1114 replies to this topic

[Sugafoot]

Wescoal
Anyone know why such a big pull from Wescoal today?

[JLFB]

 

 Liquidity is a problem for small caps, Shortboys recommendations I studied and comment as follows:

 

ISA's total trade for Thursday 2014-05-15 was 19,000 shares / 15.39k, this moved the market up 3.7% for the day, Friday 2014-05-16 was 75,633 shares / 60.104k which moved the market down 3.7%.

Say you wanted to buy 34k of shares to optimize the trading costs how would you have achieved this on Thursday without chasing the price up, similarly when you want to sell it is just not possible to off load efficiently without knocking the price down, this is clearly reflected in the share charts, whenever the graphs look like a series of Table Mountains with lots of flat tops and bottoms this is indicative of an illiquid share.

 

However much I might be tempted to buy a small cap, because of dealing costs it is inadvisable to buy below 34k, which is a bit much for a flutter, half that would be closer to a comfortable number but the trading costs then make it unworkable as well, so Nah.

 

Some finger trouble with the numbers previously, which I have now fixed.

 

 

I agree with you from a trading perspective (short-term buying and selling). But if you were investing on a longer term based on fundamentals and potential growth then ST fluctuations and liquidity does not really influence the decision much. Sure, the risk is extremely high but its worth the potential returns if it comes off.

 

Key is to do your homework; understand the company, its vision and management's capabilities to execute that vision. The temptation with small caps is to pick the next Capitec (1000%+ growth shares).

[M e r l i n]

Forgive me for labouring the point, but here it is:

ISA moved up 8.7% today which is fantastic, but here's the rub, on only 13,820 shares / R11,747-  

 

Nice but still not for me

[M e r l i n]

Forgive me for labouring the point, but here it is:

ISA moved up 8.7% today which is fantastic, but here's the rub, on only 13,820 shares / R11,747-  

 

Nice but still not for me

[M e r l i n]

 Liquidity is a problem for small caps, Shortboys recommendations I studied and comment as follows:

 

ISA's total trade for Thursday 2014-05-15 was 19,000 shares / 15.39k, this moved the market up 3.7% for the day, Friday 2014-05-16 was 75,633 shares / 60.104k which moved the market down 3.7%.

Say you wanted to buy 34k of shares to optimize the trading costs how would you have achieved this on Thursday without chasing the price up, similarly when you want to sell it is just not possible to off load efficiently without knocking the price down, this is clearly reflected in the share charts, whenever the graphs look like a series of Table Mountains with lots of flat tops and bottoms this is indicative of an illiquid share.

 

However much I might be tempted to buy a small cap, because of dealing costs it is inadvisable to buy below 34k, which is a bit much for a flutter, half that would be closer to a comfortable number but the trading costs then make it unworkable as well, so Nah.

 

Some finger trouble with the numbers previously, which I have now fixed.

Edited by M e r l i n, 18 May 2014 - 09:59 PM.

[M e r l i n]

 Liquidity is a problem for small caps, Shortboys recommendations I studied and comment as follows:

 

ISA's total trade for Thursday 2014-05-15 was 19,000 shares / 15.39k, this moved the market up 3.7% for the day, Friday 2014-05-16 was 75,633 shares / 16.104k which moved the market down 3.7%.

Say you wanted to buy 34k of shares to optimize the trading costs how would you have achieved this on Thursday without chasing the price up, similarly when you want to sell it is just not possible to off load efficiently without knocking the price down, this is clearly reflected in the share charts, whenever the graphs look like a series of Table Mountains with lots of flat tops and bottoms this is indicative of an illiquid share.

 

However much I might be tempted to buy a small cap, because of dealing costs it is inadvisable to buy below 34k, which is a bit much for a flutter, half that would be closer to a comfortable number but the trading costs then make it unworkable as well, so Nah.

[Shortboy]

My picks are Diamondcorp (DMC) and ISA (ISA). Have been invested in both for 1 year and 3 years respectively - buy and hold plays.

 

DMC has had a ghastly time over the last 5 or so years (I bought close to the bottom). It has however significantly de-risked itself and looks well on track to deliver on its project by about this time next year. If you like diamonds have a look. You can read the full story in their sens/aim posts to get the background. It used to be around R15 a share when it was a just a business plan, its now around R1.11 a share and is almost a fully operational mine and good to go. Quoted on Altx and AIM. see http://www.diamondcorp.plc.uk/home

 

ISA is a small company that specialises in IT information security (counter hacking and customer system and data protection). It pays good dividends, watches its costs, is always profitable, never has bank debt, is cashflow positive and on a div yield of about 6.5%. Good results are due in the next week or so. They are perfectly positioned to take advantage of the new POPI law which every business in SA will, like it not, have to comply with. 

 

As a 10 bagger? DMC is probably more likely to make it once it has dispelled the fear and distrust of erstwhile burned shareholders. ISA is a solid little company in a soon to be great business environment.

[vlam]

Good points, thanks longterm413

 

[longterm413]

Not sure how wise it is to invest in small caps over the coming years. Yes the markets will continue to go up for a while and reach record highs, buts it's only a matter of time before they crash....and when they do, it's the small caps which will suffer the most. The combination of bankruptcy effects on illiquid high debt small caps (as a result of increased interest rates) and an over pessimistic market will crush the small caps in your portfolio. Small caps are better suited during a market recovery when interest rates fall and investor confidence returns. During a recession, when investors become negative, the first shares they sell are their riskier investments which most of the time include their small caps. So although the markets may continue to rise for the next year or two I'd be careful about putting my money into small caps. I suggest rather saving your money for the next market crash - which will offer you quality companies at bargain prices....After all, "Cash is king in troubled times" - WB

Just my 2c

[Mr.Balls]

Anyone following PGL? See Wiese buying a lot of shares

[gamma]

OLG making a nice little run here

 

 

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[Queen B]

Hi Sugafoot.  Below is a list of the shares I currently hold in my portfolio. Will post a more detailed version in the "Post your Portfolio" thread:

 

ADI

 

AVL

 

ABL

 

ADW

 

BSS

 

CML

 

DRD

 

ESR

 

FGL

 

FSR

 

GLN

 

GFI

 

GPL

 

HLM

 

JBL

 

KEH

 

MTA

 

MIX

 

POY

 

PPE

 

SCL

 

SNV

 

WSL

[battleship]

In view of the developments at African Dawn(adw) and the huge price increase and volumes in recent days,do you not see them as a speculative punt with the possibility of high returns?

[battleship]

In view of the developments at African Dawn(adw) and the huge price increase and volumes in recent days,do you not see them as a speculative punt with the possibility of high returns?

[Sugafoot]

Queen B, can you post your portfolio?

Quite interested

[Queen B]

Hiya Rosh

I'm going to be keeping SNV for long term. I expect it to go to R2.00 and well beyond

As for AVL, I'm considering taking a punt. Should have got in early at R1.25 this morning

[Rosh]

How long would you guys hold on to Santova? Their final estimate is going to release on the 20 May. 

 

I see AVL is now sitting at R1.45. I am a bit skeptical do you think its worth a long term punt?

[Queen B]

Yeah its crazy! A lot of upside for SNV with the way they are going. Im up 60% on this one

My best other 2 shares have been POY and ADI - both up over 100% in less than 6 months

[HendrikB]

Good Trading statement from Santova today:
"Shareholders are advised that Santova expects Group headline earnings per share for the
financial year ended 28 February 2014 to increase by between 35% and 45% and Group
basic earnings per share for the financial year ended 28 February 2014 to increase by
between 20% and 30%, compared to the results reported in the previous corresponding
period."

what a beauty. Im up 75 % for this share in just 4 months. Ridiculous.

[Queen B]

Good Trading statement from Santova today:

"Shareholders are advised that Santova expects Group headline earnings per share for the
financial year ended 28 February 2014 to increase by between 35% and 45% and Group
basic earnings per share for the financial year ended 28 February 2014 to increase by
between 20% and 30%, compared to the results reported in the previous corresponding
period."