“Falling Knife” Of The Week: Albedo

albedoAlbedo Limited (SGX: 5IB) has stolen the top spot for this week’s “Falling Knife” after plunging 34.9%. It is currently trading at $0.041 at the time of writing.

Earlier this month, the company announced that it had allotted and issued 9.7 million new ordinary shares due to an exercise of warrants granted under the “Rights cum Warrants Issue”. The warrants were exercised at o.5 Singapore cents per new share. This increased the outstanding shares count from 1.54 billion 1.55 billion. The new shares started trading today.

Some of you may remember that Albedo was featured as our Singapore “Flyer” at the end of August. Coincidentally, the closing price at the time was also $0.041. It is fascinating to note the volatility of penny stocks such as Albedo.

People buying penny stocks just because it was rising would be caught out when prices start to plunge and liquidity dries up.

As noted by my colleague David Kuo, it is unwise to be like the private investor Bob, who after having bought into some penny stocks, was left holding the “baby” when he couldn’t find any buyers to sell to.

I’m signing off with this Foolish quote by Warren Buffett – “Only when the tide goes out do you discover who’s been swimming naked.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice.  Motley Fool Singapore contributor Sudhan P doesn’t own shares in any companies mentioned.