Darwin Warrants Overhang


10 April 2018

Following the 5th April 2018 announcement of the exercising of ALL of the remaining warrants initially allocated to Darwin there are now an additional 7,092,104 shares to be formally admitted to trading on the 11th April. Whilst the shares are not formally admitted until the 11th it is not perhaps beyond the bounds of possibility that these shares may have been forward sold into the market and quite possibly before the 5th.

Indeed the possibility of these warrants being exercised had already been suggested earlier on the 5th by MALTBY2002 on the LSE forum in the thread 'Darwin out ?' - they had spotted a number of 4x repeated trades of size 1.075M and suspected it was some kind of coordinated trade. I followed on with the following observation:

Ahh a return of the famous end day pairs eh ? - I think that the Erongo selldown illustrated reasonably clearly that only a single one of these trades should be ascribed to the seller - the second one is simply MMs shuffling the shares amongst themselves the cheeky blighters that they are.
The 1.075M plus the 525,000 from 16:29 yesterday, plus the 2.5M from the day before actually adds up to 4.1M.
Trouble is according to the information I have Darwin had 4,052,631 shares at 9.9p

The reference to 'end day pairs' is described  in the article that first looked into the selldown of the 41m Erongo shareholding. During the period from mid Dec 2017 to Mid March 2018 it was observed that very often near the end of the day of strong buying that there would be a pair of trades, each of a quantity that would be appropriate in size to accommodate that day's buying. The supposition was made that one of these trades was a sell from Erongo to a Market Maker, and then the second trade was an inter-Market-Maker transfer from the MM with Erongo on the line, to the MM flogging shares to PIs.

Subsequently in the article that covered the end of the Erongo overhang it was shown that it was precisely this interpretation that was most consistent with the point at which the Erongo holding was completely sold down and the stock overhang removed.

To summarise we have recently seen the following end (or near end) day trade pairs again:

3rd April noon (reported on the 4th)    2,500,000

4th April (second of the pair reported on the 5th)   525,000

4th April block 2 (both reported on the 5th)  1,075,000

Total 4.1M

Can we count down the Darwin warrants selldown in the same way that we counted down Erongo ?

9th April

Being so close to the start of the tax year there have been a lot of Bed & ISA combined trades - these have been detected and correctly account for.

The end day trade pair is shown highlighted - this is  950,000 in size.

Whilst the end day trade pair, first showing at 15:13:59 does not seem to be selling only to cover the days buys this does not take account of what may have been an excess of Buys on the previous friday, when no end day trade pair was observed. Alas no detailed trade analysis was conducted on friday so a MM nett trade position cannot be substantiated.

Taking only one of the 950K trades as being from the Darwin warrants block yields the following selldown profile so far:-

10th April

The trading position as seen around 2pm :-

Why the change in behaviour around a quarter past one - we had to wait until 2:15 to find out when the following 2x250K trades appeared:-

These clearly seem to be Buys and would increase the total nett trade position to almost 1.5M more Buys than Sells - this appears to have been sufficient to allow the MMs to release the Share Price, and thus seems to indicate that the mini-overhang from forward selling of the Darwin warrants appears to have been lifted.

Such a pity, I was having fun picking the Bed & ISA trades apart. Still, who is complaining ?

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