Thread by @JCKNIGHT2

So, here is the thread I promised.

The Lab (Limners and Bards) had their IPO in July and were able to list in under 2 weeks. They offered 189 Million shares to new investors with only 50 million shares being offered to the public (jamstockex.com/wp-content/upl…). Due to firms like

https://twitter.com/JCKNIGHT2/status/1172774686696103936

@JMMBGROUP & @SagicorJa not assisting some clients with the IPO application and the relatively small allocation to the public (jamstockex.com/limners-and-ba…), there was an expectation that the company would increase in price very quickly. jamstockex.com/market-data/li… Within the first few

days of trading, 18.2 million shares were traded or about 36% of shares allocated to the public. Now, let's understand the basics of supply and demand. Where there is high demand and low supply, the price of an asset tends to go up to match this indifference. High supply and low

demand tends to see a price decrease as there is too much supply for an asset where the demand isn't relatively the same. With the Lab, there was low supply and a very high demand. Even though the Lab price has stabilized around $3, the first month of trading was for speculators

to exit their positions and for investors to get a greater supply for their long term position. As such, the lab is up 200% and at one point, was up by 300% in a relatively short time. There was also the release of their quarterly results which acted as a catalyst for demand.

Sagicor Select Funds was another IPO on the block which had 2.5 Billion shares on offer with another 1.5 Billion available in the event they wanted to upsize the offer (jamstockex.com/wp-content/upl…). Sagicor Select Funds was oversubscribed to the tune of 20,000 plus applicants

(jamstockex.com/another-first-…) which meant there was a decent supply of shares in the market before listing. By listing time, the JSE circuit breaker kicked in twice which saw no shares being traded. After a successful first day, about 1% of shares were traded on August 12.

(jamstockex.com/market-data/li…). However, the basis on which Sagicor SelectF should have been traded on, the NAV (jamstockex.com/market-data/sa…) was much lower than the market price. Combine this with a high degree of speculation and a very high level of supply and we end up with a free

fall in price. As speculators who initially thought that Sagicor SelectF must double started to see a bigger loss each time the price dropped, they took their losses and exited at whatever price they could to minimize the damage. Sagicor Select Funds are funds composed of

local equities from a particular index. The funds don't operate like companies and the stock surely won't move as it could compared to other listed operating companies. (jamstockex.com/mayberry-jamai…) MJE's net asset value is much higher as they have a lower total number of shares

outstanding and aren't concentrated in one sector. Also, they aren't a Jamaican company so they have a greater level of tax efficiency. Similar funds, different market response. MJE currently is trading below its NAV at $12.07. A lot of the new investors coming from Wigton and

SelectF have no idea as to how market fluctuations occur and why it's important to read the prospectus or seek professional advice before investing. A lot of people are buying into companies they only have a brief understanding of without seeking secondary independent advice.

Most new buyers of SelectF have been burned badly and so have new investors in CPFV. (jamstockex.com/eppley-caribbe…) For clarification, Eppley Caribbean Property Fund is already listed in Barbados & Trinidad and Tobago. As such, there is an already established sentiment in the other

markets. Eppley was asking for investors to buy new shares in the company at the NAV/Book Value of the company as at March 31, 2019 which in JMD was $46.18. I read the prospectus and didn't like what I saw. Went ahead and read the financials from the other exchanges and it wasn't

appealing. If one looked at the other prices from the other exchanges, Eppley was trading below the book value in both markets while investors in Ja were being asked to pay a premium to obtain the company at book value. A premium in simple terms is a mark up while a discount is a

mark down. One company gave CPFV a buy recommendation while several other brokerage houses gave it a do not buy recommendation due to the fair value they obtained and seeing now value in paying such a premium. Also, there was a psychological perception by many investors as to

CPFV being expensive compared to the more recent IPO's. Eppley CPF fell short of their target and weren't able to exercise the upsize option for the offer. The offer had to be extended by an extra 2 weeks which was already a telling sign. For more experienced investors,

we know of another real estate company that listed last year which struggled to go above its IPO price only up until recently. As such, I waited and observed for the market's reaction to the listing and how it would be priced. Within the first few days, the speculators entered

and drove the price up. However, shortly after, the price started to decline. As of yesterday, it is at $43.07 with an asking price of $39.90 (jamstockex.com/market-data/li…). With CPFV, there was a 100% allocation (jamstockex.com/eppley-caribbe…) which meant all investors would receive what

they applied for. From that piece of information, one could tell that there was a low demand/uptake from the offer. This was also during the whole IPO rush of the summer where both Lab & SelectF were oversubscribed to very high degree's. So, for those who jumped onto Eppley

because they saw 'NEW IPO' sticker attached to it, they are feeling the consequences now. I understand that most people are new investors and have no idea as to how the market may work or even why prices go up. I know that it can be difficult to digest reading a prospectus

especially where it is over 100 pages, but you must also understand that it is our money at risk. The stock market is a place where making purchases without a real basis can cost you dearly. If you can identify purchases before the market notices, then go right ahead.

The investors who take their time to read and have patience will reap the best rewards in the long term compared to the short term. Just 'flipping' IPO's without reinvesting the capital isn't generating wealth, but simply hoping that someone else buys your stock.

@rtrowe @marcgayle & @Devrhoid might have classes to explain things you should look out for and do as a beginner investor, but the onus is on you to also do your reading before investing. A broker might make a recommendation on a stock, but how many of you understand the reason

for that recommendation. All I'm saying is that as an investor, you have to be able to pick good apples from bad apples while choosing one's that fit your goals and strategic horizons (time frame). I will leave a Warren Buffet quote that you can sympathize with as you go about

your day. Make Long-Term Investments Over Short Term Ones
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.” - Warren Buffett
Net worth - $84 Billion USD.

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