The Punter "roos" the day he spent 36 cents a share buying in to Roots Sustainable Agricultural Technologies (ASX code ROO). What was he thinking?
It seemed like a good idea at the time because as everyone knows, plants do a lot better when their roots are not too hot, too cold or too dry. Here was a company that promises to keep your crops' tootsies nice and cosy all the time, while maintaining moisture levels.
The technology is designed for regions (like Australia) where the weather can be erratic or extreme. The company comes from Israel, where they know about these things.
At the beginning of January, the co-founders of the company, Sharon Devir and Boaz Wachtel, wrote a long letter to shareholders.
Now the Punter, a confirmed cynic, believes that directors only write letters to shareholders to beg for more money or to reassure them things are not as bad as they seem. In Roots' case, the shares had crashed from 33c to 10c in three months. The September quarterly figures suggested the company had only enough cash for six months.
In the accounts for the year to December, released last month, the auditors noted the company's losses, and the fact it had burned through some US$3m and had only $600,000 left.
Since then Roots has raised $1.62m by issuing convertible notes, and had some significant sales success.
The shares, which began sliding rapidly again this month, were down to 8c the last time the Punter looked. Dumping them would be sad but perhaps sensible. Or perhaps not. That January letter was certainly positive. The Punter has decided not to sell, but if the company doesn't raise more cash soon, he will rue that decision too.
Wellard (WLD), meanwhile, has fallen to his 4.7c buy price, so he has added 50,000 to his portfolio.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
