Throwing money into a hole in the ground

Sometimes I wonder  if we are doing it wrong. If we should stop gearing the products that we introduce to match the aspirations and risk-appetites of our clients and just blast a load of high-interest-high-risk rubbish into the Twitter-sphere and see what happens. Stories like this one bemuse me……

The third most popular equity investment for retail investors in the 2018-19 financial year was……..?? You´ll never guess. Not even if I tell you that the first was Vodafone and the second was Lloyds Banking Group. Because you´ve probably never heard of Sirius Minerals even though they are FTSE250 company.

Sirius have just withdrawn a new bond because they can´t sell it – even at 13.5% per annum interest. They need to sell it when they bring it back to market because if they don´t then, in the words of their share prospectus (which I bet the retail investors never read)

Sirius warned that if the bond sale was not completed by the end of September, it would have “no available cash to deploy into the project beyond that date” and would be forced to halt spending and “consider all options available to it”.

Unless it could secure alternative funding or “a merger or acquisition transaction” by the end of September 2019, it would “cease to operate as a going concern and the board would be required to place the company into administration or liquidation”. It added that the company was “not confident” that either such alternative could be achieved.

Sirius shares have lost more than 70% of their value. Retail investors that bought shares in May are already sitting on a 31% loss. The dream – a mining project to create the world´s largest source of polyhalite, that will dig 1500m under the Yorkshire Moors, extract potash, and then transport it to the coast on a 23 mile underground conveyor belt for processing and shipping to the export market. $1.2bn so far invested, another $3.8bn required before a single kilo of potash starts its underground journey to the coast. You can read more here

How is this not a government project? How is this being offered to retail investors? And why would you choose to invest your money in this when I can get you 15% per annum, capital and interest returned in 12 months time, and the risk to capital is close to zero. You can find out more here

We will keep doing what we have always done – mining data and investments to find the opportunities that exist that are truly suitable for balanced retail investors who want to see their money work harder.