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Whimax, thought the value per share to be attributable at the time of the demerger &, therefore, that would be what the shorter has to pay the owner of the borrowed shares at that moment in time. Theoretically (don't for one minute suggest likely), if the Accustem valuation went down, the owner would have benefitted from a 'premium' payment. So, if value is established/paid at time of demerger In the event Accustem was sold, the owner of the borrowed shares would have no further rights.
I accept, the above is unlikely, but does anyone know for sure how shorting works in the current circumstance. I know shorters have to pay over dividends declared should they be short through to an ex-divi date, so using that as a guide hypothisised accordingly. Re any other news, yes that can happen at any time, but the shorters are ignoring that anyway.
In the highly unlikely event I was correct there would be a benefit to holders at the time of the split. The shorters shares would no longer exist which would mean the remaining shares increase in value.
Hopefully, failing the above, we should expect a mad scramble to close positions.
That’s the unknown adsman. A bid now of £200m (for example) is worth £1 a share, but given 8-12 months to develop AccuStem and obtain some market share £1b+ or £5 a share certainly isn’t out of the question.
As you’ll have seen in the interviews and RNS’s StemPrinter (based on studies already carried out) is 40% better/more accurate than the market leader (Oncotype DX) which sold for $2.8b just over a year ago, so the sky really is the limit, if it’s marketed properly.
Thanks whimax. Which option is better do you think for us PI's ? Or is it simply down to the offer in place for accustem ?
adsman, Yes. After Demerger date, if an offer is made for AccuStem before it lists, it would be voted on by the (would be) shareholders (i.e. those who qualify for shares on Friday) and, if voted through each share would receive an equal share of the offer price.
Hi whimax. New here and to investing in shares. If as you say, Accustem is sold before listing, what happens to our shares in Accustem in this scenario ? Would a value be attached to them ?
jmfw, I take your point, but I think there are just too many unknowns for them. I think they think they are currently safe in the knowledge that the BoD won’t drop any news now till after the Cut Off. At any point from Friday tho, we could get Foralumab Trial update, Main Market move, Foralumab inhaler patent news, or even a collaboration from left field, which the BoD might use to prevent any sell off. I just think that’s too risky for Shorters (even with the bot helping them).
Also, with regards AccuStem, whoever owns the shares being used to Short are unlikely to accept Book Value of £4m as payment for missing out on AccuStem. I’m expecting a minimum of £1 a share for AccuStem by the time it lists, and then of course there’s the possibility that it won’t list at all, and is just being packaged up for a buyer to walk away with, before it hits the market.
Finally, if they are Short, they will have no way of getting hold of shares in AccuStem to give to share owners until it actually list, at which point the price could be anything.
They also will have to watch out for main market move news which is due plus Brazil trials start/update, also due.
Whimax, I have wondered what value will be attributed to Accustem at the point of the demerger. If it is the current book value then I can see no reason why the shorters won't continue to hold through to the ex date 2 Nov. They could even continue to short until a 'true' valuation is established/notified, or news (or anticipated news) on Foralumab. Any opinion?
NelsonTheDog, you clearly dont understand the mechanics of a short position.
1. You borrow the shares you want to short let's say 1000 shares
2. You sell those 1000 shares at a price say £1 you now have £1000 but no longer own the shares
3. Yhe share price drops to 80p you buy back the 1000 shares for £800
4. You give back 1000 shares to the lender and you keep £200
Whilst your short position is open you DO NOT OWN the shares whoever bought them when you sold does.
This is why it's extremely dangerous to have an open short position at time of Demerger because when it's time to give back the shares (on demand) you also have to give Accustem shares as well
Nelson, to be blunt, No, you have it completely wrong I’m afraid.
If you borrow shares to Short, you are effectively selling them, so neither the Shorter nor the original owner currently own the shares.
The Shorter, at some point has to buy the shares back and return them to the original owner (with interest). The original owner, in this scenario will have to have the shares back in their dealing account by CoB on 29th October in order to qualify for AccuStem shares.
If the Shorter does not buy them back and return them to the original owner by that date then the Shorter is liable to the original owner for the original shares, plus interest, plus the value of the loss for missing out on the AccuStem shares.
Nelso you would not be the owner you are the borrower so in my mind you wouldnt get the stem shares
Whimax
I am not a shorter and i am well out of my depth on the mechanics of it so will pipe down after this last comment...
If i borrow your shares to short, then either you get the Accustem divi or if i am deemed the holder as the borrower then I get them and return the Accustem divi to you the borrowee. The Accustem entitlement must be with one or the other wouldnt it? Now if the short is on the TILS SP and the divi causes that to drop, happy days for the shorter?
Should have mused to myself - i think I am a pretty good investor on balance but shorting holds no interest to me other than lots of talk it may drive a spike here this week.
And what would stop them doing that?
Agree whimax and at 1.50 per share they would be heavily out of pocket.
Nelson to get accustem you have to own tils shares so if shorters have borrowed them then they have to return them so the original shareholder can claim his free stem shares.Thats the way i see it.
Not sure I’m with you Nelson. Whoever “owns” the shares that the Shorters have “borrowed” will miss out on the AccuStem shares if they are not returned by Cut Off date. Shorters will be liable to the owner for the value of that missed opportunity.
Hi
Just a thought - according to the RNS isnt the Accustem shares a dividend. In effect therefore, why do shorters need to close? Their short is in TILS and it will likely drop as we split (though maybe not given the lack of rise here). Could be a very clever short play in that there is no urgency for them to close today.
Still hope we have a rise prior to split - i would like to reduce my holding slightly.
GLA
NtD