Skip to main content
Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
Hi Bob,

... would this amount affect the price greatly do you think ?


It's anybody's guess. I said it's more of a gamble than an investment.

An earlier poster recommended reading the company statements on the ASX website. Did you do that? You should.

Last year. this company was trading as low as about six cents per share. Yes, that's $0.06! It was generally around forty cents. It rose to about $1.60 in March, this year, following the announcement of the purchase of Moneyguru. By April, it was back to forty cents. Lots of tech stocks did the same thing at the time.

It seems to me that the current price probably already reflects the value of the investment in Investorguru, Rectory and the maize farming in Bulgaria, etc. IMHO, the opporetunity for a quick buck has already passed. If you know something the market does not, about the earning potential of those investments, that could change the assessment, of course.

There are two other dangers with these stocks you need to be aware of, too. They are: Buy/Sell spread, and volume.

First, volume.
This company is not as bad as some, but last Friday, its entire day's trade totalled less than A$5000. So you can't necessarily make large profits. If you are trying to sell several thousand dollars' worth, you could be the only seller, and therefore likely to force the price down by yourself.

Buy/Sell spread
This is the difference between the best offer to sell, and the best bid to buy. With large companies,there is so much volume and so many players that this difference is negligible.

With Newland, its last sale was forty-one cents on Friday. But you can't get that price now. The best bidder is thirty-two cents. If you wanted to buy, the lowest offer is forty-four cents. That's a buy/sell spread of twelve cents. So if you bought now, the best price you could get immediately would be about a 30% loss!

That's not to say that a $25 million investemnt in a $11 million dollar company wouldn't affect the price. Much would depend on the earning power of those investments.

Still sounds like a gamble to me. I agree it would have been nice to have bought it for six cents in May last year, or even forty cents in December. If you then sold it for $1.60 in March, you'd probably be pretty happy with yourself. Can you do that now? I'm not so sure. Maybe you can see some sign of a breakout in its current chart. If you can, you are better than I am. I can't see it.

That's about all I can offer.
Good luck,

Chris

Print the post  

Announcements

When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.