How to be a "Stag" on the AIM Market

I do hope you had a lovely Christmas and Boxing Day.

I certainly did and judging by my waistline there's physical proof of it too!

Anyway, I thought I'd write you a little note today and tee you up for the New Year!

I'm sure 2007 will yield some fantastic opportunities in the small cap market and I can't wait.

Melissa will be in touch tomorrow before we take Friday off - why not, eh? - and then your Penny Sleuth service will carry on full speed ahead on Wednesday 3 January.

Now, I'm always on the look-out for fantastic IPO’s.

Trouble is there are so many! Half of them don’t even amount to very much. And some of them absolutely fly from the word go...

So, as a belated Christmas gift and an early New Year present, I intend to teach you how to be a ‘stag’ in the AIM market.

For those of you who are not sure what that is, it's an investor who buys and sells stocks quickly, and makes a packet.

Of course, this isn’t as easy as it is in the main market. Penny shares aren’t always as liquid as you might like. But, if you can get in and out in a jiffy – then you’ve done very well indeed.

In the New Year, I have decided to let you know my tips for Star IPO’s, so keep your eyes peeled for those.

It always helps when these new stocks, are highlighted by the media – as quite often very good companies can be overlooked, as there are just so many out there. And as you’re probably aware, small-caps just don’t get the news coverage they deserve.

Sometimes, the floats are only open to institutions, which is a very good sign. It is possible to buy in after shares have been allocated to the institutions, and sometimes they step in and gobble up more – that is often a way for a private investor to take advantage.

And your Christmas shining star is:

West Pioneer Properties floated on 13 December. They managed to raise $40 million, valuing the company at $120 million at a price of roughly 81.5p. The current offer price is 110p.

Although on their debut, the shares actually traded to a session high of 125p.

Now, if you were one of the lucky few who managed to scoop some of these up, and then timed the sale right, you would be sitting on a handsome 39% profit in just one day.

Of course, there could be a lot further to go – but if you’re happy with this level of profit, then why not take advantage, the price could always fall away, as the initial furore disappears.

The early bird catches the worm

Just take a look at the volume of shares traded: Day one £132,959, all the punters getting in around the 82p mark. And today only £17,074, the latecomers who paid £1 and above.

If you read the Penny Sleuth edition which focused on India, and the big growth opportunities there, you will see why I picked West Pioneer Properties as this week’s focus.

You see, they aim to become a leading developer and operator of shopping malls in India. And after their solid debut, they look pretty interesting – even if you missed out at the start.

They intend to use the proceeds of the placing to snap up further land in west and southern India where they plan to build, own and manage shopping malls, hotels or a mixture of both.

They are currently developing a shopping mall in Kalyan near Mumbai, which is almost one-third constructed and should be ready by the second half of 2007.

According to Amit Jatia, Chairman of West Pioneer – the Indian retail market is worth £350bn, and only 3% of that figure is ‘organised retail’.

It sounds like there could be a nice niche in the market for West Pioneer.

Let's see if they can really take advantage of it.

Until next time,
Tom Bulford

for The Penny Sleuth