The Punter has had an outstanding order to buy 15,000 shares in the Buderim Group (ASX code BUG), since late March. Although he placed the order at 26c, roughly 20 per cent below the asking price for the shares at the time, the order came almost close to being filled last week as the shares suddenly slumped by 10 per cent in a day.
Buderim is best known for its ginger products, but it also has a tourism attraction in Queensland and a significant macademia nut business.
The drop in the share price seemed to be in response to speculation that the eruption of the Kilauea volcano in Haiwaii could be bad news for the group’s Hawaiian macademia operations. The company quickly issued a reassuring statement that it had not been affected by the volcano, but it was a sharp reminder that random events can throw even the “safest” companies off course.
Not that the Punter is convinced that Buderim is in the “safest” category. On top of all the usual hazards associated with using agricultural products as raw materials, it is also facing stiff competition, particularly from cheap Chinese imports.
However, he was tempted to amend his order to buy the shares even at the current price, hoping to benefit from a quick rebound after the reassuring statement.
Until he realised that the 10 per cent drop had been caused by a single trade of a mere $290 worth of shares.
Such a small trade is normally only part of a larger order, and the fact that it could only be completed 10 per cent below the market price smacks of desperation by the seller, and great reluctance by anyone to buy Buderim shares. So the Punter is happy to wait for the BUG to fly even lower.
In the meantime, with CBA shares below $69.50, he has written off his option to buy them at $75.70 and chastised himself severely for selling his $72.70 “put” option far too soon.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.
