Regular Buyers

Monday, 10th May 2021 09:40 - by Moosh

As suggested in a previous blog post, I strongly recommend companies target an audience of regular buy-and-holders in order to secure shareholder value. In practical terms, this audience could come from one or more of the following:

• Cost averaging investors – these have the capital to invest from the start of a long term investing term but choose to insert capital intermittently over the length of their investment timeframe.

• Wage earners – these may only have capital to invest once they get paid every month and circumstances therefore force them to become cost averaging investors.

• Profit holding traders – although traders are short term, if the value of profit is held as an equivalent of shares long term, they should be considered as a type of cost averaging investor with the cost of the profit shares being effectively zero.

• Sharesave schemes – these tend to be offered in larger companies but the terms of the schemes range generally from 1-3 years, which essentially secures regular buy-and-holders from within the company which is better as it removes the dependency on finding loyal random buyers.

• Share buybacks – these are usually done by profitable companies but I would prefer to see companies adopt a long term buyback programme as in theory it should stabilise price movement up in a slow and steady manner.

- The Hidden Power of Investor Relations

Rightmove (LSE:RMV) is one such company that I am aware of which offers a Sharesave scheme to its employees and has regular share buybacks on a long term basis and these have contributed to an underlying long term steady price rise with the fundamental story providing extra boosts as appropriate.

The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.