1. Director buying. Already discussed. Unlikely to be pump buying as there is hardly any reaction when it has happened in the past, yet it continued to occur on the way down. I don’t believe this is them being charitable helping someone to liquidise their position. More likely is that the Director knows it’s a bargain.
2. Recruitment. These LinkedIn adverts from a few weeks back discuss growth. Not just growth, but big growth. Now ask yourself, would a company risk their own credibility telling a potential accountant a made up story above future prospects? Hell, no! Maybe an unscrupulous agency might if they were targeting a storeman/woman/person. But not an accountant. Conservative by nature, if they felt duped, they would be off in a heartbeat. It just doesn’t happen. (Often. I have seen it happen, but that company was dodgy and later went under.) So that’s my second reason to buy. And buy lower than the Directors. Thank you.
3. Does the story stack up? I think it does. I ask myself if the people have a track record. Yes, they do. Does the data to date back up the vision, even if that vision changes (which is a good thing in business as you have to adapt)? Yes. When you read the message a year ago, are they achieving what they set out to, delivered on promises? No and yes- in that they came close to some big lofty goals, but the profitability plan changed as they saw another opportunity, a potentially more attractive one longer term, so that gets a tick too.
4. So we have a number of reasons to buy. But it came from 5c in 2020, so with many piling in at 13c and seeing it climb into the mid 20’s, then ‘poof’ all those dreams disappearing as it dropped back, it’s hard to stop the drop. Stop losses around 13 have most likely been hit as people capitulated, so that indicates to me that around here is the bottom. People fear it dropping further and fear being in the red, or more in the red. But you have to live with a bit of red sometimes in order to not miss the opportunity.
5. So what else has caused me to build a position? It’s in the data. It’s not foolproof, but it’s pretty convincing. I’ll post it even if the 4C comes out beforehand and shows my logic is wrong, as that would be a learning in itself. I sometimes lose. I often lose! But I lose more when I take big risks and win more when the risks are lower, as I believe they are with all of the above.
Why am I not posting my final bit of info? It’s so that you don’t get lazy and think you can make a quick day trade buck off it! I reckon if people dig a little the SP will climb now and so the upside reduces and deters daytraders! I’m interested in the longer term outlook (months not days).
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