Trading Places: Who is taking advantage of the tech sell-off?

Trading Places is Stockhead’s semi-regular, pretty damn fascinating recap of the latest red flag buying and selling of ASX small cap shares. It is here that the rubber really hits the road for fund managers, stakeholders, distant (and not-so-distant) relatives and other famous or infamous investors.

Specifically, Trading Places tracks substantial shareholder movements – namely when an individual’s trade in a company’s stock crosses the 5% threshold. These are usually directors, individual investors, institutional investors… or their distant (and not-so-distant) relatives.

Shareholders are required by basic human decency (and the law) to publicly declare via the exchange when their personal stake goes below or above 5%, and from there, every movement in their holdings while owning above 5%.

Tech buy-up

There’s no denying technology stocks have been hit hard by a brutal sell-off in these recent volatile times for markets as investors rotate to value from growth. Across the globe tech stocks have been hit hard. In the US, the tech-heavy Nasdaq 100 is off ~12% in the past month and ~15% over six months. In Australia, the ASX All Tech index is down ~11% this month and a whopping 26% over six months.

While it’s had brief rallies and even yesterday was up around 1.4%, it remains under the 2300 points mark.

But when the market falls, the brave go shopping and that’s exactly what some of the institutional investors have been doing, looking to capitalise on the downturn and pick up some bargains for strong future returns.

Australian Super moves on City Chic Collective

One of the country’s largest superannuation funds, Australian Super, showed it is bullish on e-commerce stock City Chic Collective (ASX:CCX), which saw its price fall ~40% in the past month. Australian Super topped up its holdings and is a substantial shareholder with a 10.28% stake in City Chic.

The move by Australian Super follows leadership of City Chic also bolstering their holdings in the stock.

Alium Capital invests more in Beforepay

Branded as the new Afterpay, Beforepay (ASX:B4P) tumbled 44% on its ASX debut in January, making it one of the worst ASX debut performances in the past 12 months. Beforepay lends money against the customer’s next pay cheque, charging a flat 5% for the service.

The Sydney-based company had earlier raised $35m in the IPO round priced at $3.41 per share, with backing from a network of investors including Sydney-based fund Alium Capital, who still have faith in the company’s prospect, propping up their holdings in February.

Alium Capital’s Alpha fund purchased around ~480k worth of shares on the downturn, increasing its holdings to 9.56%. Before its IPO, B4P backers at the venture capital/seed stage included Vocus founder James Spenceley. Shares in Beforepay are currently ~99 cents.

JP Morgan catches falling knife with EML Payments

Sharp falls in payment solutions EML Payments (ASX:EML) has not been enough to turn off JP Morgan Chase and Co with the US investment powerhouse throwing its support behind the troubled company.

EML tanked by ~31% in the past month after it reported a 4% decrease (on pcp) of EBITDA to $27m for the half, despite gross revenue increasing by 20% to $114.5m. The six-month share price figure is even worse, down ~41.8%.

But JP Morgan now holds ~20 million shares in EML, amounting to a 5.35% stake, which should help boost the confidence of its investors.

Troubled Appen gets major support

Embattled artificial intelligence software developer Appen (ASX:APX) has got the support of international investment firm Mondrian Investment Partners who boosted their holdings to 9.40%. Mondrian, which has offices in the UK and US, is bullish on the company, which has seen its share price plummet ~22% in the past month and more than 60% in the past year.

The share price was a high of ~$40.80 in August 2020, falling to ~$6.11 in February. Appen this week announced it had invested £2 million ($3.6 million) for a majority stake in synthetic data company, Mindtech Global.

Mindtech created Chameleon, a self-serve platform that allows customers to create and curate vast computer vision synthetic data assets used to build accurate neural networks. Its customers include leading retailers and consumer electronic companies.