Investors just love corporate action and new listings and the inclusion of AB Inbev on our exchange was no different.
The problem though, is if you bought the stock on the day it listed and are still holding, you are probably not impressed with being this far out of the money.
According to my analysis, now is the “real” buying opportunity.
I have provided a chart that explains the price action since AB Inbev’s listing and why waiting until now means you could be buying in the “green zone”.
Anheuser-Busch InBev listed under the code ANB on our exchange on the 15th January this year with an opening price of R1938.00 per share.
The share price enjoyed a significant rally in the two days that followed as investors started piling into the new brewer on the board.
New buyers however, were caught straight away as early profit taking ensued and all of the easy had been made.
Just four days later, ANB’s price was right back to where it started.
Fooled by the “second chance” channel
After seeing the share price rocket up after the listing, investors couldn’t believe their luck when the share price dropped back to its listing price and grabbed the opportunity to get into the stock.
The trading from there was more organised and the share price traded up a lot more gradually with smaller price swings and investors got comfortable with owning a piece of the world’s largest brewer.
The first uptrend was born.
The reality of this “second chance” channel is that it only served as profit taking opportunity for the ones who missed out on selling the first rally.
We call that “getting sucked in”.
Just two weeks after listing, the price formed its first “double top” and the price collapsed. Seven straight days of selling meant that investors got sucked in and then spat out.
The green zone
When looking at trading in new listings, you never know where the real support for the price will come in. I often advise clients to wait a little so that we can get clues to where “new” money comes in and thus supports a share price.
On this chart the green zone is an area of consolidation. So while the share is trading sideways, it most certainly gives a good indication of where investors are prepared to buy.
Get in the zone
Look, the stock is currently trading near R1800.00 per share so getting into an equity will require a significant capital outlay to have a meaningful position.
My strategy on this trade would be to make use of the leverage provided by trading the single stock future contract or SSF. Buy only needing to put down less than 10% of the current share price, you could really make significant gains on any upside from here.
As usual, I am more than happy to explain how the instrument works as well as the risk attached to trading geared products. All you need to do is send me a mail.
Once ANB breaks out of the current consolidation zone I’m pretty sure the next round will be on you.
Here’s to profitable trading,
Robby P | Vunani Private Clients