Liquidity tolerance

[springhill]

Just posted in the HDG thread, but for me another low liquidity mover today (+30%).

 

[It's Snake Pliskin]

Hi Springhill,

Thanks for the posts in this thread.
Were you able to get good fills for exits? That is where I see the problem with low liquidity.
Cheers..

 

[springhill]

Hi Springhill,

Thanks for the posts in this thread.
Were you able to get good fills for exits? That is where I see the problem with low liquidity.
Cheers..

No problem, it's a thread i'd like to see continue being added to, as liquidity is part of my strategy.

The only (partial) exit i have taken so far is BTU, though i have a target price in mind for all of them. Having said that, to answer your question, yes if i had chosen to exit at a point, there was sufficient volume for my holding. GMM and HDG are not far from where i want to offload my initail investment, but i have had considerable gain on the back of none to near-no substantial announcements on both, and the price has continued to hold up well.

 

[springhill]

Another low liquidity mover, i personally did not get hold of any (bid was 0.1c too low but the family business did)
160m shares on issue.

 

[Synergy]

Personally I'd be very uneasy to be holding HDG or GMM. HDG didn't trade today and has a 10% gap between bid and ask.

GMM has closer to a 20% gap between bid and ask.
Are you comfortable seeing their market depths?

Perhaps it would be ok to hold 50000 shares in these types of stocks, but any more and surely you'd run into issues trying to sell? They are not too dissimilar to some I'm holding, but these probably wouldn't make the cut for me.

Sometimes I feel that a reasonable size sell order on the screen would be enough to cause a tumble in price for stocks like these.

Obviosuly nothing wrong with the way you're selecting them though...

 

[springhill]

Personally I'd be very uneasy to be holding HDG or GMM. HDG didn't trade today and has a 10% gap between bid and ask.

GMM has closer to a 20% gap between bid and ask.
Are you comfortable seeing their market depths?

Perhaps it would be ok to hold 50000 shares in these types of stocks, but any more and surely you'd run into issues trying to sell? They are not too dissimilar to some I'm holding, but these probably wouldn't make the cut for me.

Sometimes I feel that a reasonable size sell order on the screen would be enough to cause a tumble in price for stocks like these.

Obviosuly nothing wrong with the way you're selecting them though...

For my own personal situation, i am comfortable with the market depths. You're right on the ball Synergy, am holding 100,000 GMM and 50,000 HDG. As i have stated before i like the smaller ponds and while i will never be a millionaire purchasing 10k parcels, this is where i'm comfortable at.
I'd be interested to know where exactly our systems differ, and any criteria other than my own you use.

Totally understand your concerns about one big sell order causing mayhem, but one determined buyer order can light things up aswell. Guess you need a tough stomach and to be able to switch off from worrying about the quiet days.

Thanks for jinxing me with that last comment......

 

[springhill]

Thought i would show how with correct selection (or being lucky ) of low liquidity stocks good profits can be made.
Below are a list of tightly held shares, some i hold, some i don't. All went on a watchlist, but didn't have the capital to invest in all of them, sadly, and their percentage gains. I researched most as the last round of quarterlies were released (some i bought in the months just preceeding).
Bear in mind i had to comb 100+ companies to find these and most are very obscure, but with the right criteria the results kinda speak for themselves. This being said, it has worked well in a rising market, i have not had the opportunity to test in a falling market, though in all honesty i would be hesitant, not necessarily totally against, picking them up.

BTU +437.5%
GMM +82.8%
HDG +63.6%
LEF +75.9%
QNL +6%
SOI +10
WAC -2.9%
BOE +450%
CLU +66.7%
DRK +34.6%
EAR +70.4%
GUL +4.35%
MAR +84.4%
RUM +78.1%
SHH +57.6%
UTO +10.5
WWW 0.0%

As a footnote, previously mentioned with Synergy, i wouldn't buy bulk quantities of most of these, but for moderate investors they can work exceptionally well.

 

[Synergy]

Springhill,

Very impressive list.
Considering the XSO is up around 20% for the last 3 months, it is certainly a good time for it, but the results above obviously average more than 20%.

I had a look through your list on a 5 year chart and a lot of them look like GFC victims that are only now making some sort of recovery. And the surprising thing is, even though the results look huge, a lot of those rises on a 5 year chart are just a little upwards blip. Most of them look like they could go a lot further. Some lost more than 90% from their highs so I guess + 100% still leaves them at -80%...

My system is purely mechanical, with many entry citeria. My average hold time is only 7 days. But interestingly, my system has performed better over the last 2 months, than the first 7 months of this year combined. A lot of your list have only made moves quite recently.

I found looking at those 5 year charts is very encouraging actually. Obviously the GFC hit the spec end much harder, and if they've survived until now, they probably have massive upside. Especially the ones that look to have been totaly forgotten about. I'm wondering if my system is too short term for current times.

 

[springhill]

Springhill,

Very impressive list.
Considering the XSO is up around 20% for the last 3 months, it is certainly a good time for it, but the results above obviously average more than 20%.

I had a look through your list on a 5 year chart and a lot of them look like GFC victims that are only now making some sort of recovery. And the surprising thing is, even though the results look huge, a lot of those rises on a 5 year chart are just a little upwards blip. Most of them look like they could go a lot further. Some lost more than 90% from their highs so I guess + 100% still leaves them at -80%...

My system is purely mechanical, with many entry citeria. My average hold time is only 7 days. But interestingly, my system has performed better over the last 2 months, than the first 7 months of this year combined. A lot of your list have only made moves quite recently.

I found looking at those 5 year charts is very encouraging actually. Obviously the GFC hit the spec end much harder, and if they've survived until now, they probably have massive upside. Especially the ones that look to have been totaly forgotten about. I'm wondering if my system is too short term for current times.

No doubt some of them are GFC victims, some have also changed direction of interest while not hemorraging hundreds of millions of shares to stay afloat.
In regards to most of my list only moving recently, my aim is to pre-empt the rise, with some there may be an element of knife catching, i'd like to think i've put in enough effort for them not to be a total guess.

How has the consideration of the amount of time you spend in a trade gone?

P.S GUL off with a bang over the last day or 2. That 4.35% rise has now become 106.5%