South32

[unperplex]

Has anyone noticed that South32 has been moving up and down (like all shares) but quite significantly recently.
Rises and falls of 4% + per day are not unusual.

These fluctuations are much steeper than its "parent" BHP.
There appears to be no underlying financial reason for them and they appear to be simply a manifestation of the market's short term stupidity and to be something of which one may take advantage.

I have done so twice in the last month or so and made between 6% and 9% each time (buying around the 155 - 160 mark and selling 171 +).
I am hoping to do it again, perhaps several times.
Of course this pattern will not last for ever - nothing does, but it seems like quite a good earner while it lasts.

The risk would seem to be to have bought at c. 160 and for them not to go up again but to continue down a lot and stay there for a long time.
This risk might be quite low however, as the company seems quite sound and I see on the HYP board ARB seems to be considering buying some.

I would welcome any comments.

[John]

What quantities are you buying?

I used to think about doing the same with Aviva, as they too seemed quite volatile.

[unperplex]

For privacy reasons I don't want to say, but the quantities are of reasonable size for a small private investor - five figure sums in pounds.......
I have Aviva on my watchlist but I hadn't noticed such large fluctuations there.
I shall take another look.
Thanks.

[unperplex]

Well, I have done it again.I bought at 161 and sold again today at just over 176.Coincidentally this round of buying and selling included entitlement to the dividend due to be paid at the end of the month.The total gain including this will be getting on for 12%.No doubt the price will now rise to 181 (being the 52 week high) but I did not want to be too greedy.
Maybe The cycle will repeat itself some more times.....

[unperplex]

And again. I bought at 156 on 03.05 and sold on 07.08 at 182 - a gain of over 16%
To underline the fact that you can't time the market, the price has since gone up a few pence, however I am happy to take my gain.
I know the results are due out on 25th.August and if they are good the price might rise even higher, but I did not want to take the risk of them not being so good and anyway I felt I needed cash in order to buy other shares such as Unilever or HSBC IF they come down enough during the summer
There was another cycle between March and May but I missed out on that one as it didn't quite get down to my target purchase price.

[Clitheroekid]

Thanks for bringing this to my attention. I've been looking for ages for a `range trading' share, and I agree that the history seems to make it a good candidate. Unfortunately, I've just found out about it as the SP has hit a high, so I wouldn't buy in at the moment. Having said that, and knowing my luck the price will now double within a few months!

I can't believe that the price was only around 45p 18 months ago.

I've been doing the same with BP for the last few months, as that seems to have adopted a quite consistent range of 440 - 480, though it's a fairly narrow range so the individual transactions need to be fairly high amounts to make it worthwhile. Also, the fact that it pays relatively high dividends every quarter has to be factored in.

All good fun!

[unperplex]

Yes, they are high at the moment, but if you keep an eye on them, they may fall again to 157 or thereabouts and then go up to the 180s. Best of luck.

[unperplex]

Another advantage of South32 (albeit small) is that I am not charged stamp duty on it.I think this has something to do with the fact that it is basically an Australian company trading on the FTSE via some arrangement......Anyway, because my broker platform offers a few free trades my latest buy and sell cost me nothing at all.

[unperplex]

Drat. I missed out on this cycle. I put in a limit order a couple of weeks ago at 179 and I later found out that the low that day was 179.5 !!!! I was too stubborn to buy them in the low 180s and today their high was 212.80. I could have made over 18%. I know, I know, you can't time the market etc. but it's very annoying. Did anyone else (Clitheroekid etc.) manage to get on this time round ? Ah, well, maybe I can get on next time round.....

[tjh290633]

That's like the "Waiting for Vodafone to hit £1" syndrome. The mantra "The time to buy is now" didn't come about by accident.

TJH

[jackdaww]

For privacy reasons I don't want to say, but the quantities are of reasonable size for a small private investor - five figure sums in pounds.......

Thanks.

=========================

up to £100,000 a go ?? really?

i did some range trading with bhp years ago - it came to an end - i wouldhave been better just holding ..

[tjh290633]

Or down to £10,000. Not unreasonable.

TJH

[unperplex]

jackdaww. - "range trading bhp a few years ago..came to an end...better off holding"

I'm interested to see this.How much did you make ? (A rough percentage will do - no need to disclose actual figures).
Why/ how did it come to an end ? Was it that the cycles ceased, or ceased to be of sufficient size to make trading worthwhile ?

I'm not sure what I have done is what the more professional of you might call "range trading".
I did not use a combined "buy and sell" limit order. I just set a figure which I considered a suitably low buying price and then took a view about when to sell.
Sometimes my " view" was below the subsequent high, but hey, ho,I took some advantage of the relative volatility.

Maths is not my strong point but I think I made about 47% in total over about a year. This seems better than "holding".
Of course as I said in one of my earlier posts about this, the cycles will not last for ever.
I do not see what I have done as a long term trading strategy.
However, as I said, I have some cash in my ISA trading account which is waiting for one of my targets to drop to a suitable low price, at which I shall buy with the object of holding long- term. I am looking at ( inter alia) HSBC and Unilever.(HSBC for income and Unilever for long term growth)
I note the latter is now back down again to just about the price it reached following the abortive Kraft/ Buffett bid.Do people think this is the time to buy or might it go lower ? (I know no one knows , but I am interested in people's reasoned opinions.TJH will no doubt say "the time is now" and advocate immediate Unilever purchase.....)

In the meantime I shall continue keeping an eye on South32 to try and make my cash work for me.

[tjh290633]

The time to buy was a year ago or longer. S32 grew by 25% last year, while BT.A fell by 25%.

MARS was down about 17%, and might be a better prospect. You can always help their profits by drinking their beers.

TJH

[ADrunkenMarcus]

.Do people think this is the time to buy or might it go lower ? (I know no one knows , but I am interested in people's reasoned opinions.TJH will no doubt say "the time is now" and advocate immediate Unilever purchase.....)

It's certainly *a* time to buy.

Unilever is about 8% of my portfolio. You could do a lot worse than lock in a dividend yield of 3 percent or so which looks highly likely to grow well above inflation for the foreseeable future. If you're intending to buy for the long term then Unilver's quality will shine out.

Best wishes


Mark.

[Alaric]

The time to buy was a year ago or longer. S32 grew by 25% last year, while BT.A fell by 25%.

I've held it since it demerged. Up 84.9% as of 9th Jan 2018 but not having topped up, it's still not a large holding.

[tjh290633]

I've held it since it demerged. Up 84.9% as of 9th Jan 2018 but not having topped up, it's still not a large holding.

I topped mine up fairly early on, about a month later, at 102p. That made it a sensible sized holding, which has now more than doubled in value.

The rate of return has been 34.4%.

TJH

[unperplex]

I am trying to get in on what I perceive to be the current cycle. I have bought at 200 and of course they have immediately dropped to 179.....however I hope they will rise in the near future to 236 (the recent high)or higher.
ALSO the final and special dividends (Total 7.3 cents - 5.2p on current exchange rates - c. 2.6%at 200p ) have been announced - ex div 08.03.2018.At the present price I will probably still be holding at 08.03......
IF they go to 236, I should make c.20.6% including the dividend. Let us hope......