Investing in shell plays has always been a favourite past time of mine however this kind of investing has become a lot more popular recently. Reading the online forums there is many discussions on which stock will be the next to fly on announcement of a new resources project acquisition. Frequently I read and are amused at coments such as 'it will be the next ten bagger!' Having said that, there is good money to be made and a couple of different strategies to be deployed. It's taken me a while to collate the information as some of the obscure plays are really hard to find but I'm happy to share my research with each of you!
It must be stressed that this kind of investing is extremely risky. I don't want anyone to be under any illusions, do not go and put your life savings on the stocks I am going to mention.
In my opinion there is two ways of investing in shell companies. Firstly there is the patient, slowly accumulate at low prices and sit tight method. This method involves considerable time sitting and waiting. After taking a position it may take months and months for something to happen. It is characterised by a stock that is unloved, very rarely trades (even for days) and has little to no interest. The stock is usually under a cent per share and nobody posts anything about the stock on online forums such as HotCopper. This kind of investing has the potential for much greater rewards if it comes good as there is much higher share price appreciation.
The other method in my opinion is to get on the stocks that have been shells for sometime but are starting to fire up. This is characterised by increasing volume, interest in the stock and especially comments online. The advantage of this method is that something is going to happen sooner for the company however you may have already missed a bit of the run up in the share price.
It's all a bit of a time versus money type decision.
So stay tuned over the next couple of days as I release the results of trawling through all those company quarterly reports for that elusive comment 'we are evaluating numerous projects, possibly in the resources sector locally and abroad to deliver shareholder value'!!
Hi - have you had a look at ACU? Cheers
ReplyDeleteHi Roberto, yes I posted about ACU on my blog in late January!
ReplyDeleteWow can't believe I didn't find such a useful resource earlier!
ReplyDeleteAre most posts current though?
And thanks for your information. I might have seen your posts on HC but not sure who you were lol
Hi Anonymous, I try to write 2-3 quality posts a week. If you are interested in a particular company the best thing to do is click on it in the right hand margin and then check the date of the post.
ReplyDelete