by Travis Johnson, Stock Gumshoe | June 13, 2012 1:09 pm
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Why is LNAFF at $0.15 and LONR.L at $9,22? Can both be right?
Sorry.
Why is LNAFF at $0.15 and LONR.L at $9.22? Can both be right?
Yes, though maybe not to the penny. London trading is in pence, 9 pence is somewhere near 15 cents.
Now, why did I not think of that?!
Thanks, Travis
Prof –
Don’t feel bad.
Da Gumshoe fools all of us at times
Gumshoe says Lonhro is one of his major positions, a top-ten holding for him personally. If I wanted to do the same, how many shares would he suggest I buy and up to what price?
Sorry Prof., if I answer that kind of personalized question the SEC will storm Gumshoe Mountain with torches and pitchforks.
I can tell you that Lonrho is currently in my personal top ten equity positions by size, that my purchase price is pretty close to where it is now (within 10% or so), though I’ve bought a few times over the last three or four years, and that although I think Lonrho will show a jump in profitability next year and potentially a dividend starting next year, I still consider this to be a multi-year speculation that they’ll be able to turn the investments they’ve made over the last five years into an enduring grower built on African agriculture and energy exports and the associated services required by those industries. And yes, they’ve still got plenty of risk — particularly from a swashbuckling and probably overpaid management team overreaching or overinvesting — I don’t want them squandering too much money on the airline, and I will be watching carefully to see how much capital they commit to the new oil services port they may be building in Ghana.
What I was after was guidance on the following kind of question, Wih LANFF at 15 cents, every 10,000 shares costs $1,500. It is hard to build up an investment position worth initially, say, $9,000 as that requires something like 60,000 shares. More generally, positions in penny stocks cannot be acquired all at once, can they?
They can be, but not necessarily easily. This one is quite illiquid on the pinks, it may be worth calling a broker to buy the shares in London — or at least find out what the commission hit might be. I’ve bought Lonrho on the pinks and direct in London (through Interactive Brokers), and you definitely get better price and fill in London. If you do trade the pinks, make sure to do it when London is open to improve your odds.
Michael, you are right. Look at the average volume of the penny stock, and based on same you can get an idea as to how big an order you should put in. If a thinly traded penny stock of say 100.000 shares a day, I will normally prefer to trade in lots of max 10-20% of that – I.e. 10-20.000 shares. That way you will not affect the volume/price TOO much.