The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Alto Capital investment advisor Tony Locantro talks about why he loves three ASX shares in particular and his biggest regret in investing.

Cut or keep?

The Motley Fool: You've mentioned Radiopharm Theranostics Ltd (ASX: RAD) in the past, but it has now dropped about 40% year-to-date. How do you feel about it now? Would you still buy it?

Tony Locantro: Yeah, it was one of the first to lift its head off the canvas during tax loss selling. It was a 60 cent IPO that was poorly supported — fell to a ridiculous low of 13 cents during the last week of tax loss selling. It's since recovered to 23 cents. 

It is in radiopharmaceuticals. They've also added brain tumour technology. It has one of the richest pipelines of any ASX by a technology company, with multiple phase one trials for the remainder of this year and multiple trials next year.

I have bought heavily personally. I am currently underwater and really need to see the stock recover. It has been building a world-class management team, but the stock just fell out of favour as the Nasdaq Composite (INDEXNASDAQ: .IXIC) and US biotech indices underwent a significant correction. 

So the answer to that is yes, it is still great value, but was even better value a few weeks ago… No change to the fundamental view or my faith in management or the company.

The ASX share for a comfortable night's sleep

MF: If the market closed tomorrow for four years, which stock would you want to hold?

TL: Proteomics International Laboratories Ltd (ASX: PIQ).

I just think from a biotech, it's got everything going for it. It's already had a test that's proven it's now a sales exercise. They do have the upcoming pipeline and yeah, that's the one.

There is another one, but you only want one don't you?

MF: By all means, please tell us.

TL: From a mining perspective, I think Aurumin Ltd (ASX: AUN).

That's a gold company with ex-key personnel from Northern Star Resources Ltd (ASX: NST). They have purchased the sandstone project. It's about a 794,000 ounce resource. 

So they purchased a gold resource. They're looking to grow through exploration and/or acquisition. The company share price has been punished due to drilling for lithium which failed to deliver significant results, combined with tax loss selling. 

I back management to undergo a decent growth profile in those four years. They're currently undergoing a 15 cent rights issue on a one-for-seven basis with a one-for-one, 25 cent option for existing shareholders.

So I think the company has undergone some issues recently and I think these can be overcome, and I'd certainly back [the] management team to deliver. 

And one of the key aspects, I think, with any gold company that's looking to grow, sometimes you need to set the weakness to look at picking up assets that the majors don't want, and that's how Northern Star was built.

[Northern Star] was a s***ty one-cent company that went to about $15, but during the time that Northern Star grew, the Australian gold index lost two-thirds of its value.

Looking back

MF: Is there a move that you regret from the past? For example, a missed opportunity or buying a stock at the wrong timing or price.

TL: Oh, I regret not being more aggressive with selling.

I think once you start seeing multiples, we all get delusions of grandeur and the dopamine levels increase and we think that the stock's going to continue running. But history has shown that you need to take profits along the way.

You need to work out if your company would be racing in the Golden Slipper or the Melbourne Cup. Once you can classify your company, then you're going to take profits in better fashion.

But I always have the regret that I should be more assertive, and assertive with my profit taking.

MF: It's difficult for the human mind to figure out, isn't it, knowing when to sell? People find buying a lot easier than selling.

TL: Oh, geez, yeah, yeah, yeah. I've had stuff that's gone 10, 20 times, and a lot of clients won't sell because they think it's going higher. Then I try to get them to sell, and then… Yeah. 

But I guess in my sector of the market, they're exposed to abnormal gains that you wouldn't get in more conservative stocks.

The post 'Richest pipeline' in ASX: Expert names 3 small-cap shares to buy appeared first on The Motley Fool Australia.

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Alto Capital investment advisor Tony Locantro discusses two ASX shares that are ready to break out.

Hottest ASX shares

The Motley Fool: What are the two best stock buys right now?

Tony Locantro: Proteomics International Laboratories Ltd (ASX: PIQ), they're in the mid-eighties [cents]. They have developed the PromarkerD test which can pick up a diabetic kidney disease before it happens, well in advance. The science is proven. 

They just need to roll that out, [and] look at reimbursements. They've been able to manufacture 50,000 components to get that test out. 

They've announced some licensing of an esophageal cancer test as well. They're working on that. And recently, they came out with some positive biomarkers for endometriosis, which affects one in nine women, and this could lead to the world's first non-invasive test because it does take years to diagnose.

The company has some laboratory services which it provides, and the revenue matches the cash burn but you think that their expenditure will increase. The market cap is undemanding at around $85 million. Solid management that owns a lot of the company and I think it has outstanding growth. 

It's an outstanding growth opportunity in the biotech sector. 

The second stock I'm buying is a company called Maronan Metals Limited (ASX: MMA). I should disclose that I was heavily involved in the initial public offering (IPO) at 20 cents. The stock is now trading at 34 cents.

​​So, they're about to drill at the Maronan lead, silver and copper gold resource in the Cloncurry region of North Queensland. It is already a sizable resource that requires deeper drilling to expand on the 30 million tonnes at 6.5% lead. That includes a hundred million ounces of silver. They also have a separate copper gold resource that's around 11 million tonnes for 300,000 ounces of gold and some copper.

It's in that vicinity of other major mines, and it could be part of a consolidation play in North Queensland. And the company's capped around $50 million and has recently raised $15 million in its IPO. 

Again, we have extensive holdings, but it's one of these companies that has an existing resource. The grades do get better with depth, so they're trying to basically drill and increase the resource. There was a mining study completed in 2016, which showed favourable mining optics. 

So, highly speculative, but those are my two best buys on the market at the moment.

MF: With these minerals companies, are you ever worried about the cyclical nature of commodity prices?

TL: No.

MF: Because they're mainly exploratory companies that you're looking at?

TL: Yeah. 

At the moment, a lot of these mining companies are being hit with COVID issues. They've been hit with cost blowouts. A lot of the gold producers are now having to add dollars to their all-in sustaining cost. 

But my theory is that a good resource will override any commodity price or cycle. And even though they're higher risk, you're still in that exploration phase where you've got to move through DFS [definitive feasibility studies] really to get towards production.

So a big resource, I think it's going to be valued, and it should be noted that around 80% of the mines in Australia are discoveries made around 1980 or [before] that, so there hasn't been a lot of major discoveries and those that are made are rewarded with good re-ratings.

The post 2 'outstanding' small-cap ASX shares that could explode: expert appeared first on The Motley Fool Australia.

Shares in the Australian biotech company surged this morning and jumped 10% from the market open, before retreating back down. At the time of writing, Proteomics shares are trading at $1.08, up 8.04%.

The gains came following readouts from its collaborative study with Janssen Pharmaceuticals.

Let's take a closer look at what this study entailed and what it means for the company's share price.

What is Proteoimcs?

Proteomics is an Australian biotechnology and biological research company.

It has expertise in the domain of "proteomics", which is the study of the structure and function of various proteins. Hence the company name.

The company has patented a diabetes test called PromarkerD that predicts renal function in diabetes.

Drug candidate lowers diabetes test scores

Proteomics announced that its drug candidate canagliflozin reduced PromarkerD risk scores in patients with type-2 diabetes (T2DM).

PromarkerD is a blood test that accurately analyses and predicts renal function for those with T2DM.

It is the only test that can predict with a degree of certainty the onset of a condition known as diabetic kidney disease (DKD).

It, therefore, stands to reason that reductions in PromarkerD scores are an essential component in reducing the risk of DKD.

Proteomics' canagliflozin "was the first diabetes medicine with an indication to slow the progression of DKD" in T2DM in 2019.

The collaborative study confirmed that canagliflozin "significantly lowered PromarkerD risk scores" over a three-year period.

Speaking on the results, Proteomics' managing director Dr Richard Lipsombe said:

Now, for the first time, we are confirming that the [canagliflozin] SGLT2 inhibitor class of diabetes drug is associated with lowering a patient's PromarkerD risk score, and that there is a potential treatment for the at-risk patients identified by the test.

Investors seem to enjoy the company update, as its share price remains 8.04% into the green from market open.

Proteonomics share price snapshot

The Proteomics share price has posted a year to date return of 29%, extending the previous 12 month's return of 138%.

These returns have outpaced the S&P / ASX 200 Index (ASX: XJO)'s return of ~22% over the previous 1-year period.

The post Proteomics International (ASX:PIQ) share price jumps after diabetes study readouts appeared first on The Motley Fool Australia.

Shares in the biotech company were placed in a trading halt late yesterday.

Let's take a look at why the company's shares are at a halt and what it means for the Proteomics share price.

Proteomics share price halted on conference abstract

Securities in Proteomics were placed in a trading halt yesterday at the request of the company.

In a news release, the company noted that a trading halt was requested pending the release of the conference abstract.

Proteomics highlighted that the abstract outlines key findings from its second stage collaborative study to target treatment of diabetic kidney disease (DKD).

The abstract will be jointly presented by Janssen Research and Proteomics at the Australasian Diabetes Congress in mid-August.

Proteomics noted that the trading halt will remain until either a new announcement or until the commencement of trading on Friday, 16 July.

The Proteomics share price was last trading at 99.5 cents before entering a trading halt.

Snapshot of the Proteomics share price

Proteomics is a medical technology company that operates in predictive diagnostics and bioanalytical services. The company specialises in the area of proteomics which relates to the structure and function of proteins.

Proteomics' business model revolves around the commercialisation of its flagship PromarkerD product. PromarkerD functions by using a blood test to detect early onset of DKD in patients with type 2 diabetes. According to Proteomics, early detection is key in reducing the need for expensive treatment at later stages of the disease.

In previous clinical trials, it was reported that PromarkerD had 86% accuracy in predicting the number of patients that would develop CKD.

Proteomics also uses its Promarker technology platform to create a pipeline of novel diagnostic tests. The company recently received ISO 13485 certification which provides the foundation for manufacturing requirements.

The Proteomics share price has performed strongly in 2021, trading more than 26% higher since the start of the year. On a 52-week timeline, the Proteomics share price is more than 112% higher.

The post Here's why the Proteomics International (ASX:PIQ) share price is halted appeared first on The Motley Fool Australia.

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In Part 2 of this edition, Kardinia Capital's portfolio manager Kristiaan Rehder reveals 2 small-cap ASX shares with huge potential. And he explains why his fund remains bullish on CBA.

(You can find Part 1 of the interview here.)

The Bennelong Kardinia Absolute Return Fund employs a long/short strategy with the goal of making positive returns, whether the broader market is rising, falling, or flat. How did that strategy play out during the viral market meltdown and subsequent recovery in February and March 2020? 

During the meltdown last year, our stop losses came into play. Our short strategy really came into its own. We saw the strategy doing exactly what it's designed to do during periods of extreme market dislocation. That's to grow the invested capital when you come out of it, but first and foremost, to protect it in the first instance.

Our short book has never been so profitable. I've been running this strategy for 15 years. I've never seen the profits generated in such a short period of time. That really provided a huge amount of protection for our long book. That meant the Kardinia Fund only drew down 3.9% when the market fell over 36%.

It was certainly a difficult, stressful time.

The number of names on our long books collapsed. We were forced out of lots of positions through our stop losses. We were also actively selling our positions when we thought we were holding too much.

On the other side of the ledger, our short book became incredibly fat with profits.

Any observer looking in the depths of March 2020 would have seen the portfolio was unbalanced. We immediately responded to that by looking to replenish our long book.

The biggest risk was that if markets were to bounce, as we ultimately saw at the end of March, an unbalanced portfolio could cause a huge amount of damage to the underlying investors.

We were quickly moving to buy back into long positions in the quality end of the spectrum. And we moved quickly to lock in our profitable shorts so we could bring the portfolio back into equilibrium.

What was your best performing investment over the past 12 months?

Sorry to bore you, but it was actually CBA [Commonwealth Bank of Australia (ASX: CBA)].

What we recognised in March and April last year was that this was an earnings issue for the banks. It wasn't a balance sheet issue, unlike what we saw during the GFC in 2008 and 2009.

We saw [in 2020] over 10% of borrowers switching off their interest and principal payments and deferring payments for 6 months. That put a huge amount of pressure on the banks. But the government came out with the JobKeeper initiative to allow a lot of businesses to stay afloat. And then you saw the quick response by central banks. So the banks weren't going to go bankrupt.

That's when we entered CBA.

What's your outlook for CBA and bank shares more broadly now? 

We think asset growth is looking very favourable for the banks in this market. We've seen business in the large institutional lending side of things; strong credit growth; we've seen M&A [mergers and acquisitions] really starting to pick up. But we think that's just the tip of the iceberg. There's a lot more [M&A] coming.

The owner-occupied housing credit growth, based on the last data we saw, shows credit growth running at 6-7%. Owner-occupied is so important because 55% of all mortgages and 41% of all loans are written by owner-occupiers. It's the real engine in the housing market and growing incredibly strongly. And we're starting to see investor demand for credit starting to pick up as well.

The most exciting, I think, is the capitalisation of the banks.

CBA has a tier-one core capitalisation ratio of around 13%. We calculate that it translates to about $10 billion of surplus capital that's going to be returned to shareholders in the way of dividends or buybacks. And I think that's going to start this year.

A huge amount of capital return is going to find its way back into shareholders' hands. So we have a very positive outlook towards CBA and the banks in general.

Atop the banks, can you offer a few ASX shares you think our readers should consider adding to their portfolios?

There are a lot of good companies out there with strong prospects.

One name at the smaller end of the spectrum to keep an eye on is Proteomics International Laboratories Ltd (ASX: PIQ). It's very small, with a market cap of around $120 million.

They've developed a test to predict diabetic kidney disease. Approximately 40% of diabetics go on to develop diabetic kidney disease [DKD]. The issue with DKD is that most sufferers are asymptomatic when their kidneys start to fail. They often don't present with any kidney issues until it's largely irreversible, leading to dialysis or a full kidney transplant. DKD is costing the US Medicare system around $40 billion a year.

Proteomics' test can predict whether a sufferer is actually going to contract DKD with an 84% predictive measure before it starts. So that's a very interesting company that is looking to commercialise their product within the next 12 months.

One other, which most may not have heard of before, is Neometals Ltd (ASX: NMT).

The business is run by Chris Reed and his father. They've had a very successful mining career in WA, and they collectively own 10% of the company. They owned [a stake in] the Mt Marion Mine, a lithium mine, which was recently sold to Mineral Resources Limited (ASX: MIN) for over $100 million. They returned that capital back to shareholders.

And they've developed a process to recycle lithium batteries. This is going to be a big issue. In Europe, most of the discarded batteries are incinerated, where 90% of their mass is released into the atmosphere. Volkswagen alone is estimating they'll have 1 million tonnes of discarded batteries by 2030.

Neometals has a solvent extraction process which can extract key commodities from the batteries — lithium and nickel being the 2 most valuable. Through their process, they are one of the lowest global cost producers of lithium and nickel.

They've developed a successful pilot plant and are in the process of building their demonstration plant, which is only 2 months from completion. Then they'll move straight into commercialisation.

The post 2 small-cap ASX shares with huge potential: fund manager appeared first on The Motley Fool Australia.

At the market close today, shares in the medical technology company were right back where they started, trading at $1.18. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is 0.02% higher.

Today's price movement comes as the company announced one of its products received ISO certification.

ISO Certification

In today's release, Proteomics International advised it has received ISO 13485 certification. ISO certification is an independent process that gives assurance a product or service "meets specific requirements".

The company said achieving certification would aid it in commercial discussions going forward with global diagnostic companies. It also believes the certification will "widen" the market for its PromarkerD test and make it easier to achieve regulatory approval around the world.

The PromarkerD test is used for the early detection of chronic kidney disease (CKD) in patients with type-2 diabetes. According to Proteomics, clinical studies showed 86% of patients with type-2 diabetes went on to develop CKD within 4 years.

PromarkerD tests are manufactured in Australia under licence. The company is anticipating demand for the product to boom worldwide. Recognising this, Proteomics says it is in discussions with several manufacturers in the northern hemisphere "with the objective of streamlining the future production". 

Proteomics managing director Dr Richard Lipscombe welcomed the progress, saying:

The ISO 13485 manufacturing standard provides the foundation to regulatory requirements for medical diagnostics and has been adopted by markets including the European Union, Australia, Japan, Canada and, most recently, the United States.

Proteomics share price snapshot

The Proteomics share price has increased 280% over the past 12 months and is up 51% year-to-date. At the same time, it has fallen 13% since achieving its all-time high on Monday.

Proteomics International has a market capitalisation of $129.7 million.

The post Why the Proteomics (ASX:PIQ) share price is flying 5% appeared first on The Motley Fool Australia.