Admiral – 2 Ways to play Admiral (LON:ADM)
The Performance Charts show there is consistent Volatility over the years.
Using this to effect by Buying Low and Selling High can give profitable Capital Gains.
Particularly when shares are held in ISA’s.
Using this to effect by Buy Low and Holding On can give a high Dividend Income.
ADM’s practice of adding Special Dividends are a form of insurance in itself, a Safety Net should profits be hit.
This would be the downside and even worse, as when the Interim Payment was cancelled as in 2022.
Looking at the Buying Low and Selling High there are examples:
Take the recent March 2023 Dip of c1869 pence/share and the following June 2023 High at c2392 pence/share -
There’s a variation of 523 pence which is an increase of 28% in 3 months.
Then, further back, take the July 2022 Dip of c1677 pence and the following month of August 2022 High at c2247 pence -
There’s a variation of 570 pence which is an increase of 34% in just one month.
Accepting Dealing Commissions each way and a purchasing Stamp Duty these results are in excess of the 15% Traders operate at (a presumed figure).
A Policy to adopt might be to Sell Half on a High then Buy Back on the Dip, maybe with some additional funds thrown in.
So, on this date we are at a crossroads, the ex-Dividend Date is soon, on the 7th of September –
The current Share Price will incorporate this Interim plus the Special so the share price will immediately fall.
Will the Share Price quickly recover and being on quite a High then could half the Holding be Sold?
It seems obvious that no shares should be sold prior to this oncoming ex-Dividend date.
A further consideration is what to do with cash returned from a Sale of Shares –
If it isn’t put to one side then there may be no funds when the forthcoming Dip arrives.
As a Long (term) Investor the picture may change from the proposed –
For instance, a Holding in ADM created 8 years ago will have collected half the value of the amount invested –
Can this be beaten by Trading between the Dips and the Highs?
Perhaps not, as Volatility has not always been high as is currently seems the case, and may…
