Will Liam Jones do a .com?
It was bliss!
Belting out “We are the Navy Blues!” with James in my arms, my 5 year old, and Dad next to me is a memory that will stay with me.
That night, I sat on the couch to watch the replay snacking on humble pie and lots of it!
The GWS forward line comprised of number 1 pick Jonathan Patton, a bloke that would have gone number 1 in Jeremy Cameron, Toby Greene and 3 time premiership player Stevie J. Not a problem, up stepped Liam Jones (insert “shocked” emoji here).
When he was named in defence, I thought he would be given what my old football coach used to a call “a bath” up against quality opposition, despite his solid form in the VFL. His handful of intercept marks, goal savings fists to the boundary and 14 disposals had me, and many others around me at the ground, standing and applauding.
What a transformation!
It got me thinking. Which companies on the stock market have done a Liam Jones? That is, go from being a struggling forward to a competent defender, a near bankrupt mining company to a dot.com hit, or even an uranium explorer to a cannabis player. And most importantly, did the transformation result in a temporary spike, or a sustainable business model with a consistent improving performance.
The late 90’s and early 2000’s was a period remembered for the internet bubble. A time when companies re-invented themselves in more ways than one. A US company by the name of MIS International had yet to turn a profit or do any business. Its stock was trading at well below 30c a share. It then changed its name to Cosmoz.com and indicated it would be operating in the digital world. It’s share price run to $5 a share. It later halved in value and fell away completely.
Another US company at the same time was trading at less than 50c a share, changed its name from Professional Recovery Systems to NetBanx.com Corp. The company publicly stated at the time that it was not engaged in any real business activity and nor did it plan on doing so. Its shares hit a high of $9 a share only a year later. It subsequently crashed.
Recently, there were a bunch of Australian companies that transformed their businesses completely and entered the popular cannabis space. MGC Pharmaceuticals (ASX:MXC) for example, formerly known as Erin Resources Ltd, were trading at 3c a share in April 2016. By mid-April, after announcing to the ASX it would “enter the Australian Medicinal Cannabis Market”, it’s share price hit an intra-day high of 8.3c. It’s share price is currently sitting at 4c. Gleneagle Gold is another. It no longer searches for gold. It was acquired in November 2016 by Zelda Therapeutics (ASX:ZLD) and is now a medical cannabis biotech company. Its share price doubled within a month following the announcement. And lastly, in 2014, Auscann Group (ASX:AC8) had wine operations and was operating under the name of TW Holdings. It's also now a medical cannabis company. It’s share price in April 2016 was 10c, less than a year later it had hit 90c a share. It is currently trading at 35c.
What I have found is that when a company moves into a business or sector that is outside of its normal business operations, the market doesn’t react too well. A little like myself when I first heard Liam would be playing in the backline. Shoot first ask questions later.
History shows though, if a company is entering a sector that is considered “hot” at the time, such as the internet in the early 2000’s, or just recently the medical cannabis space, we tend to see in the initial stages quite a substantial spike in performance and then a dramatic fall.
Hopefully for Liam’s sake, and for the Blues, the move the backline represents a more sustainable football future with lower volatility than the handful of examples above.