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Does low volume turnover increase risk?

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    Does low volume turnover increase risk?

    Hi James, I watched your webinar yesterday about five growth stocks. Some of the stocks you were recommending (Smartpay, Regal Partners, Family Zone) have very low trading turnover. As I look this morning coming up to one hour into today's trading session there have been just one trade in Regal Partners, no trades Family Zone and only two trades on SmartPay. This makes for a higher risk trading environment for shareholders as it may be quite hard to cash out at the current market price. You didn't mention this point in the webinar. Do you see this low volume turnover as a risk? Also, given your interest in Smartpay and Family Zone why has Market Matters not bought these stocks?

    Answer

    Hi Paul,

    Small cap growth stocks are risky, with liquidity simply another factor to consider. Low liquidity is not ideal and speaks to one of the reasons why we do not own some of the names mentioned in the webinar – a point I should have stressed.

    Smartpay (SMP) and Family Zone (FZO) are both stocks that I have looked at in the past year, Smart Pay (SMP) was one I struggled to get excited about given its similarity to Tyro (TYR), while Family Zone (FZO) I am personally less certain about their monetisation strategy. The stocks covered here were the picks of the 2 analysts, I’m very cognisant that the MM team haven’t cornered all the ‘good ideas’ out there, and giving well credentialed others a platform to flag some less mainstream names can be worthwhile, noting that of the stocks covered, MM is backing Aussie Broadband (ABB), HUB 24 (HUB) & Regal Partners (RPL).

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    Family Zone (FZO)
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