Alfa Financial Software (LON: ALFA) should move higher Tuesday morning as the market reopens after the long weekend. This isn't the result of any specific news from the company itself, no results, no startling takeover or anything. Rather, the Midas column in the Mail on Sunday is one of those few share tipping columns which has, on its own, the power to move markets. We saw this when Midas tipped Intelligent Ultrasound and the stock moved 70% up on that advice alone. But we also need to be careful - Intelligent U moved up near 150%, then fell back again to rest at about 80% up over this past 6 weeks. The effects of share tips do depend, you see?
As to what Alfa Financial does, yes, it's in a great business area. Ever more companies - and people - are leasing their equipment under ever more complex terms. That places a great premium upon leasing software which is adaptable to those different terms. According to the industry insiders that's just what Alfa has, some of the leading software for that purpose. It's debt free, has a reputation for paying out any excess cashflow as a special dividend, the Midas analysis doesn't seem to have any great holes in it. But we around here aren't so interested in long term investment ideas. We're much more about the quick trade, in and out.
Alfa Financial share price from London Stock Exchange
In this trading short term the effect of a Midas tip on Alfa Financial will be much less than it was on Intelligent Ultrasound. Simply because Alfa is a much larger company with much greater liquidity. It takes much more of a tip to move a £400 million capitalisation company than it does something the markets are valuing at only £40 million like Intelligent (and don't forget Intelligent was valued more at £20 million at the time of the tip).
What we can predict with a high level of confidence is that the Alfa Financial price will be higher at Tuesday's open. The market makers will simply mark it up precisely because there has been the Midas tip. It's the movement after that which we're not sure about. It depends upon how many people actually buy as a result of the tip. If there's not much change to the normal traffic then the price will edge back down again, if there's substantial interest it might well continue to move higher.
The point here is not to tip Alfa ourselves, one way or the other. Rather, it's to use it as an example. Share tipping columns - some of them - can actually move prices. It's worth having a look to see how much this price is moved by that one Midas share tip.