How to Make a Killing in Penny Shares

Author’s Note:

Penny shares can be pure magic, the answer to an investor’s prayer. Penny shares can soar from 9p to £35, as Polly Peck did in three years in the early eighties. Or they can rocket from 20p to £30, like Pentland Industries a couple of years later.

Penny shares can, and frequently do, transform a gamble of a few hundred pounds into a very respectable investment worth several thousands of pounds. They can make small investors into quite large investors in the space of months. Few newspaper readers can have missed the tip-sheet advertising which proclaims such successes. The shrewd, or the simply lucky players really do multiply their money eight, nine, or ten-fold in a year or two in penny shares. It does happen. I have done it myself.

In April 1983 I bought shares in a new company called Applied Holographics. I knew a little about holograms from my interest in high technology share issues, which started when I visited the wild, woolly and quite terrifying American penny stock market in Denver. Watching the extraordinary ups and downs of shares there had prompted me to start reading popular science magazines to try to understand what was going on. As a result, I knew that holograms had remarkable potential – in advertising, and as security printing and information storage devices in particular. They pop up now as the sparkling, silvery patch in the corner of most credit cards.

I had been out of the country for a few weeks. Reading the financial pages to catch up with what had been happening while I was away, I noticed a short piece saying that Applied Holographics was to be floated on the Over-The-Counter market in London. United Trust & Credit, a small and relatively new corporate finance business whose directors I respected from their past record, was sponsoring the issue.

I got a copy of the prospectus, read it carefully, and decided that this untried venture would either make a fortune, or go bust fairly quickly. The United Trust people were struggling for recognition, though, and needed to get their early issues right. So I decided to take a gamble. I put a few hundred pounds into the issue. It was oversubscribed, so I did not get all of the shares I wanted. I bought more in the small Over-The-Counter market when dealings began, placing a particular emphasis on the warrants, the lowest-priced, most highly speculative pieces of paper in this particular issue.

In the summer of 1984, just over a year later, I sold a large part of my holding. The company was still struggling, but had gained a quotation on the Unlisted Securities Market. Although the debut had been disappointing, my shares were up seven-fold. The warrants had multiplied in value from the prices I had paid – some thirty-fold, others ten-fold. My few hundred pounds were worth several thousands.

Contents:

• Penny Shares – The Pluses and the Problems
• Are You Fit for the Penny Share Game?
• What is a Penny Share?
• Where Do You Buy Penny Shares?
• What Makes a Penny Share Winner
• The Ideal Penny Share – and Where to Find It
• The Penny Share Shells
• Other Penny Opportunities
• When Not to Buy – and the Time to Sell

How to Make a Killing in Penny Shares By Michael Walters pdf