penny shares

[vetten]

hello people,

I`m interested in trading the few very low priced shares in the order of under 0.20.
If a share is trading at say 0.06, what is the next step up or down?
Is that different if a share is trading at 0.20?
Where can I find a list of shares trading below 0.20?

company warrants (not covered warrants)
where can I find a list of those company warrants currently trading?

Thank you all for taking part and a happy and prosperus 2005 :cheesy:

 

[LION63]

You could choose to do it manually which would mean you pick up a copy of the Financial Times and scour the share prices. The alternative would be subscribing to something like the Penny Share Guide. There is also a magazine called Warrant Alert that you could subscribe to in order to obtain the information about Warrants (prices, premiums, expiry dates etc.).

As for your question about the next step up or down from 6p (I am assuming that you are referring to UK traded shares), they can go to 5.75p, 5.5p, 4p or even 0.1p on the downside or 500p (dreams are made of these ones). One thing that we must consider when 'investing' in such companies is that a £500 investment is the same regardless of the share price; in other words, a 25% loss is a 25% loss.

One has to be prepared to sit things out, the shares might mark time for about 3 months and all of sudden ......pop.

 

[vetten]

Thank you Lion for your speedy answer.

Yes, I do mean UK shares............but the prices I`m talking about is 0.06p and 0.20p
so what is the next price up or down from these prices?

thanks

 

[LION63]

Where do you expect to find these and how many of them are likely to be in existence? The best place to find these would be the Financial Times as the Penny Share Guide would be a waste of money. At worst, the shares could go to zero but then remember, £500 investment dropping to 0p is a 100% loss; on the other hand, if you buy them for 0.15p and they rise to 1p you will make 566% profit.

The next leg up will be determined by corporate activity, if the company are to be used as a cash shell or acquisition vehicle, you are in the money. Otherwise, you will find that they will have no business of note to write home about and very little future prospects.

In the event that you have access to Teletext; go to BBC1, click on pages 221 - 232. The share prices are listed in pence and you will find a few that match the price range. Also go to CH4 pages 521 - 526 and repeat the exercise. You will also find some warrants listed and you will be able to compile a list.

 

[LION63]

MOS International 0.75p; JAB Holdings 0.25p; Millwall (football club) 0.25p; Legendary 0.25p; Maverick Ent 0.25p; Mercury 0.5p; Ashdene 0.5p; Azure 0.25p and the list goes on.

Amberley Warrants; Ashdene Warrants; Crown Corp Warrants etc.

Quite frankly, I am amazed that there are so many of them out there.

 

[trendie]

penny shares have a relatively wide bid-ask, dont they ?

a share at 200p may trade at 200-205.
( a £200 investment would have to increase by 2.5% to break even, excluding broker costs ).

a share at 20p may trade at 20-23.
( a £200 investment would have to increase by 15% to break even, excluding broker costs ).

also, penny shares, may not have enough liquidity.
you can certainly BUY shares. but , when it comes to selling, are there enough mugs to sell to ?
Liquidity would be a key issue.

Also, thinly trades shares are open to manipulation ( pump and dump ) etc.

Also, penny shares may possibly only be listed on the AIM market.
( this may not be a problem for some, but I prefer some regulation etc )

Apart from the above, GO FOR IT !!

 

[LION63]

Trendie

You have listed the most salient points when it comes to trading penny shares, especially if they are less than 1p. It does not really matter how we want to dress them up, they are an out and out gamble. Would you agree that they are the equivalent of me backing a 500- 1 shot in the Grand National? My horse has to negotiate the 30 or 40 fences; get the trip and finish ahead of the other runners. Form? It does not have any to speak of or it would not be a rank outsider. On the plus side, if I bet small amounts I might eventually pick a longshot that wins or gets a place.

Likewise, these companies have nothing whatsoever to commend them and no amount of research is likely to yield positive results. Hypothetically, if an individual has a monthly target of £2,500 trading profits and achieves say £3,000; he/she can easily divert the excess of £500 to speculation of this nature without any REAL downside. To increase one's potential prospects, this can be divided into 2 or 3 positions.

 

[clandestino]

Trendie

You have listed the most salient points when it comes to trading penny shares, especially if they are less than 1p. It does not really matter how we want to dress them up, they are an out and out gamble. Would you agree that they are the equivalent of me backing a 500- 1 shot in the Grand National?

I was about to say "No, I don't agree...if your horse loses the race, you lose all your money. At least with the penny shares you still have the equity."

But then it dawned on me....you can't just cash these things in and get your investment back...You have to say "bye, bye" to a sizeable chunk of it, even when the value hasn't decreased.

So, I agree - they are a big gamble, & should be treated as such.

 

[vetten]

thank you all for your contribution.

I assume the LSE, AIM and OFEX have price rules for their shares.
In Australia the lowest a share can go is 1/10th of a cent = $ 0.001
price steps are 1/10th of a cent, so the next price up got to be $ 0.002

In the US the lowest a stock can go is 1/100 of a cent = $ 0.0001
price steps are 1/100 of a cent,so the next price up got to be $ 0.0002

What can the lowest possible price be on LSE, AIM and OFEX?
and what are the next price levels up?

I notice that the people here are a lot more helpful than the guys in the US.
I for one like that..........keep it up! :cheesy:

 

[LION63]

Price rules do not exist for shares traded in London, they are and can be whatever the quote is.

 

[atoone]

This site gives a good account of who and who should not invest in penny shares : Key Facts Of investing in Penny Shares

 

[Speculation]

Penny share trading is by far the quickest way to LOSE money. It's all well and good that the last trade for your stock suggests a paper profit, but as the other posts have suggested there is not likely to be any sizable liquidity in the market. This means that you will be waiting forever and a day to get rid of your 50,000 x 1p shares. You're much better off betting on companies with robust business models and reasonable expectations of earnings growth in the small cap space - personally I wouldn't touch anything with median historical daily trade value of less than £20,000 per day.

 

[theanalyst]

Penny share trading is by far the quickest way to LOSE money. It's all well and good that the last trade for your stock suggests a paper profit, but as the other posts have suggested there is not likely to be any sizable liquidity in the market. This means that you will be waiting forever and a day to get rid of your 50,000 x 1p shares. You're much better off betting on companies with robust business models and reasonable expectations of earnings growth in the small cap space - personally I wouldn't touch anything with median historical daily trade value of less than £20,000 per day.

penny stocks are risky, but i believe they arent the quickest way to lose money...maybe highly leveraged forex trading can take over it easily... anywayz..

it all depends on ur investing style and ur risk profile... penny stocks are different from normal stocks becoz therez usually an 'IF' attached to the robustness of their business model and earnings growth... this is where the smart investor/analyst comes in...analyzing that 'IF' is challenging and highly rewarding...but with experience and extensive knowledge, i believe u can pick more good penny stocks than bad onez...

why not do a small exercise...letz pick a penny stock of ur choice and then analyze its 'IF' in detail...if not for anything, letz do it for the sake of knowledge n some experience...

 

[Speculation]

Lets look at ABH [Angel Biotechnology]

penny stocks are risky, but i believe they arent the quickest way to lose money...maybe highly leveraged forex trading can take over it easily... anywayz..

it all depends on ur investing style and ur risk profile... penny stocks are different from normal stocks becoz therez usually an 'IF' attached to the robustness of their business model and earnings growth... this is where the smart investor/analyst comes in...analyzing that 'IF' is challenging and highly rewarding...but with experience and extensive knowledge, i believe u can pick more good penny stocks than bad onez...

why not do a small exercise...letz pick a penny stock of ur choice and then analyze its 'IF' in detail...if not for anything, letz do it for the sake of knowledge n some experience...

My view on biotech and indeed research / intellectual property creating companies that don't have operating models i.e. don't generate revenue, is that what you are betting on is:

1. That research uncovers a potentially marketable drug
2. A biotech with a potentially marketable drug, once discovered, is a bet on navigating the clinical trials process.

Therefore there are 3 phases during which such stocks may appreciate in value. The first phase is research uncovering a potentially marketable drug, the second phase is advancement in the clinical trials process and the third phase is generally the prospect of the biotech entity being acquired by a larger pharmaceutical marketing concern e.g. Pfizer, Bristol Squib, Smith Klein.

It is very important to identify, which phase of development the company is at.

Without knowledge of the biotechnology, the key to this analysis is understanding the human capital allied with this operating concern. Specifically we are trying to determine whether the company has acquired talented researchers with a track record of bringing marketable products to market [in this way we are betting on the commercial judgement of the research heads] or if we are in the second phase, we are assessing management's ability or experience in navigating the clinical trials process or if we are in the final phase, management's ability to find an acquirer for their operating concern.

Now to the stock in question - I will outline my analysis in the next post.