Trading Analysis - 12th Dec 2018


12 December 2018


The same old 50K dropped in as a sale 15 minutes in caused the same old drop of share price. Then not much until a 200,019 Sell at 9:11am, somewhat surprisingly reported immediately.

To anyone that has been reading these analyses for some time it therefore comes as no surprise past 10am when an 8:02am Buy of 215K is reported. - delayed by a full 2 hours.

Thus this morning we have a very clear example of asymmetric reporting - deliberate delaying of the Buy at 8:02, but not the Sell at 9:11 - such that it was possible to walk to obscure the true state of the market. Had the 8:02 Buy not been delayed one has to ask the question - would there have been all the Sells at sub 38p between then and 10am - this is a clear example of market manipulation.

End of Day

The arrival of a number of obvious trolls plus a series of ten 50K Sells after 3pm clearly heralded a shorting attack.

Despite 10x50K plus 2x100K, 1x 110K and 1x 125K Sells after this point the PI buying response was robust and swamped the selling. At no point was the short attack able to even suppress the nett trade position below zero. The short failed - however Market Makers kept the SP low and you have to ask the question why.

The answer may be that they have, or wish to, drop a significant number of Sells into the market from their tame seller, but wish to do so at an artificially reduced share price. The MM's short position, now lengthened to some 8 Million shares after the excess buying today, has generally been built at prices above 43p.

The opportunity to use the shorter's foolish behaviour today to drop the SP by an additional 2p offers the MMs the opportunity to make an additional £160,000 if they can drop shares in from their seller at a reduced price. They have lowered the price today whilst extending their short position by only 660,000 shares sold at an average of around 37p.

This relatively small additional marginal cost of extending the short might make one think that the MMs could continue this almost indefinitely - repeatedly knocking the price down so that they can close their short at a lower price - however this does not take into account the shares already taken from the tame seller and fed into normal trading - it's not just the 8M that would have come from the tame seller.

Add the 8M of the MMs current short exposure, plus, say 3 more million to give the MMs a cheap bundle of shares to take forward into the subsequent rerate and you can see that the 25 Million (my estimate) - 33 Million (the figure that was apparently reported to BMN) could quite easily have been been worked through in the 4 weeks of trading since the 48.4p SP peak of the 16th November. 

Put simply we could find that all of First Island's shareholding has been sold rather soon. This will arrive as a report (perhaps delayed) of a very large Sell, followed by a rapid subsequent price rerate, as often seen before.

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