Like many things in life, sometimes you need a bit of luck and the instinct to seize an opportunity in front of you. That’s exactly what happened to me some years ago when I made $40,000 in tax-free profit from an investment in Strategic Elements (ASX: SOR) by checking market announcements.
One thing I’ve come to realise is that stocks are influenced by news flow. Whether it be broader economic news, or company-specific announcements, share prices are guided by our expectations and the news events that frame them.
But I’ve also noticed that monitoring the market for news or data that relates to the stocks you follow is easier said than done. After all, most of us lead busy lives and it’s easy to get lost in much of the ‘noise’ that dominates financial markets.
All these years after my successful investment in SOR, I’m still wondering, why isn’t there an easier way to monitor news and data for the stocks you follow? With this, Stock Brief was born as a free announcement tracking service designed to help investors stay on top of company news, arguably the single most important aspect of owning shares in a company.
SOR: A Journey from Penny Dreadful to Multi-Bagger
Back in 2011, I was presented with an opportunity to invest in SOR at pre-IPO stage. Shares were offered at 10c each, with a minimum $2,000 investment. The stock was expected to list three months later at 20c per share and a post-listing escrow period of six months. At the time, I thought it seemed like a relatively low risk opportunity given the discount.
Six Months Later
Fast forward six months after SOR listed and the stock was sitting at 6c. At this point I figured I had little to lose holding onto the stock, especially due to its special “Pooled Development Fund” status, where I would not be able to claim a capital loss, but capital gains would be tax free. Another month later, the stock hit a new low of 4c - lucky me.
The Letter in the Mail
Between 2012 and early 2015, SOR struggled to break above 10c. At 4c per share, my $2,000 investment at pre-IPO was now worth just $800 - not exactly the return I had hoped for!
However, one day in early May of 2015, I received a Share Purchase Plan (SPP) in the mail. The offer invited existing shareholders to buy shares up to the value of $10,000 at a discounted price of 3c per share, on a first-come, first-served basis.
Given the arbitrage on offer, I was tempted to invest a further $2,000 to reduce my average and bank an immediate profit. Nonetheless, knowing other shareholders would likely share the same thought and may dump their shares once allocated, I turned off the idea.
That Pivotal Multi-Bagger Announcement
Lo and behold, just a couple weeks later, SOR released a price sensitive market announcement titled “Revolutionary Memory Technology Tackles $78b Market”.
Immediately, I sensed this news could be the break I needed. A struggling rare earths investment company had suddenly secured an exclusive global licence to memory technology from the University of NSW. In my eyes, the news had multi-bagger written all over it.
Had it not been for a stroke of luck, I would have missed SOR’s announcement altogether. At the time, my interest in the ASX had waned and my focus had been on growing my own business.
By sheer chance, I opened my account that fateful morning and stumbled upon SOR’s announcement. All the while, in my possession I still had an invitation to buy $10,000 of SOR shares at 3c each. After reviewing the offer again, I realised the company raise was limited to $750,000, or the first 75 shareholders if they each bought a full allotment! Before the market even opened, I applied for $10,000 worth of additional SOR shares.
That day, the stock soared to an intra-day high of 39c, before ultimately closing at 17c. Suddenly, my thoughts ran to, Did I get the full allocation? Did I get anything? Did I get scaled back? Did I just turn $10,000 into $50,000?
How Things can Change in an Instant
Having failed to receive an answer from the company and the registrar as to whether I had been successful in receiving an allocation, I was starting to have my doubts. In fact, I felt my luck had turned.
One afternoon in June I was driving home and had a minor car accident. Arriving home late and annoyed, the first thing I did was log into my brokerage account. Little could I believe it, but to my immense joy, there was an extra $50,000 of SOR shares sitting in my account!
The very next day, when the market opened, I sold the new allocation plus a portion of my original investment. Almost instantly, my full allocation had just earned me a tidy $40,000 profit!
At the heart of my experience investing in SOR is one key takeaway that I still reflect upon to this day. Market announcements can be extremely critical.
- If I had not stumbled across the market announcement for SOR’s memory technology, nor kept my Share Purchase Plan document, I would have neglected the invitation to buy more shares and missed out on what turned out to be a life-changing return.
I also started to ponder, what is the solution to address this?
- First, sign up for electronic communications with each registrar. Easy!
- Next, identify a way to monitor market data for the stocks you follow.
The second of these points is where the inspiration for Stock Brief was born. A journey from penny dreadful to multi-bagger kindled the desire to create a reference that all investors can draw upon so that you may keep up to date with all your stocks.