Strategic Elements Share Price up on Intriguing AI Push

At time of writing, Strategic Elements Ltd’s [ASX:SOR] share price is up 25%, trading at 5.5 cents.

After a surge in October last year, Strategic Elements share price has spiked sharply in the last 30 days:

ASX SOR Strategic Elements Price Chart


Strategic Elements is a Pooled Development Fund (PDF). Today, it announced the launch of a new Artificial Intelligence (AI) and robotics company which clearly excited investors.

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Strategic Elements provides ‘high level overview’ of new company

Strategic Elements share price surged when the market opened, with the announcement released before trading commenced.

Despite the company’s announcement only being a ‘high level overview’ of the wholly owned Stealth Technologies venture, noticeably investors are eager to hear more about their projects in the coming months.

This is how they pitched the new operation’s personnel:

Over the past six months Stealth has built an experienced in-house team of international award winning PhD and Masters qualified research engineers with deep capabilities in AI, machine learning, automation, computer vision and robotics (hardware and software).

And this was the punchline:

[Stealth Technologies] has recently commenced commercial discussions. Further information on partnerships and commercial engagements are expected to be released within this current third quarter of 2019.

Strategic Elements’ Managing Director Charles Murphy had this to say about the venture:

Stealth technologies has been positioned higher up the valuation ladder than other companies in this sector due to its dual capabilities in both hardware and software development. In anticipation of near term events, we have expanded the engineering, operations and business development team within the Company.’

But what exactly will be Stealth Technologies main area of business?

The overview says that the company is developing propriety Computer Vision technologies.

This is in essence a process that seeks to replicate and improve on human visual analysis.

What’s the outlook for Strategic Elements?

As a PDF, the company receives a tax break from the government where it only pays 15% tax on income and capital gains derived from equity investments in Small and Medium Enterprises (SMEs).

PDFs were designed by the Aussie government to increase investment in SMEs, and cannot invest in retail or property.

PDF shareholders are exempt from tax on income and gains received from holding and selling PDF shares.

The program closed in 2007, but PDFs continue to operate under the rules set out in the Pooled Development Funds Act 1992.

Going forward, the announcement notes that further news will be released, so you can expect them to fill us in more on the Computer Vision tech they are working on, as well as how they intend to profit from it.

It is worth noting that in their quarterly report (which was also released today), they currently have $2.9 million in cash and cash equivalents, so it is conceivable they may opt for a three-step process.

  1. Provide further info about the technology
  2. Detail commercialisation plans
  3. Go to investors for a capital raise

After strong surges in small-cap stocks like Strategic Elements, it is not uncommon to see a pull back in the share price as people cash in on the gains.

And until revenue starts to come in, it is difficult to get a read on their potential valuation.

We will be watching this stock closely and update you when more news becomes available.


Lachlann Tierney

For Money Morning

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Lachlann Tierney is an Analyst for Money Morning and has been investing for nearly a decade. With a Masters of Science from the London School of Economics, he brings a sound understanding of global markets to his writing. Lachlann is interested in emerging technologies, energy solutions and helping people invest their money wisely. Recently he has been working with Ryan Dinse. Lachlann is involved in two publications:

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