With all the crazy events going on around the world, many ASX shares have been hammered this year regardless of how the underlying business is going.
And that's exactly the disappointment Cyan portfolio manager Dean fergie relayed to his clients in a memo this week.
"Market sentiment, in the short-term, is a powerful force and the recent inflation fears (and associated rate rises), exacerbated by the invasion of Ukraine and the uncertainty and concerns around energy prices and the potential economic impact, has created almost the perfect storm for many of the fund's holdings."
However, Fergie told his clients that short-term shocks like this still doesn't shake his longer-term faith in the stocks that he's backed.
"In times of turmoil, it is valuable to focus on the underlying operational performance of our investments, particularly when the disconnect between the share prices and business performances has been stark," he said.
"We remain particularly positive given the optimistic results recently released."
Fergie examined 3 ASX shares that plunged in February despite the company performance still remaining strong:
Drink away the world's woes
Shares for craft drink provider Mighty Craft Ltd (ASX: MCL) fell a hair-raising 18% over last month.
Fergie noted that this freefall happened at the same time as it reported spectacular numbers.
The first-half saw revenue of $30 million, which is up 132%, and a "wildly successful launch" of its Better Beer brand.
"With the economy reopening and increased scale of the business post its acquisition of The Adelaide Hills Group, the company moved into profitability in the last quarter of the calendar year — a milestone that looked a pipedream only a few months ago."
According to Fergie, that was not just a fluke half and the outlook remains strong.
"We continue to back management to deliver on their aggressive growth ambitions which include posting revenues in excess of $70 million for FY22," he said.
"Despite these important financial milestones being achieved, the share price did not, in the short-term, reflect the company's underlying achievements."
Mighty Craft shares closed Thursday at 30 cents, which is almost 30% down from the start of February.
Wealth managers in the firing line
Fergie has publicly backed micro-investment platform Raiz Invest Ltd (ASX: RZI) for a while now.
Similar to Mighty Craft, the company reported excellent numbers in February but the share price sunk like a stone.
"Investment platform business Raiz delivered strong growth metrics period-on-period, including active customer growth of 73% to 595,000, funds under management growth of 71% to $1 billion and group revenue growth of 77% to $9.3 million (the vast majority of which is recurring)," said Fergie.
"Again, this was not reflected in share price movement with the stock falling 17% in February."
He suspected general market sentiment went against listed fund managers, with huge selloffs seen in sector stalwarts Magellan Financial Group Ltd (ASX: MFG) and Pinnacle Investment Management Group Ltd (ASX: PNI).
Raiz shares closed Thursday at $1.14.
The software maker that set a new company record
Healthcare software provider Alcidion Group Ltd (ASX: ALC) reported "solid" half-year results, according to Fergie.
But guess what, its share price plunged 17% in February.
Fergie noted the contracted revenue of more than $27 million was a company record, despite COVID-19 delaying purchasing decisions in UK hospitals.
"As such we expect some material short-term catalysts by way of new contracts out of the region," he said.
"Alcidion is building a very strong position in the healthcare industry which is expected to rapidly expand as the digitisation of the healthcare industry accelerates."
The Alcidion share price finished Thursday at 18 cents.
Deals galore in February, but share price didn't match the news
Fergie has also been a longtime fan of games developer Playside Studios Ltd (ASX: PLY), which saw its shares lose 9% in February.
Again, Fergie is consoled by an excellent half-year report.
"This Australian-based game developer delivered a great interim result which clearly illustrated its strong growth and a healthy outlook," he said.
"Revenue grew 61% half-on-half to $9.4 million."
In the same month, Playside revealed it booked $8.4 million in revenue in just one week after it launched Beans NFT.
"Further good news was released when Playside signed a material work-for-hire contract with Activision Blizzard Inc (NASDAQ: ATVI), one of the world's most successful interactive entertainment companies and maker of iconic games such as Call of Duty, Overwatch, Guitar Hero and Candy Crush."
The share price movement in February confounded Fergie.
"Through the month the share price of PLY rallied from $1.02 to $1.40 before, disappointingly, ending the month at $0.93 — a head-scratching outcome given the materially good news."
Playside shares closed Thursday at 94 cents.
