ASX Small Caps Lunch Wrap: Who among you is still fiddling while Credit Suisse burns?

Aussie markets have opened lower again today, after aggressive moves by regulators and lawmakers in Europe to stop Credit Suisse sliding into the sea did little more than add to the general sense that the wheels are about to come off everything completely.

We’ll get into the specifics of that in a little bit (spoiler alert: it’s not great) – but the important-right-now result of it was a 0.9% drop at open for the ASX 200.

As much as the Credit Suisse buyout (bailout… whatever you want to call it) is raising more than a few eyebrows around the traps, another recent deal that is far more likely to be amusing was the sale of 150% NSFW website Pornhub.

Pornhub (in the hugely unlikely event that you’ve never heard of it) is basically YouTube, but for porn. Users can, and frequently do, upload whatever porn they want to on the site, where it gets added to a library of footage that is preposterously large.

To give you an idea, the most recent data I could find (without tripping the content filter and having everyone from HR arriving at my desk in less than 10 seconds) shows that in 2019 alone, users uploaded 1.36 million hours of content to the site.

If you were to start today and consume all of 2019’s content, without taking a break, you’d either get to the end of it around 13 May, 2178, or – far more likely – you’d die of severe dehydration sometime around Easter.

So news that the site has been bought by a Canadian private equity firm was pretty big.

The name of the firm is (possibly intentionally) hilarious: it’s called Ethical Capital Partners, which was formed in 2022 to focus on tech firms that “have legal and regulatory complexity and that put a value on transparency and accountability”.

According to Bloomberg, Ethical Capital Partners is led by “cannabis entrepreneur Rocco Meliambro and criminal lawyer Fady Mansour, who is listed as managing partner.”

“Derek Ogden, a retired chief superintendent of the Royal Canadian Mounted Police, is also a partner at the firm.”

Tell me your company is made up of “colourful racing identities” without actually saying “colourful racing identities”.

And I’ll leave it to this guy to neatly sum up what the firm’s pre-purchase due diligence looked like.

PE associates doing ‘due diligence’ on the Pornhub deal pic.twitter.com/ubhTR4Q26J

— Buyback Capital (@Larryjamieson_) March 16, 2023

But here’s the thing: for all the talk from Ethical Capital Partners and its claim to be all about transparency and accountability, there are a lot of unknowns here.

The price it paid for Pornhub hasn’t been announced. Nor has where the money to buy it has come from. Nor have the names of most of the senior execs (because, hilariously, they’re ashamed of having their names attached to owning it).

Countdown to the startling revelations that it’s been bought by a conglomerate of God-Fearing Conservative types from the US begins now.

In the meantime, if you’re looking for a distraction to take your mind off the impending global financial catastrophe, there’s about 15,000 years worth of it at Pornhub, and the new owners will almost definitely appreciate the ad revenue.

And speaking of watching consenting adults shove unpleasantly massive things into spaces they weren’t made for, let’s go take a look at what’s happening on the ASX today.

TO MARKETS

The ASX opened lower by 0.9% this morning, but – like old age pensioners marching as fast as they can shuffle to protest the rising cost of living – it’s been rallying slowly ever since.

By the time we were sitting down to lunch, the benchmark was hovering around -0.3%.

Materials is the only sector driving deep into the gains this morning, up 1.01% with Utilities up -0.15% in support.

But the rest of the market’s in a pretty deep funk, from Telcos on 0.15% down to Consumer Staples on 1.40%.

The top end of town is more than adequately represented this morning, with no fewer than 11 of the market’s $1bn-plus crowd putting on some weight today – and, to the surprise of absolutely no one at all, they’re almost exclusively goldies.

The XGD ASX All Ordinaries Gold index is up a massive 7.6% this morning, thanks to the sense of impending doom around the place because those scamps and scallywags of the international banking community have been caught with their nards in the till. Again.

Evolution (ASX:EVN) is up around 10% this morning, Gold Road Resources (ASX:GOR) and De Grey (ASX:DEG) are up more than 9.0%… you get the idea. They’re doing well, because investors are getting a little frantic.

And here’s why:

NOT THE ASX

The big international news this morning is that Credit Suisse is set to be snapped up by UBS, in a deal that was brokered over the weekend, and which is likely to leave more than a few people severely unhappy.

As Earlybird Eddy Sunarto reported this morning, the deal saw UBS buying its rival Swiss bank for 3 billion Swiss francs (US$3.23 billion) – but there are some issues with the deal itself.

The buyout will see all Credit Suisse shareholders receive 1 share in UBS for 22.48 shares in Credit Suisse, with UBS agreeing to forego part of the usual adverse developments protection in return for the Swiss National Bank putting up 100 billion Swiss francs in liquidity assistance.

It’s a huge move, particularly in light of the deal getting pushed through without UBS shareholders getting a say in proceedings, as Swiss regulators sidestepped existing laws to get the deal in place before the markets open there later on today.

“It is a historic, sad and very challenging day for Credit Suisse, for Switzerland and for the global financial markets,”  Credit Suisse chairman Axel Lehmann, who, despite his own surname, was clearly bewildered by how years of appallingly unchecked and unmitigated risk-taking by his bank could possibly have gone wrong.

Obviously, it’s caused quite a commotion – and there are a lot more details that there’s neither time nor space to cover here – but Wall Street is bracing for a wild few days before the US Fed dares to make noise about interest rates there on Wednesday.

US markets will be coming off the back of a torrid session on Friday, which saw the Dow close 1.2% lower, the S&P down 1.1% and the Nasdaq lower by 0.74% as well.

In Japan, losses are within a reasonable range so far today, with the Nikkei down 0.2% in early trade, with investors moving cautiously as the market there will be closed tomorrow for one of the seemingly hundreds of holidays it shuts down for every year.

Tomorrow, it’s for Japan’s vernal equinox celebrations, which mark the end of winter and the beginning of spring – a time for cherry blossoms, new beginnings, bank collapses and weirder-than-normal pornography.

Strap in. Or on, as the case may be.

Hong Kong, predictably, has opened lower this morning. It’s down 1.60% while Shanghai is also feeling some pressure, down 0.36% in very early trade.

With the banks in turmoil again, gold prices have spiked and are closing in on US$2,000 an ounce, while crude oil is up slightly this morning, but still down more than 10% for the week.

Moving on now to Crpyto, where everyone with digital money has been having a quiet chuckle while the ‘normal money idiots’ dig in for a prolonged period of panic – none more so than former Coinbase CTO Balaji Srinivasan, who reckons BTC will get to US$1 million within 90 days.

If that sounds dumb, it’s because it is – but not as dumb as it is at first glance. Srinivasan is banking on the USD collapsing, rather than BTC suddenly moving 40x between now and 17 June.

Meanwhile, BTC enthusiasts will just need to make do with it moving through US$28,400 over the weekend.

Rob “The Gambler” Badman’s got his own unique take on that story, and more, over in Mooners and Shakers.

ASX SMALL CAP WINNERS

Here are the best performing ASX small cap stocks for March 20 [intraday]:

Swipe or scroll to reveal full table. Click headings to sort:

Breaker Resources (ASX:BRB) has gone through the roof this morning, on news of a recommended takeover offer from top 10 Australian gold producer Ramelius (ASX:RMS), up 32.8% since the news broke this morning.

Ramelius and Breaker have inked an all-scrip off-market takeover offer that will see Ramelius snap up 100% of the issued ordinary shares of Breaker, at $0.40 based on the 3-day volume weighted average price (VWAP) of Ramelius shares up to and including 17 March 2023 of $1.127, implying a total undiluted equity value for Breaker of approximately $130.7 million.

Meanwhile, Auroch Minerals (ASX:AOU) has confirmed intercepts of spodumene bearing lithium-caesium-tantalum (LCT) pegmatites at its Kangaroo Hills lithium project in Western Australia.

Assay results from the first four holes include:

• 29m @ 1.36% Li2O from 38m (KHRC011)
• 7m @ 1.00% Li2O from 198m (KHRC002)
• 2m @ 1.68% Li2O from 1m (KHRC001)
• 5m @ 0.51% Li2O from 42m (KHRC004

It’s solid news for Auroch, which has seen its trading price jump 28.2% this morning.

And rounding out the Top Three for the morning in Small Caps, Magnetite Mines (ASX:MGT) has added 22.7% after it revealed a massive increase in its ore reserves estimate for its 100% owned Razorback Iron Ore project located in the Braemar Iron Formation in South Australia.

MGT says the ore reserves estimate has been increased to 1.6 billion tonnes, up from 473 million tonnes announced in 2021 – with scope for even more growth when the numbers come in for the company’s high-grade Iron Peak deposit later this year.

ASX SMALL CAP LOSERS

Here are the most-worst performing ASX small cap stocks for March 20 [intraday]:

Swipe or scroll to reveal full table. Click headings to sort: