Saturday, September 17, 2016

Shares Investing at Home - Post Retirement

Retirement brings with it different opportunities and ways of life.

Work with school governing bodies and charities is fulfilling albeit unpaid. However the next generation will need to be earning a living through to their 70s.  Thus for people in their 60s today, earning a living - perhaps part time and contrasting with one's previous work - has interesting possibilities of itself and  may even serve as an example for the next generation.

Certainly there has been an abundance of opportunities of interesting part time employment in retirement available so far, in SE England at least,  one of which I have taken up.

Another opportunity is share investing/trading which may be commenced  by converting a spare room at home to an office. 

Investing in shares needs both judgment and luck. There is also a risk to one's capital caused by poor investing decisions or worse by apparent mismanagement not excluding the possibility of fraud, affecting the chosen companies.

Personal Investors (PIs) especially those with  with comparatively small capital sums available, need to be aware that they might lose their total capital, for example in a company affected by issues set out above. 

On the other hand a well thought out investment strategy coupled with more than a little luck, may bring huge rewards rendering the post-retirement self employment aspects, very interesting as well as quite successful.  

PIs may also be tempted to invest in smaller cos than those invested in by major  institutions, such as pension funds and insurance companies, on the basis that the large institutions would be far better able to invest in say FTSE 100 type companies, more speedily and cheaply than  individuals usually can.

Two companies  may provide fair  examples of the possible disasters and windfalls that may occur:

The first is Oxus Gold plc. A risky investment in a company specialising on gold mining in Kyrgyzstan  - the Indy reported some 10 years ago that:

The US government was on the verge of wading into the diplomatic dispute between Oxus Gold, the AIM-listed mining company, and the Kyrgyz government yesterday, after the group served official dispute notices on the Kyrgyzstan authorities and suspended construction of its new mining facilities in the country.
In a statement to the London market yesterday morning, Oxus said it had forwarded the dispute notices to both the UK Government and Condoleezza Rice, the US Secretary of State, who it claimed was supportive of the British company due to its significant number of American investors.
The issue then went to arbitration in Paris. At that point having looked into the arbitration issues  and seeing that a  large specialist company had  stepped in to finance the arbitration by OXUS in return for a large fee if successful, I decided to invest. 

However, what I had not expected was that the arbitrators would issue a decision which seemed to have little bearing of the issues in dispute.

Disaster beckoned but then OXUS went into administration under BDO Hamlyn rather than liquidation.  Perhaps surprisingly if the company was a write off, the specialist finance company remained involved.

Then recently the OXUS administrators commenced proceedings in the French courts against the arbitration outcome, based on  points  not apparently too dissimilar to those mentioned above, so all may be delayed rather than lost.

Interesting but obviously  hugely difficult for a personal investor.

On the other side of the investing  coin is   in what is called a "shell company", that is one formed to take over a suitable company already successfully trading but  privately, that is not listed on any stock exchange.

Shell companies are usually ineligible for investment by large institutions so provide a way in for PIs at a price which is not inflated by the numbers of large institutions buying stakes or the number of shares issued as a consequence.

Given the costs of listing on the  London Alternative Investment Market (AIM) there are not too many decent shell companies for a PI to consider.  

A canny PI might be able to do well by investing in such a company but equally might lose all.

The key appears to be to look at the reputations of the promoters of the shell. In the event I selected Levrett plc described as:

Levrett plc is a special purpose acquisition company formed to acquire realisable and/or developed commercial technologies focused in the Pharmaceutical and Biotechnology sector. The Company draws on its expertise in the Pharmaceutical and Biotechnology sector to assess different propositions and initiate discussions via market contacts and professional advisers. 

The share price was low a few months ago and indeed was still low a few days ago. However the company then announced that it was about to take over a small unlisted company called Nuformix which is a medical  drug company, specialising in:

Nuformix is focused on pharmaceutical cocrystallisation. Our technology allows the creation of new intellectual property and competitive advantages for existing drugs.
The share price of Leverett plc immediately rocketed upwards so I took half the profit on a "bird in the hand..." basis.

Trading in the shares was then suspended pending completion of the take over (or as the case may be). 
Sometimes when  the t/o of an unlisted company by an AIM  shell company is completed, the gain in the latters share price can be huge.

On the other hand sometimes, particularly if the t/o does not in the event proceed, the immediate loss in the shell company's share price can be equally huge so one needs to do one's research and keep one's nerve.
Never a dull moment in earning a retirement living - so far.

1 comment:

  1. Lovely description of how an investor should operate.
    Lets hope for a big one.
    Good luck


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