Saturday, 24 June 2017

Why I've sold my Oliver's Real Food Shares

I hadn’t intended to write an update on Oliver’s so quickly, but on Friday I sold my shares at 30 cents each, clocking a 50% return in two days.

Notwithstanding the money I’ve made, I’m a little disappointed to have gotten out so quickly.  I liked the idea of being an Oliver’s shareholder and I was looking forward to justifying forking out the ridiculous mark-ups on a cup of green beans by thinking I’d getting it back in dividends one day. However, a 30 cent share price puts the market capitalisation of Oliver’s at just under 63 million dollars, which seems exceedingly generous for a company projecting revenue of only 21 million this financial year.

Oliver’s originally tried to list at a market capitalisation of 50 million, yet failed to find sufficient support from institutional investors at that price. To be trading twenty percent higher than this just two days after listing does not make much sense. My best guess is the increase in share price is being driven by overly enthusiastic retail investors rather than larger institutions, and we all know how quickly this type of sentiment can change.

I will keep watching Oliver’s from the side-lines, and may even buy back in if the share price looks attractive again after their FY2017 numbers come out, but as far as this blog is concerned my investment is over. This is the first IPO recommended in this blog that I’ve sold. I can only hope my investments in Tianmei and Bigtincan end up being as profitable.

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