danbradster, CUP is a classic example of low risk dollar cost averaging.
l will try to keep this somewhat generic, for all readers to digest the principle. Dollar cost averaging is not infallible, as it can lead you to pout good money after bad, but in the right circumstances, it is in my view, a fantastic way to make money and reduce risk as a business goes through its cycle.
Having bought a reasonable holding in CUP at around 80c a few years ago at the time dividends were halted, and the price tanked, the SP has continued to trend lower and lower.
This despite the business becoming focussed (after Class Ltd sale) and debt free. It also divested non performing member firms and invested in selective businesses. It was a plan implemented in line with the stated business strategy, a while back.
It made no sense for the price to sink to the 60s then 50s then 40s, except the market had moved on, impatient for results. Any would be sellers had to take whatever they could get, if they wanted out and third stock does not have a deep market.
After digging deep, once, twice, three, four and five times over the last 18 months, my average cost dropped below 60c. Nevertheless, l was still hopelessly under water. My last little buy was at 46c at the beginning of this week in anticipation of the half yearly accounts in August which would likely surprise on the upside after a few nice bolt on member firms joined the firm.
This week has been more than some of us could have hoped for.
Now holding one hell of a lot more stock than l ever intended, l admit to selling quite a lot on Friday at the low 70s.
The lesson here is, a less than perfect entry point does not mean you have to watch your money go down with the price. Active investing, in debt free companies is a lowish risk strategy that works for dollar cost averaging or value/contrarian based investors.
Please note, this is not advice, it is an illustration of a strategy. Please DYOR and good luck to all.
l hope all patient CUP holders as well as new investors can breathe a sigh of relief and enjoy continued gains as the business reinvents itself with its owner, driver, partner model. But expect some hiccups along the way because Count Financial is a mammoth meal to consume for CUP.
Expand
(20min delay)