- Backblaze’s stock soars 45 per cent on 16 February
- Holding backs up 40 per cent of TMT’s market value
- TMT’s take in Bolt set for valuation uplift at next month’s results
Efficient market hypothesis states that asset prices reflect all available information, the implication being that the market cannot be beaten. The issue is that information voids exist as is often the case in my small and micro-cap hunting ground, thus offering the opportunity to buy in at below fair value.
For instance, the stock price of Nasdaq-quoted cloud storage group Backblaze (US: BLZE) soared 45 per cent on 16 February 2024 following a forecast-busting set of results that led to analyst upgrades. It was the day my 2023 Bargain Shares Review was published. One of the constituents is TMT Investments (TMT: 342¢), a venture capital company with a portfolio of 55 high-growth, internet-based companies, one of which is Backblaze.
TMT’s 10.4 per cent stake in the US company is now worth $44.3mn (139¢), or 172 per cent more than the $16.2mn (51¢) carrying valuation on 30 June 2023. Last Friday’s 45 per cent price surge accounts for half the increase. It means that TMT’s spot NAV of $227mn (721¢) is 110 per cent higher than its market capitalisation of $108mn even though the company’s 1.3 per cent stake in taxi and food delivery group Bolt is conservatively valued at $71.3mn (226¢). The stock price of the closest comparable, Uber Technologies (US:UBER), has surged 82 per cent since TMT’s last valued its stake in Bolt. The pricing anomaly in TMT’s shares is worth exploiting. Buy.
■ Special offer. Simon Thompson's books Successful Stock Picking Strategies and Stock Picking for Profit can be purchased online at www.ypdbooks.com at the special discounted price of £5 per book plus UK P&P of £4.95, or £10 for both books plus UK P&P of £5.75, subject to stock availability.
They include case studies of his market beating Bargain Share Portfolio companies outlining the characteristics that made them successful investments. Simon also highlights other investment approaches and stock screens he uses to identify small-cap companies with investment potential. Full details of the books’ content can be viewed on www.ypdbooks.com
