5 weeks to Christmas.....Oxford Pharmascience

Friday, 23rd November 2012 15:32 - by Moosh

Last Christmas, I gave you a present in my diary in the form of OXP.

Admittedly, the share price hasn’t taken off like a runaway train, but since my first mention of OXP a number of developments have occurred in the company which have continued to build my confidence in it from the initial gut feeling I had about it and I have also had a year to get used to price movements and general investor interest in OXP. It’s not your traditional pharmaceutical company – instead of developing new drugs, its primary focus is to reformulate existing drugs with new technologies such that the revamped versions can tackle problems that face current formulations. Having a background in pharmacy, this intrigued me....a lot! I was sat there thinking ‘After all these years, here’s a company which appears to have a simple technology that has the potential to solve a lot of problems – why haven’t big pharmaceutical companies come up with it already?’. Obviously an unanswerable question, but the fact is, big pharmas haven’t and OXP have, and the intrigue itself was enough for me to start building up a holding. Although the drugs being reformulated have been used clinically for many years, I do understand that trials of the reformulated versions may not go to plan but I am happy to take that risk and will vary the amount I invest to reflect that. Alongside this, OXP do have reasonably long-standing revenue streams from far-flung locations (Brazil, the Far-East) and I would like to see these providing the company with a useful financial base from which to work from...but time will tell.

Now without going into details (since my OXP purchases were made when I was in to-and-fro mode trying to work out a definitive buying strategy), I eventually built up a holding (in 9 purchases) of 60000 OXP shares, for a total value of £854.03. Since I am fond of the company on a long-term basis, I decided to split my holding into 3 portions as follows:

The following sales were made:

The total value of the sales is approximately equal to the value of short term holds A and B, with the remaining freehold of shares being:

40000 + 5000 – 4465 – 1700 – 35422 = 3413 shares

With my long term hold C still intact, the total remaining are:

15000 + 3413 = 18413 shares                        (with a value at 1.588p of £292.40)

The point of having different amounts in holdings of varying lengths of time is that I know OXP is an AIM-listed company which has sporadic spurts in trading volume with or without news, so while I am happy to have a large amount of capital tied up for a small length of time, ie, until the first major price-increasing news, I don’t really want to have that same large amount of capital stuck in until the next time (which is the unknown) since in the meantime, there may be other companies which I follow which enter an optimal investment window in their own trend which I can then take full advantage of. Long term hold C combined with the freehold shares from the short term holds A and B still provide reasonable exposure to any gains in OXP if a medium term trend (~6-12 months) kicks in, whether or not a stream of news is involved.

While I like the fundamental characteristics of what OXP do as a company, I am still very aware that trends exist and will still abide by them on the short term, but on the sale day, providing the investment case remains, it will be on that day when the fundamentals of a company will really matter and the question I need to ask myself then is:

How many shares do I NOT want to sell?