KUALA LUMPUR (Nov 7): BTM Resources Bhd's shares surged 6% after The Edge Research said the shares of the timber company have momentum.

BTM rose 1.5 sen to its intraday high of 27.5 sen at 10.11am with 13.43 million shares done. The current price translates to a market capitalisation of RM31.77 million.

The Edge Research had featured BTM as a "Stock with Momentum" based on algorithm, in a report published in The Edge Financial Daily today.
 
It is also the first "Red Flag" stock in the column so far.

"Red Flag" stocks are identified  as those with weak fundamentals coupled with an increase in trading momentum. It is  to caution investors on the counter's high-risk level.

"There is no fundamental reason for this rally as far as we can see," Edge Research had said.

Financially, BTM's net loss widened to RM847,000 in its second financial quarter ended June 30, 2014 versus a net loss of RM19,000 a year earlier.

For the six months, the company's net loss expanded to RM2.56 million from a net loss of RM548,000 in the previous corresponding period.

The Edge Research said BTM's share price and volume rise started after the listing of 81.46 million rights shares and 32.58 million warrants.

"With the price surge, the rights shares and warrants are now both in the money. The free warrants fetched 17 sen yesterday, with 15.4 million units traded

"Despite weaker financial performance, BTM saw a surprisingly high oversubscription rate of 21% for its rights shares," The Edge Research said.