The Macquarie Group Ltd (ASX: MQG) share price is edging lower on Monday afternoon.

At the time of writing, the investment bank’s shares are down 0.1% to $174.06.

This compares to a gain of 0.2% by the S&P/ASX 200 Index (ASX: XJO) today.

Why is the Macquarie share price underperforming?

The weakness in the Macquarie share price on Monday could have been driven partly by a broker note out of Citi last week.

According to the note, in response to its trading update, the broker has retained its sell rating but lifted its price target on the company’s shares to $153.00.

Based on the current Macquarie share price, this implies potential downside of 12% over the next 12 months.

What did the broker say?

Citi was pleased with the investment bank’s trading update, which revealed that Macquarie expects its first half profit in FY 2022 to be “slightly down” over the second half of FY 2021.

The broker believes this implies a first half net profit in the range of $1.8 billion to $2 billion. This was materially ahead of the consensus estimate of $1.55 billion.

Citi has upgraded its estimates and is now expecting a net profit of $1.9 billion for the half. However, this isn’t enough for a more positive rating. This is due to its belief that the Macquarie share price is expensive at the current level.

It commented: “We now forecast $1.9bn for 1H22, with commodities and MacCap gains tracking better than our expectations, despite the negative timing of storage & transport revenue. We see a moderation in earnings in 2H22 as MQG cycles the UK meters gain on sale; and buoyant capital markets activities starts to cycle.”

“The stock has reacted positively to the guidance upgrade (+5%), but consensus is largely upgrading on the back of one-time MIC wind-down revenues. At 22x FY23 earnings the stock remains expensive in our view,” the broker concluded.

The post Macquarie (ASX:MQG) share price struggles amid broker sell rating appeared first on The Motley Fool Australia.

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• September is not being kind to the BHP (ASX:BHP) share price
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• The Macquarie (ASX:MQG) share price has gained 3 times that of CBA over 5 years
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is in the green today, bolstered by the energy and material sectors.

At the time of writing, the ASX 200 is 0.38% higher than it was at Friday’s close. It has gained 28.9 points today.  

Meanwhile, the S&P/ASX 200 Materials Index (ASX: XMJ) has gained 1.26%, while the S&P/ASX 200 Energy Index (ASX: XEJ) is up by 1.32%.

Let’s take a look at what’s been driving the materials and energy sector to lead today.

ASX 200 supported by energy and materials sectors

It’s a good day to be an energy or materials share, with each index housing a sea of green.

The energy sector might be being boosted by the rising price of oil today.

According to CNBC, the price of West Texas Intermediate oil has surpassed US$70 a barrel today. It’s currently trading at $70.04 per barrel. At the same time, the Brent Crude oil price is 0.44% higher today at $73.24 a barrel.

The Worley Ltd (ASX: WOR) share price is leading the energy sector, with a 2.9% gain. The Santos Ltd (ASX: STO) share price is following Worley’s closely, with that of Woodside Petroleum Limited (ASX: WPL) bringing up third place.

ASX 200 materials shares are also having a great day’s trade.

The Pilbara Minerals Ltd (ASX: PLS) share price is heading the materials sector, with a 6.5% increase. The share prices of Oz Minerals Limited (ASX: OZL) and Lynas Rare Earths Ltd (ASX: LYC) are also boosting higher, gaining 5.4% and 4.7% respectively.

Though, it’s not all positive on the materials front. The Resolute Mining Limited (ASX: RSG) share price is sliding 3.4% at the time of writing.

All in all, it’s a lucky thing the material and energy sectors are in the green, as the S&P/ASX 200 Information Technology (ASX: XIJ) is currently down 0.7%.

The post ASX 200 energy and materials shares are leading the market on Monday appeared first on The Motley Fool Australia.

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• 5 things to watch on the ASX 200 on Monday
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Paladin Energy Ltd (ASX: PDN) share price has been on a relentless rally this month, up 90% to an 8-year high of 97 cents.

The sudden re-rate in Paladin Energy shares has largely been driven by an uplift in uranium spot prices, running to an 8-year high of ~US$40/lb.

Uranium prices explode out of nowhere

Uranium prices have emerged out of a prolonged bear market where prices plunged from ~US$140/lb in 2007 to mid-US$20/lb between 2016 and early 2020.

This is why the Paladin Energy share price is still down ~90% from its 2007 highs.

The 2011 nuclear disaster at Fukushima Daiichi in Japan was arguably one of the major catalysts for a fallout in uranium demand.

After grinding around mid-US$20/lb, uranium prices pushed above US$30/lb in April this year. And jumped from US$30/lb to US$40/lb since mid-September.

Uranium prices have been propped up by a Canadian investment fund, Sprott Inc and its Physical Uranium Trust (SPUT).

S&P Global reported that “The spot uranium price for deliveries this month leapt 30.8% over 30 days to $39.75/lb as of 1 p.m. on Sept. 7 — a steep rise for a commodity market that previously saw years of sagging prices, according to data from S&P Global Platts.”

“Market analysts credited Sprott Asset Management LP, a uranium trust formed in July to buy up low-cost uranium on the spot market and hold it for the long-term, for jolting the market with a wave of purchases,” it added.

The fund has been aggressively buying uranium off the spot markets, acquiring more than 3 million pounds of uranium between 2 and 7 September, according to S&P Global.

Why the Paladin Energy share price is surging

Paladin Energy was once a major player in the uranium space, producing 119,586 pounds of uranium oxide in 2007 with plans to ramp production to over 3.7 million pounds by 2010.

The decline in uranium market conditions led Paladin Energy in May 2018 to place its Langer Heinrich project into care and maintenance.

It wasn’t until June 2020 that the company announced plans to restart the project followed by a $192.5 million capital raising in March 2021 to prop up its balance sheet.

Paladin Energy estimates that the project will require US$81 million of pre-production capital expenditure with a peak production of 5.9 million pounds of uranium oxide for 7 years.

The company believes it’s in a “competitive cost position” where life of mine production cash costs come in at US$27/lb in addition to freight and logistics of US$0.95/lb and sustaining capex of US$2.9/lb.

From an operational perspective, Paladin Energy is still in its early days of bringing the Langer Heinrich Mine back to life.

However, accommodative uranium prices have helped drive the Paladin Energy share price to fresh multi-year highs.

The post Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why. appeared first on The Motley Fool Australia.

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• ASX uranium shares are booming double digits across the board on Monday. Here’s why.
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• Two exciting ASX uranium shares get big price upgrade by broker
• ASX uranium shares are booming: What’s all the hype about?
• Up 70% in September, why the Paladin Energy (ASX:PDN) share price keeps going up

Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Brokerage platform Stake is the latest broker to hop on the ‘cheap shares’ train. The previously US-only broker is expanding into ASX shares, offering a market-leading $3 brokerage fee as a start.

Stake announced its new expansion plans this morning. It will be opening up to ASX trading for a select number of Beta users starting today, with investors who miss out on the initial Beta permitted to join a waiting list.

So why now for ASX trading on Stake? “It was led by customer demand,” Stake CEO Matt Leibowitz tells The Motley Fool. “It was something our customers have been clamouring for, so we were happy to provide it”.

Stake reckons that its $3 brokerage will make it “the lowest cost CHESS-sponsored offering bar none”. By ‘CHESS-sponsored offering’ Stake is referring to how it will keep a conventional CHESS-sponsored model, which allows investors to use an individual HIN (Holder Identification Number).

This allows investors to hold their shares under one HIN via the CHESS system. This is similar to the model offered by existing brokers like CommSec and NABtrade.

However, it does draw a point of difference with the rival broker Superhero. 

To HIN or not to HIN…

Superhero made quite the splash when it launched its own ASX trading last year, complete with a $5 brokerage fee and free ETF trading. However, Superhero doesn’t assign individual HINs to investors, instead using a custodian model. This means customers’ assets are held under one broad HIN, rather than each investor having an individual HIN.

Stake is clearly seeking some differentiation with its new product, so will offer $3 brokerage for all trades, including ETFs.

Aside from Superhero’s $5 brokerage, other ‘cheap’ options for ASX investors are currently the $9.50 brokerage being offered by SelfWealth Ltd (ASX: SWF). The largest brokers in the country such as Commonwealth Bank of Australia‘s (ASX: CBA) CommSec or National Australia Bank Ltd‘s (ASX: NAB) NABtrade, typically charge users between $10 and $20 per trade, depending on position size.

US and ASX markets now open for Stake users

When asked if the company could turn a profit on such a low flat fee, Leibowitz was unequivocal. “Absolutely,” he told the Fool. “With our scale, this is something that we can see generating a positive return for Stake”.

“We just saw an opportunity,” says Leibowitz. “Lower brokerage benefits the users at the end of the day. Paying brokerage fees from the 1990s has always been normal for Aussie investors… but we don’t see why [other brokers] should enjoy such high margins.”

So until now, Stake only offered ASX users access to the US markets. For US shares, users are charged zero brokerage, with the company only taking a 0.8% foreign exchange currency fee for cash transfers. Stake’s ASX site will also have a wallet for cash transfers, albeit with no fees.

Stake does currently offer fractional shares for US trading, but Leibowitz confirmed that this won’t be available for ASX shares. “It just doesn’t work with the ASX,” he said. “The systems don’t really allow it, so it’s not something we can really offer.”

What’s next for Leibowitz?

But since the ASX lacks the kinds of high-cost shares that are present on the US markets (think Amazon.com Inc (NASDAQ: AMZN) at US$3,470 or Warren Buffett’s Berkshire Hathaway Class A (NYSE: BRK.A) at US$418,000), Leibowitz doesn’t think too many ASX investors will find it useful anyway. “You’ve got plenty of ASX shares under a dollar,” he says.

As for future plans, Leibowitz says the company is just focused on getting the rollout of ASX trading right before it considers other avenues. When pressed though, Leibowitz did admit the team “has talked” about offering cryptocurrency trading.

Stake says it is now the fourth-largest broker on the ASX, boasting 360,000 customers across Australia, New Zealand, Brazil and the United Kingdom.

The post Online share trading platform Stake offers $3 ASX trades appeared first on The Motley Fool Australia.

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• Up another 13%, the Paladin Energy (ASX:PDN) share price keeps on rallying. Here’s why.
• Novonix (ASX:NVX) share price falls on broker downgrade
• Here’s why the AMA Group (ASX:AMA) share price is on the rise today
• The Kogan (ASX:KGN) share price has shed 46% this year. Is it a buy?
• Own the Vanguard MSCI Index International Shares ETF (ASX:VGS)? Here’s what you’re invested in

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Amazon and Berkshire Hathaway (B shares). The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2022 $1,920 calls on Amazon, long January 2023 $200 calls on Berkshire Hathaway (B shares), short January 2022 $1,940 calls on Amazon, short January 2023 $200 puts on Berkshire Hathaway (B shares), and short January 2023 $265 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Amazon and Berkshire Hathaway (B shares). The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Novonix Ltd (ASX: NVX) share price has run out of steam on Monday.

In afternoon trade, the battery materials company’s shares are down 1% to $5.84.

This looks set to end an incredible run which saw the Novonix share price rise 21% over five trading sessions last week.

Why is the Novonix share price sliding today?

There are likely to be a couple of catalysts for the weakness in the Novonix share price on Monday.

The first is profit taking after the strong gain it made last week. That gain was driven by increasingly positive sentiment in the battery materials sector and news that the company’s shares will be added to the ASX 300 index at the next rebalance.

What else is weighing on its shares?

Perhaps the biggest weight on the Novonix share price has been a broker note out of Morgans.

On Friday, the broker called time on its rally and downgraded the company’s shares to a hold rating with a $5.68 price target.

Morgans notes that the company’s shares have risen significantly, not just last week, but also in the weeks prior. It feels this has left its shares fully valued and sees limited upside potential in the near term.

The broker commented: “NVX has rallied 83% over the past month following the announcement of the strategic share placement to Philpps66 in early August. The company has also recently been included in the ASX300 which it has outperformed by 86% over the same time period.”

“NVX’s prospects continue to look promising however we think the share price already reflects a lot of the future success that we think the company will achieve. There is still a small premium to our updated base case valuation but we think the risk to reward is less attractive than before. We therefore reduce our rating to HOLD as we wait for more detail on the company’s progress on the Samsung quality audit and confirmation of our expectations for gross margins,” it added.

The post Novonix (ASX:NVX) share price falls on broker downgrade appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The AMA Group Ltd (ASX: AMA) share price is gaining in intraday trade, up 3.57% after earlier posting gains of more than 7%.

This comes after AMA Group emerged from a trading halt this morning. Trading was paused last Monday, 6 September, pending today’s price sensitive announcement.

We take a look at that below.

What did AMA announce?

The AMA Group share price is on the rise after the automotive parts and smash repair company reported it’s completed the institutional component of its fully underwritten accelerated 1 for 2.80 pro rata non-renounceable entitlement offer.

The Institutional Entitlement Offer, announced on Friday, raised $53 million at an offer price of 37.5 cents per share. That’s a 13% discount to the current AMA Group share price of 43 cents. Those 142 million shares are expected to be issued and commence trading on 21 September.

The underwritten retail entitlement offer is expected to raise $47 million. The offer opens this Friday, 17 September and closes on 30 September.

To participate, investors will need to hold shares by the end of the day tomorrow, 14 September. They’ll be entitled to 1 new share for every 2.8 shares they hold priced at the same 37.5 cents per share.

Topping off the new inflows of capital, the company said it had also successfully priced $50 million of notes. Unless the notes are converted, repurchased or redeemed, they mature on 22 March 2027 at a coupon of 4.0% per year. The notes are convertible to shares at an initial conversion price of 46.88 cents per share.

Commenting on the capital raising, AMA Group CEO Carl Bizon said:

Throughout the Institutional Entitlement Offer and Convertible Notes Offer processes, we were very pleased by the level of support by investors, both for the capital raising, and for our business. It is extremely encouraging to see the level of belief in our business and strategy.

We look forward to the future, as the impacts of COVID-19 related restrictions begin to lift and we can turn our focus to the execution of our strategy as we seek to unlock the value inherent in the AMA Group.

AMA intends to use the new fund to pay back $72.5 million in debt facilities. It will deploy the additional $69.3 million to support growth plans, boost liquidity and provide working capital.

AMA Group share price snapshot

The AMA Group share price has been under heavy selling pressure in 2021, down 46%. That compares to an 11% year-to-date gain posted by the All Ordinaries Index (ASX: XAO).

Over the past month, AMA’s shares have dropped  almost 14%.

The post Here’s why the AMA Group (ASX:AMA) share price is on the rise today appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Kogan.com Ltd (ASX: KGN) share price is out of form and trading lower on Monday.

In afternoon trade, the ecommerce company’s shares are down 1% to $10.46.

This means the Kogan share price is down 46% since the start of the year.

Why is the Kogan share down 46% in 2021?

Investors have been selling down the Kogan share price this year after its strong performance during the early stages of the pandemic reversed.

This was driven by management failing to predict a sharp slowdown in sales after bricks and mortar stores reopened.

This ultimately led to the company having a significant inventory excess and, at times, nowhere to put it. The latter resulted in the company incurring millions of dollars in demurrage costs for stock that was stuck at ports.

In light of this, Kogan reported a net profit after tax of just $3.5 million for FY 2021, down 86.8% year on year, and decided to suspend its dividend.

Is this a buying opportunity?

One leading broker that believes the Kogan share price has fallen to an attractive level is Credit Suisse.

In response to its full year results last month, the broker retained its outperform rating but cut its price target down to $14.06.

Based on the current Kogan share price, this implies potential upside of 34% over the next 12 months.

According to the note, the broker acknowledges that its elevated cost case could take a bit of time to normalise. However, it believes it is worth sticking with the company.

Credit Suisse remains positive on the company due to its private label business and its long term growth potential thanks to its strong market position and the shift to online shopping.

All in all, while the Kogan share price performance has been very disappointing over the last 12 months, the broker appears optimistic the next 12 months will be much more positive.

The post The Kogan (ASX:KGN) share price has shed 46% this year. Is it a buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Kogan.com ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX investors looking to diversify their portfolio might turn to exchange-traded funds (EFTs) such as those offered by Vanguard.

And for Australians interested in benefitting from global markets but not sure where to start, the Vanguard MSCI Index International Shares ETF (ASX: VGS) could be seen to be a great option.

As with all EFTs, Vanguard’s International Shares ETF is a collection of securities that can be traded like a share. However, this one is focused on international markets, housing a whopping 1505 stocks.

Right now, an investor can get their hands on a piece of the EFT for $101.69. Also worth noting is the fund’s 1.58% dividend.

So, what companies are holders of Vanguard’s International Shares ETF backing? Let’s take a look.

What stocks make up the Vanguard International Shares EFT?

There are 5 stocks that each make up more than 1% of the Vanguard International Shares EFT. Interestingly but not surprisingly, they’re all housed on the NASDAQ exchange and need no introduction.

They are Apple Inc (NASDAQ: AAPL), Microsoft Corporation (NASDAQ: MSFT), Amazon.com, Inc. (NASDAQ: AMZN), Facebook, Inc. Common Stock (NASDAQ: FB), Alphabet Inc Class C (NASDAQ: GOOG), and Alphabet Inc Class A (NASDAQ: GOOGL).

They make up around 4.6%, 3.5%, 2.4%, 1.4%, 1.4%, and 1.3% of the EFT respectively.

Tesla Inc (NYSE: TSLA) comes in just short, making up 0.9% of the EFT’s holdings.

Other recognisable stocks held by the Vanguard International Shares EFT are Johnson & Johnson (NYSE: JNJ), Visa Inc (NYSE: V), PayPal Holdings Inc (NASDAQ: PYPL), and the currently renown Pfizer Inc. (NYSE: PFE).

Further down the EFT’s holdings rank are companies from the United Kingdom, Canada, Japan, the Netherlands, France and Switzerland, among others.

Those interested can find the list of the EFT’s 1505 holdings here.

Now, perhaps the most important question…

How has the EFT performed lately?

The Vanguard MSCI Index International Shares EFT has been doing well on the ASX lately.

It is currently trading for 21% higher than it was at the start of 2021 and 28% more than it was this time last year.

The post Own the Vanguard MSCI Index International Shares ETF (ASX:VGS)? Here’s what you’re invested in appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Microsoft, PayPal Holdings, Tesla, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Johnson & Johnson and has recommended the following options: long January 2022 $1,920 calls on Amazon, long January 2022 $75 calls on PayPal Holdings, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, PayPal Holdings, and Vanguard MSCI Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Liontown Resources Limited (ASX: LTR) share price is soaring to new heights despite no news having been released by the company.

However, the mineral exploration and development company has been busy lately.

Its spin-off’s Initial Public Offering (IPO) is just weeks away and it’s enjoying its new spot on the S&P/ASX 300 Index (ASX: XKO).

Right now, the Liontown share price is $1.34, 18.14% higher than its previous close. That also represents a new all-time high for Liontown’s stock.

Let’s take a closer look at what Liontown has been up to lately.

What’s Liontown been up to lately?

The Liontown share price is taking off today despite the company’s silence. Here’s what it’s been up to lately.

Anticipation is continuing to build for the company’s planned spin-off’s ASX debut.

Liontown is spinning off its non-lithium assets into Minerals 260 Limited. As part of the spin-off, Liontown shareholders will receive 1 share in Minerals 260 for every 11.91 Liontown shares they hold.

Following the demerger, Minerals 260 will own the Moora Gold-Nickel-Copper-PGE Project and will have an option to earn a 51% interest in the Koojan Gold-Nickel-Copper-PGE Project, the Dingo Rocks Project, and tenement applications at Yalwest.

Minerals 260 is also waiting to float on the ASX on 11 October. Under Minerals 260’s prospectus, 60 million shares of the company were offered for 50 cents apiece.

Additionally, the Liontown share price might have been strengthened recently by its recognition as one of the ASX’s top 300 companies.

The company was one of 13 that made their way onto the ASX 300 Index as part of S&P Dow Jones Indices’ quarterly rebalance.

Liontown share price snapshot

It’s been a good year for the Liontown share price, which has gained 217% since the start of 2021.

It is also currently 685% higher than it was this time last year.

The post The Liontown (ASX:LTR) share price is leaping 18% to a new all-time high today appeared first on The Motley Fool Australia.

More reading

• Which ASX shares are the top movers in the ASX 300 today?
• Which ASX 300 shares are leading the way as the top movers on Friday?
• Which ASX shares are leading the way on the ASX 300?
• Which ASX shares are set to finish the week as the top movers on the ASX 300?
• Why ASX lithium shares are having a bumper start to the week

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Veem Ltd (ASX: VEE) share price is in freefall today following the company’s update on its capital raise.

During early afternoon trade, the marine technology company’s shares are down a sizeable 11.51% to $1.23. This means that since 3 September, its share price has lost close to 15%, hitting early August lows.

Veem completes capital raise

A catalyst to the falling Veem share price could be new shares coming onto the company’s registry.

According to the company announcement, Veem advised it has successfully raised $6 million before costs by a way of placement.

The offer received strong support from both institutional and sophisticated investors, subscribing for 5.1 million shares at $1.18 apiece. This represents a 15.1% discount to the last traded price on 8 September and a 10.3% discount to the 15-day volume-weighted average price.

Concurrent with the placement and investor demand, the company’s founders, the Miocevich family, have offloaded 11.9 million shares. The partial sell-down is expected to improve liquidity and the free float of Veem shares in the market.

Once the transaction is fulfilled, the Miocevich family will hold a controlling 50.4% interest in the company. No intention has been stated to sell any more shares in the near-term future.

In addition to the placement, Veem announced it will open a Share Purchase Plan (SPP) on 22 September. The pricing terms will be the same as the placement, with the intention to raise approximately a further $2 million.

Both proceeds will be directed towards a number of initiatives. These include funding research and development, sales and marketing to drive gyro sales growth and working capital.

Veem chair Brad Miocevich commented:

We are particularly excited about the very high demand from investors leading to a successful capital raising which will allow us to further invest in the gyrostabilizer business which is at the leading edge of the industry. The market is significant and over the past few years we have truly started to become recognised as the global leader. We now have the opportunity to ensure we deliver on this mission as well as the broader base of the business.

About the Veem share price

Over the last 12 months, Veem shares have climbed by more than 166% and, year-to-date, are up 51%. Despite today’s drop, the company’s shares have gradually increased over the long term to provide fruitful returns for investors.

Veem presides a market capitalisation of roughly $161 million and has 130 million shares on its registry.

The post Why the Veem (ASX:VEE) share price is sinking 11% today appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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