Tuesday, 7th February 2017 15:22 - by Moosh
The number of shares in a defensive buy is dictated primarily by the asking price and the buy/sell commission that you pay – for simplification I will assume that the buy and sell commissions are the same value and will provide a maximum number of shares to buy for a single commission of £5.25, £7.50, £10.00, and £12.00.
If your commission is not shown here, then round up to the nearest commission level and use that as a potential maximum number of shares to buy, assuming you are happy with the fundamentals at the latest time and price given. I will be adding more companies to the Defensive Buy list when they are ready to appear on it and NOT before!
This week’s example of a defensive buy is Oxford Pharmascience (OXP). I began buying in November 2016 with most defensive buys being below 2p since the market capitalisation was virtually the same as the cash level at the time and also because the company is heavily backed by institutional investors who took part in historical placings at prices well above 2p.
Bought: 15000 shares OXP (in 6 tranches)
Total cost of purchase: £304.20
Return after selling cost: £324.74
Return on investment: 6.7%
Incubation time: 82 days
A third defensive buy from Asiamet Resources (ARS) in as many weeks now paid out....
Bought: 4200 shares ARS (1 tranche)
Total cost of purchase: £120.75
Return after selling cost: £127.47
Return on investment: 5.5%
Incubation time: 7 days
Total profit from defensive buys (rounded down to nearest pound)
= £8 (GSK) + £7 (BT.A) + £50 (ARS) + £4 (OMI) + £81 (ARS) + £20 (OXP) + £6 (ARS) = £176
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.