Escrow Watch is Stockhead’s fortnightly recap of the small cap companies releasing shares that have been locked away in escrow.

Escrow refers to shares that are held by early investors or directors, who are restrained from selling them for a year or two.

The release of escrowed shares can have a big impact on a stock’s price. If the holders choose to take up their right to sell – the shares you own can fall.

This is particularly important in a time when markets are predominantly in a bearish mood. Now these shareholders have a chance to join in whereas previously they could only sit back and watch.

 

The stock due for release

Over the next fortnight, only six companies are releasing shares. But some of these have been among the biggest hit by the coronavirus

Code Company Date of Release Shares % of company
ATL Apollo Tourism & Leisure 26 March 2,575,214 1.38%
VRS Veris 29 March 14,843,750 3.97%
IXC Invex Therapeutics 29 March 2,680,793 4.87%
ELS Elsight 31 March 17,950,000 6.60%
KTG K-TIG 1 April 4,206,665 2.90%
TOU Tlou Energy 8 April 12,000,000 2.66%

 

Ardent Leisure (ASX:ATL) for example has lost over 80 per cent in 2020. On Thursday it will release nearly 2.6 million shares worth 1.38 per cent of its market capitalisation.

Like many other tourist companies demand has evaporated fast due to travel restrictions as well as fears of the coronavirus.

Another group of stocks that have plunged is oil and gas explorers due to the oil price crunch. Southern Africa-focused Tlou Energy (ASX:TOU) has lost 60 per cent of its value since December and it’s releasing 12 million shares on April 8.

While Africa has been less hit by the coronavirus than many other regions, it has ramped up the battle in recent days beginning with South Africa locking down, which will affect neighbouring Botswana even if it does not follow suit.

A more broader group affected is recent IPOs, with all but one of 2020’s now in negative territory and most of 2019’s now underwater. One of these, biotech Invex Therapeutics (ASX:IXC) is now trading at a third of its IPO price.

Nearly 5 per cent of its stock has been locked away, unable to be sold, but that will change over the weekend. Also being freed on the weekend is 3.97 per cent of aerial mapper and spatial planner Veris (ASX:VRS).

Rounding out the list with share releases in the next week is Elsight (ASX:ELS) with nearly 18 million shares and K-Tig (ASX:KTG) with 4.2 million.