How many US-based health and tech small caps have come to the ASX?
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The success of a handful of Australian tech stocks and envy of Silicon Valley has led to talk of the ASX either becoming a mini-NASDAQ or being one already.
Often such talk occurs prior to companies listing. Most recently Californian-based chip-builder Revasum (ASX: RVS) listed in December and there has been significant hype about family networking stock Life360, due to list this Friday (May 10).
How many US based tech and health stocks have shunned the NASDAQ and listed here?
Stockhead analysis has found 15. Collectively they are up 11 per cent this year, roughly in line with the broader market. Their average market cap is $94.9 million, far smaller than the biggest US tech companies that dominate the NASDAQ.
While the big tech companies on the NASDAQ has led to some Australian companies going straight to Wall Street – most notably Atlassin chose to go to straight to Wall Street to list – some smaller US companies choose to list on smaller exchanges and the ASX is one such option for them.
While Australia is hardly short of large tech companies (such as Xero and Afterpay) there are fewer of them and they do not completely usurp the attention of investors away from smaller companies. Australia’s unique superannuation system means there is a particularly large pool of investable funds.
Yet each of these companies’ individual companies have their own stories to tell. For instance, Osprey Medical (ASX: OSP) manufacture devices that monitor the impact of chemical substances (contrast dyes) present in medical imaging procedures.
Contrast dyes can be harmful to patients with kidney problems and Osprey made over US$826,000 last quarter ($1.15m) due to an increased uptake among hospitals.
One trend in America that makes Australians shake their heads is the unaffordability of universities. But Credible Labs (ASX: CRD) helps students by providing student loans. Last year it expanded its offerings to mortgages.
Since Tuesday, Credible Labs has gained 25 per cent after a positive quarterly which included news that it had signed a trial partnership with real estate platform Realtor.
Moelis released a report that very day (made available through the ASX Equity Research Scheme) setting a target price of $1.64 – which it has so far fallen slightly short of.
|Ticker||Name||Price (3-May 1pm)||Market Cap||Return YTD (%)||City of Domicile|
|AXP||AIRXPANDERS INC||0.035||$19.5M||35||San Jose, California|
|BLY||BOART LONGYEAR LTD||0.004||$105.2M||0||Salt Lake City, Utah|
|BIQ||BUILDINGIQ INC||0.058||$15.9M||45||San Mateo, California|
|CCA||CHANGE FINANCIAL LTD||0.032||$3.2M||-46||Hollywood, California|
|CRD||CREDIBLE LABS INC||1.515||$346.9M||84||San Francisco, California|
|FLC||FLUENCE CORP LTD||0.43||$241.8M||45||White Plains, New York|
|GID||GI DYNAMICS INC||0.023||$22.2M||44||Lexington, Kentucky|
|OMN||ONEMARKET LTD||0.805||$84.2M||42||San Francisco, California|
|OSP||OSPREY MEDICAL INC||0.14||$60.5M||22||Eden Prairie, Minnesota|
|PIN||PINCHME.COM INC||0.135||$18.9M||-13||New York, New York|
|PVS||PIVOTAL SYSTEMS CORP INC||1.425||$158.8M||-11||Fremont, California|
|RWC||RELIANCE WORLDWIDE CORP LTD||4.835||$3.8M||-10||Atlanta, Georgia|
|RVA||REVA MEDICAL INC||0.17||$21.9M||0||San Diego, California|
|RVS||REVASUM INC||1.345||$102.9M||-25||San Luis Obispo, California|
|VTI||VISIONEERING TECH||0.074||$17.8M||-52||Alpharetta, Georgia|
While US tech and health stocks appear attractive, there are a few points investors need to bear in mind. They are relatively minor but are nonetheless different to ‘home-grown’ stocks.
In the US, companies use the calendar year as their financial year. This means they will hold their AGMs in the first half of the year rather than the second half and release full year results in February.
In August, when most ASX companies release their full year results they will only release half-year results. However they still have to release their quarterlies on the same schedule as other companies.
They are required to appoint a local ‘mediator’ to liase with the ASX during Sydney business hours and have to specify the rights foreign holders will have in any offering of securities.
The ASX has a residual discretion not to allow companies with too high a foreign ownership but there is no official threshold – it is determined on a case by case base.
Yet it goes without saying, if these companies did not want Australians to invest they would not list in Australia in the first place.
While Life360 is a little too big for Stockhead, with an expected market cap of $689 million, it will be fascinating to watch. If it goes well, there may be more American tech and health companies who will want list in the land down under in the months ahead.