Monday 27th Nov
Trading opened quietly, with only 3 trades in the first hour. Of these one was a 50K Sell. At 9:28am another arrived – causing both Bid and Ask to drop when the total nett trade for the day reached the uneyewatering level of -98K. The Bid dropped again following a third 50K sell at 9:38am.
Ask yourself why both Bid and Ask have been walked down in this way whilst the nett trade position is still so tiny. Clearly the Market Makers do not consistently respond to Buying/Selling pressure. Anyway – on with the story.
The two drops in Bid appear to have spooked the holder of the 94,530 shares that were then sold at only 7.8p at 9:42am. There then followed a strong sequence of buying with an upward price trend which pushed the nett trade position positive for the first time in the day – at which point the Ask rose back up to 8.50p.
From 11am onwards there were a few more sells which caused the Ask to be dropped twice until at noon Buyers were able to pick up shares for as low as 8p. I do not recall if the Buy sizes were being heavily restricted at the time but evidently not many buyers could take advantage of this opportunity as the maximum Buy size in the period between noon and 1pm was only 25K. It was not until after 1pm, when the MMs moved the Ask back up to 8.25p that trade sizes of greater than 50K were accepted and Buys of 61K,182K and 250K appeared. Of course exactly the same sort of thing happens during a tree shake – all of sudden the advertised prices appear to drop without reason and yet Buyers are restricted from taking advantage of this – both are sham drops designed to release shares from weak holders.
These larger Buys then caused the Bid to rise back to 8p which sparked a 250K sell just before 2pm – this was partially reversed by a Buy of 169K following soon after and despite almost pure buying until the close the nett trade position finished the day positive at +194K. Despite there being c. 200K more shares bought than sold by PIs the share price ended the day at 8.00p down 4.5% on a volume of 2.6M (1.38M Buys vs 1.19M Sells).
Tuesday 28th Nov
Trading opened with a Sell of 420,281 (not revealed at the time). Following on from this were Buys of 50K and 150K but these were offset by a 200K Sell. That was followed 10 minutes later by another 100K Sell and then 15 minutes later by another 100K Sell. All the multiple-100K Sells are marked in green on the chart above.
The drops in Ask may have caused delight to the new owners of blocks of 25K and 6.5K shares, but evidently again nobody else was able to benefit in significant quantities from these knockdown prices. Persistent buying moved both the Bid and Ask back up but it was not until a quarter past nine when the nett trade position went positive for the first time in the day that the Ask moved back up to 8p.
Things appeared to settle down like this until 3pm when the Bid dropped back again to 7.25p. Another 100K Sell appeared at a quarter past three – the nett trade position spiked briefly lower before strong buying pushed it back positive. At half past Three there were two closely timed trades, both of 200K, which turned out to be a LTH rolling over a position. Why the Bid should spike down to 7.00p as a result of this nett zero combination I cannot say, but evidently Buyers were paying only 0.01p less (7.49p versus 7.50p before the 2x200K trades) despite the large advertised Bid and Ask changes.
The end of day share price was reported as 7.625p, down 4.7% on a volume of 4.8M (2.69M Buys vs 2.11M Sells) – the 208K sell after hours knocked the nett trade position for the day back from +785K to +577K but unlike the UT trades in the previous week did not skew the reported closing share price. Why such crazy Bid and Ask were reported for that trade I also have no idea.
Wednesday 29th Nov
The publication of the H1 interim results at 7am caused the Bid and Ask to be set out very much lower than the previous day. Evidently somebody may have concluded that the Impairment cost due to the Afritin demerger was sort of like, er, making a loss and so may have thought that now was a good time to try to set off a short. The Bid opened at 7.25p and after a 100K sell in the first 45 seconds was immediately marked down to 7.00p. Some 100 seconds later it was again marked down by 0.25p following sells amounting to approximately only 100K. For the third day in a row it appears that the Bid has been bashed down by 0.5-0.75p on excess sells of perhaps only 300-400K. It would appear the MMs are looking for any excuse to slash prices.
The opening two hours are shown in more detail above. Following on from the initial drops in Bid and Ask buying returned strongly, with a large buy of 266,586 at 8:25am helping to lift the nett trading position positive for the first time in the day. Some significant T20 closing sells followed this and the Bid again dropped back to 6.75p, firstly at 8:26 and then a second time at 8:51. Further concerted buying after 9am caused Ask and then Bid to rebound and at 9:40 they were at the true closing levels of the previous day.
By 9:55 the regular buying had raised the nett trading position to >250K for the second time in the day – at which point this was promptly taken out by the 300K sell shown highlighted on the chart. The Bid then rose strangely to 7.75p on a rather small trade of c. 10K before being dropped back to 7.50p following a 100K trade, presumed a sell, 2 minutes later. The trading in the remainder of the day seemed uneventful in comparative terms – whilst trading between 10:30 and the end of the day did see the nett trade position move from +100K to c. -300K nothing happened with either Bid or Ask, though the effective price paid to buy shares did decline during the day. The rigidity of the Bid/Ask is a notable difference to the start of the day – this is discussed further in the conclusion.
The SP ended flat on the day at 7.625p on a volume of 5.26M (2.34M Buys vs 2.92M Sells) – the final net trade position was significantly affected by the 300K trade after hours, which has been classified as a sell.
Thursday 30th Nov
Thursday of course started off with the game-changing RNS that BMN intends to purchase Yellow Dragon’s remaining 55% stake in Bushveld Vametco – in one fell swoop BMN would be able to increase its stake in the strongly cash generative Vametco by c. 125%.
Not unsurprisingly there was enthusiastic buying right from the off – in fact the first 40 trades all appeared to by Buys. By 8.20 it was pretty much all over – the SP had appreciated by over 20% and there was an excess of Buys over Sells of more than 1.5Million. After this there was a greater balance of Buys and Sells and by the end of the day the nett trade position had edged somewhat higher to c. 1.9M more Buys than Sells. Whilst there were surprisingly many Sells given the news this may be purely a reflection of day traders’ aspirations – get in early on and if you can get out the same day with 10% more than you started with you can call it a champagne performance.
However – that still leave 1.9M more shares that the Market Makers sold to PI’s than they appeared to Buy from them. Of course had the Market Makers forced themselves to run a neutral daybook, as most PI’s would assume they generally do, then there is no doubt the price appreciation would have been much larger than the rather limited 21% that the day finished with, and which of course is entirely unreflective of the nature of the YD buyout deal. In periods of very strong buying or selling Market Makers are naturally allowed to operate without have to have a one-in-one-out policy on shares – however there are also longer term patterns evident that could not be claimed to be periods of extreme volatility – see the conclusion.
Friday 1st Dec
Compared to Thursday trading started off relatively slowly – a sell of 100K followed by 50K and then 64,511 caused the Ask to be dropped to 9.25p at 8:35am. This spark a series of Buys including an Uncrossing Trade (why ?) of 100K at 9.40p at 9am. After a couple of significant sells (99K, 101K) at 9:10 and 9:11 the nett trade position again went positive after a second period of buying. The Ask returned to 9.50p and things settled down with a balance of Buys and Sell until 1pm.
Just after 1pm a 200K sell was rapidly offset by 2x100K buys (probably the rollover of a T20 position) and this was followed by a 50K Buy, an 8K Sell and a 53K Buy. At this point the Ask dropped from 9.50p to 9.25p – this clearly makes no sense and suggests that there are delayed trades yet to be reported at this time. Between 1:10pm and 1:38pm there was a good balance of Buys vs Sells but again there was a sharp and unexplained drop in both Bid and Ask at this point. Whilst there is a Sell of 125K at 8.75p showing at 1:40pm the drop in Bid and Ask actually happened 2 minutes earlier – again we may expect to see some delayed trades that may provide a pretext for the drops.
After a recovery in the Ask and further buying above 9.1p the nett trade position reached an excess of c. 225K more Buys than Sells. A pair of 100K Sells just after a quarter past 3 subsequently knocked the nett trade position back very close to zero.
The share price finished at 9.00p, down 2.8% on the day on a volume of 3.5M (1.76M Buys vs 1.77M Sells).
Since the last clear flash short on the 10th of November it appears that there has been a period of significant selling. This may have been from short sellers or normal sellers – the former are likely at some point in the future to have to Buy the shares they just sold, whilst the latter had already bought their shares at some point in the past.
In the week following the 10th November short the share price stood up well due to PI buying, and at the end of that week there was the announcement that c. 1.1M of Warrants that had been issued to Beaufort Securities had been exercised. This leads to the hypothesis that this was the event that closed the 10th November short, which was of a very similar size. In the week of 13th-17th Nov the Market Makers appeared to run a trading book that was approximately neutral – i.e. they did not build up either a long or short position.
The following week (20th-24th Nov) started out with the Q3 production reports which were not quite as outstanding as some people had been hoping for. This was due in part to a brief shutdown of production in the Vametco processing plant and in part because the reporting period was for just before the sharp increase in Vanadium prices at the start of August.
Either there were some very impatient LTHs who were selling on the 20th November, or those that had been previously shorting BMN returned to try and take advantage of the Q3 news. Either way on the 20th November the Market Makers decided to buy almost 1M more shares from PIs/Shorters than they sold them (a PI Sell is a MM Buy). The MMs at this point developed a long position, whilst seemingly taking advantage of every opportunity to knock down the share price whilst they accumulated shares for their own pot.
The Market Makers continued to acquire more shares than they sold to PIs through the 21st-24th of November, developing a long position of some 1.5M shares by the 24th. The H1 interim results published on Wednesday the 29th offered the MMs another opportunity to slash prices at the start of trading and so they may have expected to be able to continue with building their long position at low prices. Although they were able to Buy c. 600K more shares than they sold on wednesday this was only after the wider market had cottoned onto the depressed BMN price and had produced a strong rally after the opening mark down.
Thursday’s outstanding RNS regarding the acquisition of Yellow Dragon’s 55% stake in Bushveld Vametco completely changed the game. Strong early buying (again this could be either PIs or shorters desperately rushing to close earlier shorts) forced the MMs to let the SP go, and in the first 20 minutes of trading it rose 21% on an excess of Buys of 1.5M. By the end of trading a further 400K more PI Buys than Sells had occurred yet the SP had not moved at all – in fact it fell back. Evidently there are two phases to the MM reaction – the initial ‘freewheeling’ response that was then followed by ‘normal service resumed’ with its significantly greater price rigidity. The 1.9M more Buys than Sells on Thursday may have used up the stock of shares that the MMs had been cultivating for the previous 10 days, but if so then they would be financially rewarded for doing so. Evidently the MMs sold those shares for quite a bit more than they paid for them – for example at least 0.6M of the shares they bought the day before at prices below 7.675p – whilst they sold them on thursday at prices in the range of 8.25p to 9.5p.
Whether there remains an active short on BMN is hard to say – it looks like a short may have been developed between the 19th of November and the 29th of November but this could have rapidly been closed in the first 20 minutes of trading on Thursday the 30th. The picture will no doubt become clearer in the next 3 weeks.