18th Aug Flash Short – Week 10

Alfacomp

28 October 2017

Monday 23rd Oct 2017

After the RNS announcement first thing that the Afritin Demerger was proceeding apace, with the announcement of a new Board of Directors and plans to produce 5000 tonnes of tin concentrate at Uis within the next 5 years, there was strong early buying. By nine o’clock there had been over half a million more buys and negligible sells. Time to put the Bid up you might have thought. All of sudden at 10:12AM what appears to be a sell of half a million shares turns up, and guess what the Ask drops all the way back down from 10.25 to 9.75p.

So what happened ? Evidently Buying slowed up and the MMs did not risk putting up the Bid for fear of being landed with shares that they could not sell on to PIs. But where did the 500K shares at 10:12AM come from – a PI, who having just seen people paying 10.22p suddenly decided that they were prepared to accept 5.5% less than this – I don’t think so.  I think more likely another market maker who either had a stock of shares that they paid less than 9.66p for, or who felt that they might be able to buy at less than this later in the day.

There was slight selling until 11AM, when the ask went up a notch, until 11:30AM when share sells of 300K, followed by 250K (though remarkably at 9.75p) occurred (thanks to disclosure by a LTH). Buying opportunities at 9.75p then persisted for about an hour and the nett balance of trades returned to around minus 400K – one or two LTHs were able to increase their positions during this time and then there was little action until the afternoon when buying continued around 9.9p.

The SP ended at 9.75p, down 1.2% on a volume of 2.9M (1.13M Buys vs 1.75M Sells).

Tuesday 24th Oct 2017

Tuesday trading started out at about the same pace as the end of the previous day. By 2pm only 130K shares had been traded.

Evidently the MMs thought ‘enough of this, let’s shake things up’. Naturally they dare not raise the Bid unless there are hungry buyers beating their door down, so what else might they do  ? – they can only do the opposite – have a cut price sale and give shares away.

Either way – what happened as a result was predictable – there were very happy buyers ready to snap up these discount shares (each one of course now coming with a free Afritin share thrown in) with over 500,000 shares being bought between about half past three and quarter past four. A couple of curiously priced ‘Sells’ at 4:14 and 4:15pm knocked the nett share trades  back down to around plus 300K.

After hours there was a 50K Buy reported on the day, then a 250K Sell at 9.5p reported the following day – these trades took the day’s nett trade position back very close to neutrality.

The SP ended at 9.625p, down 1.2% on the day on a volume of 1.45M (743K Buys vs 709K Sells).

Wednesday 25th Oct 2017

Wednesday started strangely with a brief pulse of buying and then a period of what seems to have been MM confusion – 9.5p was being offered for both Buys and Sells. PIs (Winecellar, spbhoy, Loudspeaker, fatbanker) have reported definite Buys at 9.50p after the drop in Bid around 10am, and importantly, also before the Bid dropped (see where the A-D line dips below the Bid).

The pair of ‘Sells’ at 12:13pm are clearly a Bed&ISA pair as they are very similar values and are separated by only 12 seconds. Following on from this just after 1pm it became possible to buy at prices of marginally over 9.30p – multiple PIs (Paludina and a.ka.Muppet) have reported Buys at less than 9.40p before the effective Ask rose again to 9.50p and spbhoy bought for the second time that day. By 3pm the nett trade position had risen to plus 100K, at which point the Ask was raised back up to 9.75p. A Buy at 9.70p lifted the nett trade position to plus 200K by 4:15pm

After hours there was a 50K Buy at 9.70p reported on the day, then a 300K Sell at 9.3932p (!) reported the following day – again these trades took the days nett trade position back very close to neutrality.

The SP ended at 9.5p, down 1.2% on the day on a volume of 2.4M (1.17M Buys vs 1.22M Sells).

Thursday 26th Oct 2017

After the obvious MM confusion of the previous day, Thursday was rather ordered, nay quiet. Towards the end of the day there was an RNS notice about the exercise of 248,663 of the 2.4p warrants.

By the end of the days trading the nett trade position recorded 108K more Buys than Sells –  a 400K Sell at 9.379p reported the following day then took this trade position back down to minus 291K.

The SP ended at 9.5p, flat on the day on a volume of 1.0M (354K Buys vs 645K Sells).

Friday 27th Oct 2017

Friday was as different from Thursday as that was from Wednesday. Further buying pressure at prices >9.30p started with a couple of large LTH Buys first thing and then a persistent series of smaller Buys starting around 9:20am.  These continued until about 12:30pm only interspersed with a couple of Bed&ISA pairs (140K at 10:20am and 75K at 12:19pm). Interesting both of these Bed&ISA pairs are arranged such that the two parts of the pair have a separate trade sandwiched in between – since the first pair only spans 17 seconds and the second pair 12 seconds the chances of this happening by accident are very small.

It is illuminating to consider the chance of the first pair accidentally having a trade appear within their temporal span – with 30 other trades in the day this is  30 * 17/(8.5 hrs x 3600 seconds) = 1.6%. For the second pair it is only 1.2%. Both would occur on the same day by random chance only once every 17 years. This may therefore be the first example of deliberate Bed&ISA obfuscation that we have seen in these analyses.

The nett trade position rose throughout the day, reaching greater than plus 825K by the end of trading.

The SP ended at 9.5p, flat on the day on a volume of 1.47M (1.148M Buys vs 323K Sells).

Summary for Week 10

SP Change TBP estimated Buys – Sells Potential Shorting Activity Comments
Monday 23-10-17 – 1.2% – 624,954
Tuesday 24-10-17 – 1.2% + 34,482 After Hours Trades – 50K Buy reported on the Day, 250K Sell reported the following day
Wednesday 25-10-17 – 1.2% – 54,365 After Hours Trades – 100K Buy reported on the Day, 300K Sell reported the following day
Thursday 26-10-17 Flat – 291,849 After Hours Trades – 400K Sell reported the following day
Friday 27-10-17 Flat + 826,136
Total -3.7% -0.109M

Conclusion

Week 10 has been fascinating one – as the lowest graph below shows it seems that the post-18th-August macroscopic short->short squeeze->MM short->MM accumulation cycle has now played out. So what is the story now ?

With the Afritin demerger and Bushveld Vametco Q3 production results now on the horizon the Market Makers now seem to be trying to avoid developing any kind of long or short position.

After the rise at the end of last week following the passing of the Afritin demerger vote the MMs may have expected further strong buying on Monday morning. This did not materialise and so they needed to be content with the SP rise that they had developed last friday (800K more Buys that Sells).

Recall the 10:12am sell of 500K at 9.66p on Monday morning – as explained before I do not believe that this is really a PI selling, but rather is an inter-MM trade. Thus the true nett trade position for Monday is not minus 624K but only minus 124K.

As previously suggested, this can only happen if the MM selling the 500K for 9.66p can be confident that they will be able to get these shares for less than this price. The trouble is with the news coming up they cannot be sure that they will have 2-3 weeks to do this – so this share accumulation needs to happen pretty quickly. What happens over the next couple of days you might describe as a long slow shake – the SP is dropped to try and allow the MMs to Buy low, but PI sellers do not really materialise.

In fact the nett trade positions only return to near neutrality as a result of the delayed after hours trades that are reported on Tuesday, Wednesday and Thursday. It would appear that MM1, who may have sold the 500K on Monday at 9.66p does not wish to be short for very long and needs to buy from MM2 on Tues/Wed/Thur because PIs are not selling. Their short and the mid-week shake did not work. MM2 now has to find those shares.

There now appears a certain degree of panic amongst Market Makers – the normal attempts to stimulate trading (tree shakes and selling short into news) just don’t seem to be working. Wednesday was all over the place, and on Friday we see Bed&ISA trades apparently being deliberately obfuscated. In the run-up to the Afritin demerger and Vametco results the MMs aren’t sure which way the market will jump – PIs are not selling so the MMs really need to place their hope in the upcoming news attracting in new market participants.

They know that they can only really attract the short term traders by having a share exhibit daily price rises of >5% for 2-3 days – with a very small effective float (LTHs are holding tightly onto their shares and appear to be steadily buying more) this would seem like a genuine possibility that might arise from the good Vametco production news that is expected imminently. Unlike most shares the MMs don’t seem to have much forewarning of what BMN is up to so they are not in the position to prepare for this by accumulating shares on the cheap. Thus if or when the SP moves it may move rather drastically.

Footnote: I understand that the shareprophets crew may have put out further articles on BMN in the last 7 to 10 days – evidently this has had no effect as nobody pays any attention to them any more.

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