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Zak's Small Caps: What's In A Name? (Including Sound Energy, Sirius Minerals and Royal Bank of Scotland)

Zak explores just how change of name might (and might not) alter the fortunes of a small-cap

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Perhaps RBS should have changed its name

While many of us would agree that the search for the multi-bagger makes the small-caps area the most compelling part of the stock market, it is usually the case that most commentators, analysts and writers do not necessarily make it as exciting as it might be.

Clearly, given the financial risks involved, and the need to avoid coming up with howlers means that they tend to be rather cautious, if not dour, when talking about what could be the next big thing.

Perhaps rather strangely, I have managed to avoid such an approach, largely on the basis that for me the stock market is an exciting and stimulating place, with challenges and opportunities to be welcomed in equal measure.

Given that I have been watching stocks come and go from the Unlisted Securities Market in the 1980s, to NEX Exchange now in 2017, there tends to be a pattern in terms of the stock market darlings, the pariahs, the companies where the management is perhaps somewhat inexperienced, and where they can only walk on water.

Sound and Echo

Perhaps, rather more strangely, and quite appropriate given how superstitious traders and investors can be, there are the aspects of the name of a company, and even its epic code to consider. ECHO for Echo Energy (LON:ECHO), already looks to be a winner (formerly Independent Resources), and Sound Oil soared after it changed its name to Sound Energy (LON:SOU).

It is perhaps not surprising that Quindell changed its name to Watchstone Group (LON:WTG) after all the agonies shareholders suffered. As a rule, so far companies with Africa or China in their names have not exactly set the stock exchange on fire to date.

Although I suppose the worse examples of hurting investors have actually been the banks over the past several years. Indeed, the Royal Bank of Scotland(LON:RBS) saga continues to this day.

Perhaps a name change is in order here as well to get rid of the bad karma the stock has been giving off for years. 

The Sirius and Savannah twns

In fact, despite all the fanfare of the Government exiting Lloyds Banking (LON:LLOY), the shares remain well down on whether they were 10 years ago, just before the financial crisis. Then they traded at the equivalent of 300p a shares, versus 71p now. And of course, it was not only the capital loss for shareholders of Lloyds, but also the dividends along the way.

However, I wish to end on a happy note, and wonder if anyone else has spotted a couple of the “glamour” couple of the small caps space of the moment?

This is because there are two companies called Sirius at the moment which are in favour – Sirius Petroleum (LON:SRSP) and Sirius Minerals (LON:SXX), both in strong recovery modes on their charts. There are also the Savannah couple – Savannah Resources (LON:SAV), and Savannah Petroleum (LON:SAVP).

I am not sure if anyone sensible would invest in a company just on the basis of its name or the coincidence described above. But on this occasion it seems to be a winner!

Zak Mir is a presenter at TipTV, senior journalist at WhyMedia.com, and columnist at Yahoo! Finance UK

 

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