Any volatility in the markets can be unnerving at the very best of times, so I asked HotCopper contributor, investment expert, educator, and economic author Andrew Baxter how to read current market conditions.

“We’ve had the talk of tariffs, we’ve had interest rate moves, we’ve had a lot of social programs going on – the dispute between Russia and Ukraine and the very public spat in the White House – it’s been a lot for people to digest,” Baxter said while speaking to HotCopper in the Expert Exchange series.

“Part and parcel of that is why we’ve seen the savage level of sell-off we have over the last week or so, as people come to grips with the news flow and try to make sense of it.

“Maybe we’re on the other side of it.”

“We’ve been in an incredibly strong bull market,” Baxter said.

“Since 2022, we’ve seen the market in the bottom left to top right trend.

“So seeing a pullback of 10% or 15%, I guess it’s like running up a hill: [When] you get to the top of it you’ve got to stop and pause for breath.

“We’ve seen that pull back [before].

“When you look at the underlying earnings, we’ve come out of an earnings season which has been largely solid, about 40% up on expectations… so the underlying machinery that’s driving markets remains intact.

“It’s the newsflow and the chaos around that, I think, which has really seen us on the back foot – so to speak.”

Andrew Baxter called it a “buying opportunity” – as long as the buying horizon isn’t too short. In this interview, he shares thoughts on what some of those buying opportunities could be.

You can hear more from Andrew on the Money And Investing podcast, right here on Hot Copper as well as Apple Podcasts, Spotify and YouTube.

Join the discussion: See what’s trending right now on Australia’s largest stock forum and be part of the conversations that move the markets.

Disclaimer: Wealth Magnet Pty Ltd (ABN 52 618 868 830) trading as Australian Investment Education is a Corporate Authorised Representative (CAR no. 1255231) of Grange Financial Services Pty Ltd (AFSL No. 488609).

The material provided in this article is for information only and should not be treated as investment advice. Viewers are encouraged to conduct their own research and consult with a certified financial advisor before making any investment decisions. For full disclaimer information, please click here.

The implied offer price of that deal is $0.48cps and the Board is solidly backing it.

It is a premium to its current price of around 17cps, albeit still well below where it sat during COVID.

But the Board has firmly outlined why it believes BTH shareholders should vote in approval of the offer at its upcoming AGM on Friday 29 November at 9.30am AEDT.

(Proxy forms are available on the company’s Investors portal on its website.) 

In short: If all goes ahead, Investcorp AI Acquisition Corp will take Bigtincan Holdings to Wall Street, where it will list on the NASDAQ. It’ll inject US$12.5 million and take a 20 per cent stake in the company.

There’s far more enthusiasm for tech stocks on Wall Street than there is on the ASX, where investors are more interested in banks and mines. 

There is a competing, but non-binding indicative offer from a US private equity firm called Vector Capital. Its takeover offer for Bigtincan has been at $0.22cps – clearly below Investcorp’s implied price of 48cps. 

And here’s the other thing about private equity: those firms buy struggling companies, oftentimes victim of circumstance (like Bigtincan’s volatility in the face of macro trends it can’t control), and then later sell them on.

Shareholders might be able to score 22cps for their shares now and get out, but then they’ll be gone forever.

A listing on Wall Street’s NASDAQ index could see those shares command a price far higher than A$0.22cps in the coming months and years. 

But let’s step back. 

For those unfamiliar, Bigtincan produces enterprise software. In other words, computer programs that help businesses manage everything from sales to customer enquiries.

And Bigtincan considers itself a global leader in that field as well as in its adoption of AI – global enough to command considerable attention from Wall Street. 

Its client base underscores that reputation, as CEO and cofounder David Keane told HotCopper.

“We have amazing customers around the world – organisations like Google, Nike, Sephora, AT&T and many others, and these organisations are proving that Bigtincan’s technology and approach to sales enablement really works,” Keane said. 

That doesn’t address its onshore customers, either. 

Bigtincan provides software to the Federal Australian Department of Defence (DoD) and Seek Ltd (ASX:SEK); zooming back out to the global level, it also provides services to GUESS, ThermoFisher, Bayer, and Novo Nordisk.

There is, after all, a reason the company shot to record highs during the COVID years of around $1.36/sh. 

And it could get back there, given that tech companies enjoy far more liquidity – and confidence – from Wall Street investors, both institutional and retail. 

“The Board believes that this move to NASDAQ with the support of Investcorp offers Bigtincan’s shareholders an opportunity to achieve a potentially significant increase in value, and, to build upon the work this company has done over the last few years to build what is undeniably a global leader,” Keane explained. 

Consider the company’s recent forays into AI – a trend that Wall Street is hungry for. (Just look at OpenAI’s increasingly stratospheric valuations.) 

“When you add [our existing strengths] to the impacts of the AI technologies that Bigtincan has been building we see a significant opportunity to continue to bring the smartest people in the world into our team to grow value for all,” he said.

“Investcorp have talked about expanding our investments in Hobart, Tasmania, to grow an AI Technology Centre there bringing new well paid jobs to Australia – and that vote of confidence from one of the world’s largest asset managers is wonderful for Australia.

“Really speaking, this is about providing a chance for shareholders to play again at a new level.”

In recent history, Australian tech stocks broadly have been subjected to a re-rating epidemic of their own, driven by the end of that other great epidemic – COVID-19. 

As at 3pm Sydney time on Thursday 14 November, Bigtincan is trading at just 17.5cps – which Keane states, in Investcorp’s view, is firmly below its intrinsic value. 

As I’ve already mentioned, in August of 2021, it traded at $1.36/sh – and there’s a clear thread painting the reason it got there. 

Hark your mind back to the early years of COVID, where there were microchip shortages for automakers as tech companies fought for the assets to boost sales of computers and hardware needed to run Zoom. 

Everybody was working from home and no business, really, was doing bricks and mortar or face-to-face contact. 

It was a very good time to be in tech – especially for Bigtincan, whose software ultimately allowed companies to pivot into remote operations. 

However, Keane cites that Australian investors may be fickle.

“It’s one of the challenges of Australia – the re-rating of tech stocks in Australia over the last few years has been really tough for our shareholders, tough for many shareholders, and I think that some of the institutions really don’t know how to react to that,” Keane stated. 

While the S&P500 has been uplifted by 7 megacap tech companies in recent history, Australia hasn’t seen such a boon for its IT stocks. We’ve got Wisetech (ASX:WTC), Xero Ltd (ASX:XRO) and NEXTDC (ASX:NXT) still valued in the tens of billions, but that’s about it. 

For retail shareholders with less than 5,000 BTH shares in their portfolio, there has been made a concession from Investcorp that could see those holders cash out for 23.5cps, or, they can pick up an international trading account – and no shortage of services offer that.

So smaller shareholders can absolutely expose themselves to the liquidity that a NASDAQ listing is sure to bring. 

“The bottom line is, any shareholder, all they have to do to get liquidity once [we] move to NASDAQ is to have an overseas trading account. It’s just like you’re holding Tesla shares,” Keane told HotCopper.

Obviously, the CEO and cofounder of Bigtincan would want to expose the company to Wall Street tier volumes.

And of courseInvestcorp, the company that wants to buy Bigtincan for cheap, would present its offer to be a good deal.

But it’s not just those parties voting yes. So too is Bigtincan T20 constituent Ingalls & Snyder, a NY-based investment manager and long-term shareholder. 

“The Nasdaq is the global home of innovative technology companies. This change in listing may lower Bigtincan’s cost of capital, be more attractive for acquiring and retaining talent and serves as a strong reference point for acquiring customers on a global basis,” Ingalls & Snyder wrote in a recent public letter favouring the deal. 

As stated earlier, BTH has received a non-binding acquisition proposal from Vector Capital at a price of A$0.22/share.

“This valuation is substantially below BTH’s US peer group and does not represent the quality of the business or its future growth potential,” Ingalls & Snyder said. 

What happens next lies with BTH shareholders. Keane hopes they’ll agree that a move to the NASDAQ is the best opportunity on the table.

BTH last traded at 17.5cps.

Join the discussion: See what HotCopper users are saying about Bigtincan Holdings and be part of the conversations that move the markets.

Disclaimer: Bigtincan Holdings was a client of HotCopper at the time this piece was written.

It was the end of an eight-day rally in the US overnight, with the S&P500 and Nasdaq shedding .2% and the Dow Jones also down about 60 points (.15%).

Volatility picked up as investors sought hints on the size of the now highly-anticipated rate cut next month.

Back home, plenty of FY24 reports are coming in…

One of the first out the gate was Cleanaway Waste Management (ASX:CWY) which posted an annual statutory net profit for FY24 nearly $135 million – or more than 570% – higher than for the previous year.  

Insurer Insurance Australia Group (ASX:IAG) reported profit up 8% to just below $900 million, and, its full year dividend is 80% up on FY23.

Pallets, crates and containers company Brambles (ASX:BXB) also reported profit after tax some 8% higher, and it’s dividend is up 30% on the previous financial year.

The Australian dollar is stronger today – its buying US67.4c.

Gold is up nearly half a per cent to US$2515 an ounce, iron ore is just above US$98 ($98.10) a tonne, brent crude has shed three quarters of a per cent to US$77 a barrel, and, natural gas is just under US$2.20 a gigajoule. ($2.19).

Some of the biggest drags included Tesla – which fell 12%; ARM and Nvidia were both down close to 8%; Visa shed nearly 4%; and, Microsoft, 3.5%.

Meanwhile Canada’s TSX lost ground after policymakers dropped interest rates by 25 basis points to 4.5%. It’s the second monthly rate cut in a row.

Back in Australia and last month’s labour force data is due out later this morning.

Earnings reports are likely to dominate headlines, with Newmont Corporation (ASX:NEM) reporting production of 2.1 million ounces of gold, it reduced debt by $250 million, and it claims it’s on track to achieve its guidance.

Fortescue (ASX:FMG) delivered record iron ore shipments of 53.7 million tonnes – which is up 10 per cent year-on-year, but Ampol (ASX:ALD) reported its fuel sales were down nearly 6% for the first half of 2024 calendar year.

Our dollar lost half a per cent, to be buying US65.8 cents.

Silver took a 1.2% slide, to be back at $28.84 an ounce; Gold also pulled back to be at US$2394.72 – despite India lowering import duties on both precious metals. Iron ore’s been trading just above $108 a tonne, brent crude recovered to $81.52 a barrel, but natural gas continued its volatility dropping 2.85% to $2.12 a gigajoule.

First announced in mid-late May, Telix will offer American Depositary Shares (ADS) on the tech-heavy bourse that sports NVIDIA, Apple and Microsoft as its crown jewels.

Each ADS will represent one ordinary share in Telix.

The underwriters of the deal have an option to acquire up to 15% of the total ADS offering, which includes Morgan Stanley, Jefferies, and two other firms.

Morgan Stanley, if it is isn’t obvious, are a pretty good mob to have around for such a thing – it’s not like they haven’t got clients who’ll be interested.

The move comes at a fortuitous time for Telix Pharmaceuticals. The company’s stock price has been the beneficiary of recent test results the market liked.

At the same time, by looking at US IPO activity, it’s clear the biotech sector broadly is having a rebound in 2024 (which I also mean to include healthcare.)

Jefferies – another investment bank underwriting Telix’s IPO – are reasonably bullish on biotech.

According to their analysts, 2024 is the best environment biotech companies have been in since early COVID, with investment coming back to the notoriously risk-on sector.

The $5.97B market cap Telix is up +14% over the last week; up +17% over the last month, and, up +63% YoY.

TLX last traded at $17.89/sh.