ASX300 Inclusion Comparisons

As a guide to what possible benefits the AJX share price might experience from inclusion in the ASX300 I thought it worthwhile to have a look at the subsequent price history of companies that went through the same exercise 6 months ago.

The inclusion of 14 companies was announced on 4^th September 2015, effective from 18^th September. Their share price performance relative to the market (All Ordinaries) is shown in the first chart below.

Two of those new entrants clearly stand out. Since September SBM has shown price out-performance of 360%. BAL has outperformed by 77% (after peaking at 159% in December). The performance of the remainder is less prominent.

As a group the average price close on 18^th September at entry represented 8.8% out-performance compared with share prices at the beginning of that month prior to announcement. Three months later out-performance had increased to 11.1% (28.3% if BAL and SBM were to be included). That figure now has decreased to only 2.5% better than the market if BAL and SBM are ignored.

Turnover on the day of entry was massive for each stock compared with average volume in the months leading up to that date, commonly by a factor of more than x10. Not all companies now show daily volumes higher than prior to inclusion.

The price history of the other 12 companies over the last 6 months appears in more detail as coloured spaghetti in the second chart below. In general for this group there is no obvious indication of significant out-performance relative to the market as a result of their ASX300 inclusion (current average +2.5%).

None of the 14 companies have growth or business characteristics comparable with Alexium’s. However it would be nice to see the share price follow a similar track to that of SBM.