After the analysis of the flash short that was taken out last friday (18th Aug 17) and the subsequent rapid recovery of the share price we were all primed for lots of activity in the following week. Would the short be closed out – or would there be other actions taken by those short ? A complete explanation of all the possible scenarios is described in the accompanying article ‘A Short Story about a Hedge‘.
Here follows a day by day account of the trading, with the accumulation-distribution line being modelled to give a more reliable distinction between buys and sells than simply the mid-Bid-Ask point. This has been positioned using information helpfully provided by a number of the LSE shareholders on the precise nature of their trades. Trades above the line get classed as Buys, those below Sells.
Monday 21st Aug 2017
There is more detail given in the update article that appeared at the time – but the executive summary is that it appeared that the very first trade of the day, a sell of 200K appeared to be again testing the market, and was considered as an extension of the short that was started before the weekend. When this is added to the friday short position of 1.3M shares (adjusted down from 1.4M after a LTH’s information) this gave the short a final open position of 1.5M shares. The two near-Bid trades towards the end of the day were ascribed to a nett-zero Bed & ISA operation and thus their prices are not informative.
The share price opened at 8.88p and finished up 4.2% at 9.25p.
Tuesday 22nd Aug 2017
Tuesday opened with very strong buying – with an opening gap up from 9.25p to 9.75p – however this only lasted until about 08:30 – after which there was a series of sells, the most significant of which was a sell of 300K at 09:02 which is what caused the Ask to drop from 9.75p to 9.5p. This was followed within a minute, by another 100K sell and the Ask subsequently dropped to 9.25p. There was then what appeared to be a brief period of buying at or very close to the Ask price of 9.25p until a quarter past 10 – after which the SP settled back down to a more typical spread and behaviour. There was what appears to be a Bed & ISA combined trade at 11 oclock and a sell of 300K in the afternoon which can be attributed to a LTH.
The share price opened at 9.26p and finished level at 9.25p.
Wednesday 23rd Aug 2017
Relatively simply behaviour took place on wednesday – there were some significant sells between 09:15 and 10:15 but these were accounted for by a LTH and had little impact on the share price. There was also a separate series of 5 sells in multiples of 50K between 10:45 and 12:18, amounting to 500K shares – but again there was little impact on the share price at the time. Later on in the day the Bid did increase when a 500K buy for was posted at 14:50.
The share price opened at 9.25p and finished up 1.4% at 9.375p.
Thursday 24th Aug 2017
A strong sequence of buys early on led to the Ask being increased to 9.75p around 08:50 but this was then followed by a sequence of sells, including 4 in multiples of 50K, concluding at 10:30 with a 100K sell that brought the Ask back down to 9.5p. There was fairly light trading for the rest of the day.
The share price opened at 9.30p and finished as it did on the previous day at 9.375p.
Friday 25th Aug 2017
Trading was fairly light to start with but picked up with a 400K sell around 10:05 – this was a LTH closing out on some T20 trades – but the same LTH made up for this by purchasing a multiple 100K’s later in the day. The Ask was increased to 9.7p around 11:29 and then again to 10p in early afternoon. The two trades at 12:45 are so close in size that they are assumed to be a Bed & ISA combined trade and so count as a nett zero trade. Whilst there were no obvious patterns of 50K multiple trading there were 2 x200K buys in the afternoon so there totalled over 550K shares bought in multiples of 50K.
The share price opened at 9.375p and closed up 1.3% at 9.5p.
Can we say if the 1.5M flash short from last friday has been closed, or even extended in size ? Which of the scenarios described in ‘A Short Story about a Hedge‘ may be being played out ?
The table below summarises the results, and also shows the same type of information had you believed the Buy-Sell assignments as listed on ADVFN.
Buys – Sells
|TBP estimated Buys – Sells||50K Multiple Buys
|50K Multiple Sells
|Monday 21-8-17||+4.2%||– 130,402||+ 234,806||50K||250K|
|Tuesday 22-8-17||Level||+ 320,300||– 573,598||250K||600K|
|Wednesday 23-8-17||+1.4%||– 1,838,454||– 506,008||750K||700K|
|Thursday 24-8-17||Level||– 25,281||+ 254,518||200K||300K|
|Friday 25-8-17||+1.3%||– 1,285,611||+ 233,933||550K||100K|
Firstly – you can see how much the results obtained from ADVFN differ from those derived by us using the more accurate Accumulation-Distribution approach. ADVFN, and other trading platforms can say nothing about trades at mid-price, whilst a simple inspection of the share price graph can reveal whether it is a buy or a sell.
Secondly, it may seem unexpected that the share price has increased by 7% whilst the number of sells has exceed the number of buys by 356K even by our more accurate approach – but remember 356K is a very small nett amount over a whole week – there are many single trades during the week that have exceeded that amount by themselves. Also the start price at the beginning of the week was artificially suppressed by the previous Friday’s short selling. If we take the starting price as the 9.2p that was reached within only an hour of the start of the week as the starting price then the rise over the week is only 9.2p to 9.5p, or 3.3%.
Finally – the whole point of the exercise – has there been any clear evidence of further shorting, or the short closing ? Whilst the total amount of shares traded in 50K amounts (and who are not LTHs who have revealed their trades) is closely balanced – when you look at the actual distribution of trades it shows that there were in fact two periods of selling – the first on tuesday morning (3 sells totalling 450K over 1/2 hr) and wednesday morning (5 sells totalling 500K over 1 1/2 hr).
Thus there is some evidence that those who shorted the share last friday have concluded that the short will not work (the market recovered completely and LTHs are clearly very confident), and are proceeding to sell down the remaining 1.5M shares that might form the remainder of a holding of 3M warrants. This is described as scenario 1 in the explanatory article ‘A Short Story about a Hedge‘.