No volume in small shares
IT’S ALMOST impossible to invest in some of the small companies on the JSE, especially those on AltX, because the volumes offered for buying and selling are too small. When volumes fall too low, investors avoid the shares completely and volumes then fall to zero. Usually the price also falls, because there are still sellers left but no buyers.
The companies should buy their own shares on a permanent basis and offer them on the market. The earnings yield could be compared with current interest rates in order to decide at which level it’s worth incurring more debt and buying shares back or issuing more shares and expanding.
When volumes start increasing there should be more buyers and sellers and the number of issued shares won’t necessarily change very much. The company could even make money out of the buying/selling spread. DEWALD DE LANGE