SMALL CAP MOVERS: Diurnal shares jump; Cakebox tumbles

Small-cap stocks were not immune to the sentiment-driven drop in markets this week.

Worries over inflation, higher interest rates and the overall state of the global economy put the skids under the AIM All Share.

It fell 4.2 per cent, which more or less tracked FTSE 100’s performance over the week.

But while the blue-chip index has drifted less than 5 per cent so far this year, underlining its solidity, the junior market has lost 29 per cent of its value.

Why the disconnect? The Footsie is seen is home to the haven stocks sought out in times turmoil.

The flipside of that equation is those seeking a safe place of their money tend to be same people exiting riskier investments on AIM.

With trade sanctions against Russia ramping up and the outlook for inflation and economic growth rather gloomy, there appears little respite in sight for those who have pumped cash into junior stocks.

Now, if you are an opportunist the current conditions create bargain opportunities.

Indeed, that’s exactly what it looks like Neurocrine Biosciences has found.

On Tuesday, the Californian group lodged a knock-out £48million bid for Diurnal, which was at 141 per cent premium to Friday’s closing price.

Still, at 27.5p a share, the bid is still way below the 66p the stock was changing hands for in January and well (well) down on the peak of 2018, which saw Diurnal push through 200p.

While globally tech shares have been performing poorly as hyped valuations have been reset, there has been the odd exception to the general rule.

Bango was a case in point. Its shares raced 22 per cent higher this week after it inked a deal to acquire the mobile payments platform of Japanese giant NTT Docomo for a negligible fee.

But make no mistake, this is a transformational deal for the UK group.

Broker Liberum estimates that annualised cost synergies from combining Bango’s business with Docomo Digital will be in the order of £18million by 2023.

Adjusted earnings, meanwhile, will increase by more than 50 per cent to £25.5million the following year, it added.

Sticking with the risers, the small-cap gas and oil stocks were well bid – again.

The now indiscriminate buying across the sector reflects a growing belief that industry regulations will be altered to allow more UK onshore drilling.

The assumption currently is energy security will be one of the first issues to be dealt with by the new Tory administration under Prime Minister-elect Liz Truss.

Up 76 per cent, Angus Energy led the field after it began making its first sales of gas from a field it runs in Lincolnshire.

Onshore drillers Egdon Resources and Union Jack were also chased higher, 25 per cent and 17 per cent respectively.

While Rockhopper Exploration gave back some of the gains made last week, falling 15 per cent, its cohort working in the waters off Falkland Islands were enjoying a stellar week, with Argos Resources and Borders & Southern both up over 20 per cent on no news.

Bulletin board chatter suggests that there may be a roll-up to be done in the South Atlantic.

Turning to the fallers, Serinus Energy tanked 25 per cent on Friday after it confirmed its latest well Romania was a dud.

While there were gas shows they weren’t sufficient to justify testing. Work will now focus on a second well close to existing gas infrastructure.

Petroneft, which operates in the Tomsk Oblast region of Russia, saw its shares tank 28 per cent this week after it said it was in a stand-off with the company that stores and transports its oil.

Cake Box shares tumbled after 20 per cent after it sounded the earnings alarm, with the egg-free baker blaming inflationary pressures for its struggles.

Finally, the first IPO of the new month took place on Friday.

Zamaz, an ethical consumer goods firm, has come to market via a direct listing, supported by stakeholder Atlas Capital Markets.

It raised just under £4million by issuing new shares and has a £15million loan note facility it can tap into.

The Zamaz portfolio comprises Ecomoist, an ecological screen cleaner derived from natural sources, and Bella Dispensa, an innovative online grocery in Italy.