Monday 30th Oct
There was strong buying from the start of the day, with only a single sell apparent before 11am at which point both the Bid and Ask lifted. There was subsequently some selling at prices in excess of 9.75p but this was much smaller in magnitude, with only 350K shares being sold by 4pm. At the close of trading there had been more than 745K share Buys than Sells.
An 800K Sell appeared at 4:40pm at 9.63p – though this was not reported until wednesday. This knocked the nett trade position back from +745K to very close to zero.
The SP finished at 9.625p, up 1.3% on the day on a volume of 2.2M (1.47M Buys vs 1.53M Sells).
Tuesday 31st Oct
The rises of the previous day were reversed early on, with the inevitable response of further buying – almost 500K more Buys than Sells before noon. Lifting the Ask back to 9.75p slowed the buying but there was little further selling and the nett trades position reached +447K by the close of trading.
An after hours 450K Sell appeared at 9.4613p – though this was not reported until wednesday. This knocked the nett trade position back from +447K to very close to zero.
The SP finished at 9.5p, down 1.3% on the day on a volume of 2.1M (1.03M Buys vs 1.03M Sells).
Wednesday 1st Nov
After the oscillations of the previous couple of days investors were unsurprisingly reticent about rushing to buy on Wednesday morning. The first trade was not until 8:20am and the first Buy not until 70 minutes into trading. Trading was very quiet until a quarter to three in the afternoon when a 300K Buy arrived, taking the nett trade position positive for the first time in the day. This was offset by a 250K sell at 3:54pm and prices paid for Buys dropped slightly until the close of trading
After hours there was a 250K Sell at 9.3p – though true to form this was not reported until the next day.
The SP finished at 9.5p, flat on the day on a volume of 1.35M (583K Buys vs 769K Sells).
Thursday 2nd Nov
Was thursday to be groundhog day all over again – persistent buying only to be taken out by a large after hours sell reported late ?
Trading until 10:30am was uneventful – the usual trickle of buys and sells. Until 10:42 when a 1.16M buy was reported – although this was priced at the Bid-Ask mid-price it is clear from the pattern of trades before and after that this was a buy. Apart from a rather strange sell of 121K at 9.15p trading followed on from this very large buy largely unperturbed.
In the afternoon Wessy disclosed to the LSE board that he had been forced to liquidate a long-term spreadbet position that he had and that this will have resulted in 4.5m shares sold back into the market by the spreadbetting company in the previous 10 days. This disclosure, and the resultant selling overhang is described in more detail a separate article. The end result is that we can expect the nett positive trade position of + 1,426K currently showing for Thursday to be entirely wiped out by the final 1.5M Sell resulting from last installment of spreadbet selling.
The SP finished at 9.6p (not the Bid-Ask mid-price but somehow as a result of an uncrossing trade at that price after hours) – up 1% on the day on a volume of 3.1M (2.24M Buys vs 816K Sells).
Friday 3rd Nov
The very timely disclosure by Wessy allowed the overhang from the spreadbet selling to be analysed and published before trading opened on Friday. Together with the belief that this was the last day that BMN shares could be bought before the Afritin demerger this led to strong early buying. By 9am Buys had already outstripped Sells by more than 500K. Both Bid and Ask moved up and there was some resultant selling. Continual buying through the afternoon led to a balance which left the nett trade position at more than +470K at the close of trading.
At 3.30pm an update to the AIM schedule one notice about the Afritin demerger was published – this made it clear that the expected admission date for the Afritin demerger had been put back from the 6th to the 8th of November. In addition it stated “Following Admission, the Bushveld Shareholders as a group will hold approximately 29% and Bushveld will hold at least 15% of the Enlarged Issued Share Capital on Admission.”
The SP finished at 9.625p – up 0.3% on the day on a volume of 2.0M (1.21M Buys vs 784K Sells).
|SP Change||TBP estimated Buys – Sells||Potential Shorting Activity||Comments|
|Monday 30-10-17||+ 1.3%||– 54,396||–||After Hours Trades – 800K Sell reported 2 days later|
|Tuesday 31-10-17||– 1.3%||– 2,488||–||After Hours Trades – 450K Sell reported the following day|
|Wednesday 1-11-17||Flat||– 185,308||–||After Hours Trades – 250K Sell reported the following day|
|Thursday 2-11-17||+ 1.0%||+ 1,426,755||–||After Hours Trades – 50K Sell, c. 1.5M expected|
|Friday 3-11-17||+ 0.3%||+ 432,912||–||–|
The spreadbet overhang clearly seems to have been removed now – Wessy has stated that the transactions have already taken place so it is just a matter of bookkeeping for the sells of last Friday and this Thursday to be reported. During the period from last Tuesday to this Thursday, when the spreadbet selling was being undertaken a clear pattern of trading behaviour has been observed. I need not go over it again here as it is clearly described in the conclusion of the Overhang Clearance article.
It is informative to compare the SP response during the spreadbet selling phase, and after it – for example on Monday and Friday this week. On Monday it took more than 1.2M Buys before the Ask increased but on Friday it took only 500K Buys. Clearly the Market Makers do not need to increase the Ask (and perhaps put buyers off) so quickly if they know that there is a large distressed seller waiting in the background to feed them all the shares they need. With no seller present they need to buy shares from PIs and this means they need to put the price up to get balancing sellers.
The situation after the removal of the spreadbet overhang clearly makes the SP much more sensitive to Buying pressure. With two days longer to buy BMN shares that come with a free Afritin share it could be that this results in signficant SP increases ahead of the demerger.
The daybook neutrality that MMs have been operating for the last two weeks (either as a result of doubt about post Afritin SP movement or because it is “back to business as usual”) has resulted in very little change to the accumulated nett trade position that has arisen since the 18th August (the graphs shown here do factor in the additional spreadbet sells that we expect to see reported for last Friday and this Thursday). The MM response to the 18th August short is clearly evident – initially selling shares to distressed shorters that they themselves did not yet have, then buying those shares back after the 20th September.
It took until about the 20th of October for the MMs position to be neutralised and for ‘business as usual’ (i.e. some semblence of daybook neutrality) to return. Interestingly since the 20th of October the BMN share price has been remarkably stable. Time will tell if this reflects a genuine change in market dynamics, notwithstanding the brief period of volatility that we might expect around the time of the Afritin demerger.
On Monday 6th Nov a 1.5M Sell was reported for Thursday the 2nd Nov and a 395K Sell was reported for Friday the 3rd of November. The first of these was the final trade in the liquidation of the spreadbet hedge against Wessy’s bet and happened during the day, unlike all the previous balancing sells which happened after hours.
The second sell (395K) occurred just before the close of trading on Friday, thus eliminating the c. +432K nett trade position. All the graphs shown in this article have been adjusted to take into account these delayed reports.