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18th Aug Flash Short – Update Week 8

Monday 9th Oct 2017

A relatively straightforward day – the trade pair at 10:20AM (160,854 and then 160,188 6 seconds later) is clearly a Bed&ISA combined trade. This had no effect on the overall patterns of trading on Monday – but skip ahead to Friday to see the MMs take the opportunity to try a tree shake following a Bed&ISA trade like this.

The real Bid and Ask rose slowly during the day – evidently the Market Makers are still looking to buy from the PIs and need to pay increasingly higher prices to get what they need. The RNS at 1:09PM about Atlas exercising their rights to convert £50,000 of their bonds into shares seemed to have somewhat of a positive effect – remember the price that Atlas pay is based upon the actual price in the market in the previous 5 days – so it makes sense for them to convert as soon as possible and then hold as long as they like – unlike warrants there is absolutely no sense in converting and then selling immediately – they would make virtually nothing on the margin.

Once again a sell at the very end of the day led to a negative nett trade position – this time minus 229K.

The SP ended at 9.675p, up 1.2% on a volume of 1.27M (524K Buys vs 753K Sells).

Tuesday 10th Oct 2017

A large Buy of 431K at 9:03AM seemed to shake the market up and the Ask rose to 10p again. This was not followed by any further significant buying and some profit taking around 11AM absorbed most of the positive nett trade position. Some more selling in the afternoon then led the Bid to fall back again, leaving the nett trade position at minus 313K at the end of the day.

Around 6pm, following a day at the Vanitec 3rd ESC meeting, the new Bushveld Minerals website went live, following a day or two when only a placeholder page was visible.

The SP ended at 9.75p, up 1.2% on the day on a volume of 2.06M (877K Buys vs 1.189M Sells).

Wednesday 11th Oct 2017

Positivity returned strongly on wednesday, possibly as a result of the extensive coverage of the Vanitec ESC meeting. Although the advertised Bid and Ask did not budge during the day it was clear that there was enthusiastic buying which lifted the effective Bid and Ask during the day. Only a delayed reported Sell of 350K and another after hours sell of 163K were able to return the nett trading position back to neutrality. It looks quite feasible that one Market Maker (MM2) may be selling to another (MM1) in order to close their (MM1’s) short position, but MM2 is yet again waiting until the end of the day, after the price has had a chance to move up, to do so.

The SP ended at 9.75p, flat on the day on a volume of 2.08M (1.06M Buys vs 1.015M Sells).

Thursday 12th Oct 2017

Thursday’s trading appears dominated by two early Sells of 250K each at 8:08AM and 8:09AM. There was a suggestion that these were from a specific LTH (Nickderby) who had confirmed that they had reduced their position – but this notion was quickly refuted. What else might it have been – an attempted short on the back of this news ? The usual shorting characters were not evident on the LSE board and the only slightly negative comment was “There is a large seller in the background …dummy sells going straight to nt ….. Nick we are all big boys … you do what’s right for you…..” (after midday from coffeecups) – so not an obvious connection.

The Bid dropped later in the day, allowing more shares to be picked up at the 9.70p level that Sellers were able to obtain only a day earlier. These offset some subsequent sells but not sufficiently enough to completely take out the 2x250K morning Sells – the nett trade position ended the day at minus 665K.

The SP ended at 9.625p, down 1.2% on the day on a volume of 2.53M (932K Buys vs 1.597M Sells).

Friday 13th Oct 2017

On the LSE bulletin board there was further discussion about Nickderby’s change in position (from 40M to 31.5M) on thursday evening and friday morning and it may have been this sentiment that led the MMs to drop the Bid following a 205K Sell at 8:10AM. The market reacted simply by absorbing this with extra buys before 10AM, but the MMs were able to keep the Ask at 9.75p until 10:55AM when they were able to drop two >200K trades rapidly in succession at around 9.00p.

On simple inspection (and indeed later confirmation by ClarkGriswold on the LSE board) these two trades were simply a Bed&ISA combined trade but the MMs used the opportunity to behave as if they were two big Sells. How did they do this ? – immediately after the Bed&ISA trades the MMs dropped the Ask to 9.5p making it look like the share mid-price had fallen from 9.625p at the morning opening to 9.25p at 11AM (a price drop of almost 4%).

Did anyone Sell ? No

Could you Buy ? Only 3 people were able to (max buy 80K’s worth for Fatbanker via a limit Buy) but by 11:18AM it was not possible to get a real-time quote to Buy any more than 500 pounds worth. A classic Tree shake – drop the price and hope you can get some people to sell, but make sure you don’t let anyone buy at these artificially low prices.

In the afternoon the advertised Bid and Ask returned back to their opening levels and by the end of the day the SP was 9.625p, flat on the day on a volume of 1.9M (878K Buys vs 1.02M Sells).

Summary for Week 6

SP Change TBP estimated Buys – Sells Potential Shorting Activity Comments
Monday 9-10-17 + 1.2% – 229,097
Tuesday 10-10-17 + 1.2% – 312,957
Wednesday 11-10-17 Flat +47,733
Thursday 12-10-17 – 1.2% – 665,014  2x 250K Sells ?
Friday 13-10-17 Flat – 141,900
Total + 1.2% -1.30M

Conclusion

For the third week in succession the SP has risen 1.2% whilst at the same time it appears that there have been more Sells than Buys – clearly PIs cannot really be selling if the SP keeps rising so what is happening ? It seems likely that this is the closing of a short position held by one of the Market Makers – with shares being sold to them by another Market Maker.

 Week after 18th Aug Short TBP estimated Buys – Sells Weekly SP Change
Week 1 – 0.36 M
Week 2 + 1.2 M + 7.9%
Week 3 + 3.6 M -6.1%
Week 4 + 0.76 M – 2.5%
Week 5 – 1.36 M – 1.2%
Week 6  – 1.90 M + 1.2%
Week 7 + 0.09M + 1.2% 
Week 8 – 1.30 M + 1.2%

The Graph below shows the daily nett trade position shown in the 8 weeks since the 18th August flash short.

You can see that there was an initial recovery after the short and then as the bulletin board and TBP coverage became widely known, and the shorters got squeezed, one of the Market Makers decided to take advantage by selling to PIs (and shorters) quite a lot more shares than they actually had. You can see that between the 29th of August and the 14th of September the Market Makers were, on average, selling to PIs 300K shares per day more than they bought from them.

By the 14th of August there appeared a deficit of some 4M shares that needed to be found within c. 3 weeks. What luck then that the SP fell 10% from its peak at 10.25p just at the point that the Market Makers needed to buy these shares. However as LTHs know too much about this company and are not selling their shares the short Market Maker (MM1) appears only to be able to buy these shares from another MM (MM2) – in the last three weeks we have seen  the regular walking up of the effective Bid even whilst the market was very quiet .

However if PIs will still not sell then Market Maker MM2 is now exposing themselves short. Simply churning the shares amongst the 5 or so market makers will not make their problem go away. Only PI selling can do that, and that will inevitably require the price to rise further still. All the while the clock ticks closer to the point that Vametco production reports for Q3 are published.

There is no point in anyone hoping that they can wait until the Afritin demerger for the BMN price to drop on that event – for every share sold short prior to the demerger date 1x BMN share +1x Afritin share need to be delivered. The whole point of demerging Afritin is to change the situation from what it is now, where the Tin assets are ascribed essentially zero value, to one where they are given something closer to fair value – the total SP value of BMN+Afritin will unavoidably rise as a result of the demerger.

This article only conveys the personal opinion of the author. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. This article does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions.

Site content is not authorised by the FCA and you are not safeguarded by the Investor Protection measures of the Financial Services and Markets Act 2000. See our full disclaimer

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Thank you for visiting the Bushveld Perspective, an archive of opinions from many private investors and commentators on the subject of Bushveld Minerals, which it is completely independent from.

The Bushveld Perspective holds no responsibility for your investment decisions and information written should not be relied upon in completing specific transactions. In particular the content does not constitute professional, financial or investment advice & must not be used as a basis for making investment decisions.

The content only conveys the personal opinions of our contributors. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. Site content is not authorised by the FCA and you are not safeguarded by the Investor Protection measures of the Financial Services and Markets Act 2000.

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This article only conveys the personal opinion of the author. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. This article does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions.

Site content is not authorised by the FCA and you are not safeguarded by the Investor Protection measures of the Financial Services and Markets Act 2000. See our full disclaimer