Hi,

Given the renewed interest in IND recently, and particularly after the upbeat investor meeting, I thought it might be helpful to reiterate some tips about buying & selling the shares in size.

Many people have commented on how difficult it can be to trade in & out of IND in size, and I know for a fact that there are several people/Funds looking to buy at the moment. I've had occasion to buy & sell IND shares in size over the past 4 years, and have picked up some useful tips, which I've posted before, so ignore this post if it's old hat to you !


1) How to get more than 1,000 shares without paying a premium price ?

Normally the Market Makers will quote the market price for 1,000 shares (sometimes it can be less, at 500 shares), so at the current price of 830p Bid/845p Offer, you can expect to get 1,000 shares for 845p.

However, if you want (say) 10,000 shares, the MM will usually offer you a series of options, something like this;

1,000 shares at 845p
2,300 shares at 855p
5,000 shares at 870p
10,000 shares at 890p

Not a very appealing set of options, I'm sure you'll agree ! Why should you pay a premium price ? So I always decline this type of offer, and instead the key thing to do is this;

Instruct your broker to "buy 1,000 at 845p, and leave the remaining order for a further 9,000 shares with the Market Maker, good for the day".

This is an agreement between you, your broker & the Market Maker, that you will buy up to another 9,000 shares at 845p today, if the stock becomes available.
So the MM now has an incentive to ring around & see if he can find any stock. He might also increase his Bid price by 5p or so, to attract sellers. As the day progresses, he might well accumulate (say) 4,000 shares and these will then be booked over to you as a T trade at around 4:15pm.

So by using this method you managed to get 5,000 shares, without paying a premium at all. That saved you 5,000 * 25p = £1,250 ! Not bad for a day's work.


2. Buying on red days

IND is a volatile share, and there are always clumsy buyers & sellers, especially people who drip-feed large orders through the market by e.g. buying or selling 1,000 shares a day, which is a really bad strategy, as everyone can see what you're doing & it just moves the price more & more against you.

So if you want to buy, the best strategy by far is to wait for a red day, as when the price falls (say) 20p, it usually panics a few muppets into selling their few hundred shares, and the price might well go down another 10p.

Use this irrational 30p drop in price to snap up some cheap stock !

Also, you might well find that on a red day, more volume is available than usual.
And, you can be cheekier on price, as follows;


3. Be cheeky on price !

The MM spread on IND is a whopping 30p (although depending on how the 2 MM's sit relative to each other, that can narrow), why should we pay so much ?

If you monitor the trades, you can see what price the buys & sells are going through at. The MMs run neutral books wherever possible (i.e. they try to hold nil stock), so if there have been some small sells on a particular day, why not total up how much the MMs paid for that stock, and then instruct your broker to buy it at (say) 7p or 8p above what the MM paid for it ?
That's a reasonable profit margin for them, and they might well accept your offer. It doesn't cost you anything to try, and you can always increase your price if they say no !

To do this, you really need a proper, telephone broker, although I have heard that some online brokers will put themselves out. But trouble with an online broker, is if you input a buy price below the current market price, the broker will probably do nothing unless & until the market price falls to that level, which is no good at all.

But if the market price is say 840p Bid, 870p Offer, I would instruct my broker to buy at 857p (just above the mid-price). If the MM has stock he bought at 840p, he might well be happy to sell it to you at this price, saving you 13p/share.

As before, this strategy works best if you're going against the flow - i.e. if you're buying when others are selling, and vice versa.


4. Use the house broker !

Bell Lawrie, IND's house broker, are happy to act as a go-between for larger transactions in IND shares, and I've transacted several times this way. You just ring them up (ask for the person who deals with the IND account, and explain you're a large private shareholder looking to buy or sell in size), and then place a firm order with them.

I usually propose buying or selling at the market mid-price, as that is fair to buyer & seller, and also gives you a much better price than through the market !

Bell Lawrie will of course want to charge you commission, but this shouldn't be more than 0.5%

NB. This method is only worth bothering with, if your transaction is more than say 10,000 shares.
Generally they have more potential buyers than sellers. Institutions don't tend to go into the market & buy in scraps, they just wait for the house broker to offer them a decent line of stock in one go.

Imagine trying to sell 100,000 shares through the market ! It would be a total nightmare, and take ages, and kill the price. But through the house broker it can be done in about 10 minutes with a couple of phone calls. I've done this about 5 or 6 times over the years.
There has always been a big buyer, often who has been waiting patiently for a big seller, for months, so you're actually in a strong position if you sell in size, due to the lack of available stock out there.

I managed to even get a premium price (1000p) for a big line of stock back in the spring, and then bought it back about 150p cheaper in the market over the summer.


5. Be patient !

It's usually a mistake to continuously buy 1,000 shares a day, as you'll push the price up against yourself. Same with selling. But if you're a bit more patient about it, and just do 1,000 shares say twice a week, on red days, your repeat buying will go undetected, usually without moving the price much.

Or you can just wait for sellers to emerge, and only put buy orders in when you can see that the MMs have taken over 1,000 shares from sellers. Chances are you'll get the stock cheaper too. And if you only buy stock which they already hold, you won't move the price.

Buying 2,000 shares a week in this way will accumulate a nice holding over a few months.



Hope the above is helpful & enables people to save a bit of money & stress !!!

Cheers, Paul.