FLEDGLING
5 December 2017 By PDSNETThese are ordinary shares which comply with all listing requirements, but are too small to be included in the All Share Index and which are not tested for liquidity. There are five JSE indices - the All Share Index, the Top 40 Index (the 40 largest companies on the JSE), the Mid-Cap Index (which consists of the next 60 listed companies by free-float market capitalisation), the Small Cap Index (which is all shares not in the top 40 or the mid-cap) and the Fledgling Index (the smallest 1% of listed shares excluding free float). Most of the fledgling shares are included in the Alt-X, which is a market for small to medium companies in the growth phase and has less stringent listing requirements. Many of these companies are high-risk, high potential return investments. We recommend that if you are going to invest in one of these that you take the time to visit the company and talk to its CEO. Whereas you might find it very difficult to talk to the CEO of a company in the Alsi40 like Bidvest or Standard Bank, talking to directors of fledgling companies is usually fairly easy. You need to establish that they are passionate about their company and get them to explain why they think it's shares represent a great opportunity. Then decide if they have a good reason for being so optimistic.
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