Retail investors have been piling into Maas Group after the share price nearly halved in value over the past week following the spectacular collapse of Firmus Technologies’ planned $44 billion initial public offering.
Individual investors and day traders were buying up Maas shares – now trading at the lowest levels since April last year – just as institutional investors were bailing out in the aftermath of the collapsed IPO.
Maas Group was the 10th-most traded stock last week on Australia’s largest retail brokerage CommSec, with 72 per cent of its orders a buy and was one of the top traded ASX stocks on CMC Markets’ platform with 80 per cent of its orders also a buy.
“Retail investors seem to think the Maas Group sell-off has gone too far, and they may be right,” said CMC Invest market analyst Henry Fisher. “But there’s still a lot we don’t know. If Firmus struggles to secure funding, Maas could take a hit to both the value of its stake and its future earnings.”
Fund managers, meanwhile, said they were steering clear of the stock, warning that more “hate-selling” could follow. That is after founder Wes Maas earlier in the year sold the company’s building materials business for $1.6 billion to invest heavily in Firmus.
The founder tipped $410 million into the data centre developer over two tranches in February and August and also secured a $1.1 billion contract with Firmus for electrical work.
Had the IPO gone ahead, Maas could have tripled the company’s investment in Firmus, but its failure has only justified the concerns of some of its former shareholders, including hedge fund QVG, which sold out of the company after the pivot in strategy.
Firmus is now said to be exploring a potential IPO on the technology-heavy Nasdaq after demand from institutional investors fell away for an Australian listing.
Wes Maas last week insisted he did not “put the house on the Firmus investment” and blamed the sell-off on “fear and the mentality that there must be something wrong. But there’s nothing wrong.”
The construction business he started 24 years ago was once a small-cap darling but is now a favoured way for market bulls and bears to speculate on the promise of artificial intelligence and the related data centre build-out.
Elsewhere, retail investors have also been piling into lithium stocks, which have been battered after the price of the battery metal tumbled since May.
They have been hoovering up ASX-listed lithium miners, including PLS and Liontown Resources, despite the mounting concerns about demand for electric vehicles and large-scale energy-storage systems. Bell Potter analyst Stuart Howe said both companies were “oversold opportunities” this week.
The share prices of PLS and Liontown Resources have both fallen more than 50 per cent in the past five months after the price of the white metal crashed, with spodumene trading at around $US1360 a tonne on Tuesday, according to S&P Global Platts. In May, it was closer to $US3000 a tonne.
The heavy selling has also drawn interest from hedge funds, which are betting on further declines. Short interest in PLS has doubled to nearly 13 per cent of the total shares on offer from about 6.5 per cent in May, while Liontown has spiked from 1.5 per cent to 7.7 per cent.
“Lithium stocks have come under pressure as the lithium price has halved from its May high on expectations of more supply, while the push towards sodium-ion batteries adds a longer-term question mark over demand,” said Betashares investment strategist Tom Wickenden.
PLS was the most-traded stock on CommSec last week, with 68 per cent of trade orders a buy. This came as the country’s largest pure-play lithium miner on Friday announced a $2.5 billion expansion that will more than double its output.
Rival lithium producer Liontown was the third-most-traded stock on CommSec last week, with 66 per cent buys.