Stock market

2 shares in today’s stock market I wouldn’t touch with a barge pool.

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Despite the improvement in investor sentiment, I still see few places to invest in the stock market. But there are also stocks that I avoid like the plague. Here are two of them.

A flurry of concerns

Hypgnosis Songs Fund (LSE: SONG) is one. FTSE 250 The investment trust focuses on music royalties. It has a portfolio of around 40,000 songs from a wide range of artists including Blondie, Shakira and Neil Young.

In theory, I like the idea here. Music royalties usually provide a steady stream of income over time. It originates from a variety of sources, including radio, advertising and streaming services Spotify.

However, in reality, the fund has been a big disappointment so far. The stock has fallen 34% since listing in 2018 and there is continued uncertainty about the true value of its intellectual property.

To help clean things up, the company last year hired banking firm Shot Tower Capital to do due diligence on its assets. It found the fair market value of the fund’s song catalog to be $1.9bn. That’s down 26% from what the fund reported back in December.

Additionally, Shot Tower’s analysis shows that 67 out of 105 acquisitions made by the fund are worth less than the price paid.

Now going at today’s 68p share price, the latest portfolio valuation suggests the fund is undervalued by around 20%. I imagine bidders will eventually come out for some of his hits. So maybe it’s worth pursuing here.

However, the fund said it would not pay a dividend.For the foreseeable futureAs it focuses on paying down its $674 million debt pile (as of September). Ouch!

Basically, this whole thing has become a royal mess and I want no part of it.

Another meme stock

Another stock I wouldn’t touch with a 10 foot barge pole. Trump Media and Technology Group (NASDAQ: DJT).

The company runs Truth Social, an alt-tech social media platform associated with former President Donald Trump.

It completed its merger with Special Purpose Acquisition Company (SPAC) and started trading on March 26. A SPAC is an entity listed on the stock market that holds cash and merges with a private company.

Currently, the share price is $46.

A plus point here is that Trump Media now has over $200 million in the bank and no debt after this merger. It can use that cash to grow subscribers and revenue.

It will be needed. The company generated just under $4.1m in revenue last year, while it suffered a loss of $58.2m. And the latest statistics I have suggest about 5m monthly active users on Truth Social after 26 months of existence. It’s not much for social media.

Then again, perhaps it’s not surprising that it aims to provide “Home Canceled content for creators“It seems somewhat of a niche market to me.

After all, we have a company that generated $4.1m in sales with a mark cap of $6.3bn.

This means the stock is trading at a price-to-sales (P/S) ratio of around 1,000. And that puts it in speculative meme stock territory. History shows that this is not an attractive place to invest.

Needless to say, I think there are much better stocks for me to buy and hold in April.


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