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Toonman shorting a share doesnt bring the share price down
Thanks. I have always thought it did. My simple understanding of a short is that shares are borrowed by the shorter who then effects a sale transaction. And to close the short the shorter must buy the shares back at some future point to return them to whoever loaned them. Do those two transactions have no effect on the share price? Happy to be educated on this.
A short can only be placed on an upswing and is typically a % of the free-float. So shorting does not bring the price down directly. But the fear of shorting can cause others to sell. I would not buy a highly shorted stock in normal times.
Shorters running every where
Just seen one hiding under a rock ??
Yep their mates in the mm dept two floors down are holding the price and spiking down to let them out.
Clemoc wrote: "Shorters are gamblers, holders are investors."
Clemoc, I assure you institutional shorters are not gamblers. Far from it, they often know more than anyone the vast majority of the time.
korvet wrote: "mm dept two floors down are holding the price"
korvet I assure you they can the MM can not hold the price, there is nothing it for them. MM's want the volume that all they can profit from.
why is the sp going down when we have a takeover battle?!?
robortsmith wrote: "why is the sp going down when we have a takeover battle?!?"
These are normal daily fluctuations. If the SP went down it would be more like 24p and you will feel it. If the share price goes up properly you would also feel it. I don't expect anyone who thinks like this to stay the full 4 weeks as the share price may never rise until the final week or it could rise tomorrow. Nobody will know.
That’s rubbish. The mm hold the stock so why would they need to lower the SP for themselves knowing the are going to do better be it at least at a 0.40p offer.
I should add, I only expect the share price to go down to 24p should the AA balls the PE deal up. They are not in a position to raise equity so I am not sure why they bothered to put it in the RNS unless they actually believe it goes into the pounds (no chance IMHO), the previous CEO who now owns a boxing club should have done the placing at 400p. An official confirmed bid of 40p would send this stock very close to 40p and anything more is a highly speculative but welcome bonus. It pays not to be too greedy... 25p or 40p is to be expected.
It is a really interesting subject partly as information is not transparent.
Some institutional investors filing Form 8.5s show they must be shorting to hedge price fluctuations in their books so they must be buying contracts not on a fluctuation of free float as PIs may be offered on CFD platforms but in line with a strategy. I have never bought a short and don't know how that works in practice but don't see a sell to buy arrangement as anything other than a contract. It has felt as though the SP was subject to unseen forces from Parvus sell off onwards although not with aggression other shares that have just boomed seem to be attacked with.
JP Morgan declare about 23m shares held long (for investment) & about 27m held short. Perhaps this is the swap position held for JP Morgan Chase bank declared last in an RNS 22 July.
Some some long & short transactions set each other off such as at 28p but then the list of shorts goes heavier. The numbers are all are exact, perhaps they are generated by a trading algorithm. I don't understand how the absence of declaration of 27m shorts or 4% of share capital on shortracker (or here if it was up to date).
https://www.londonstockexchange.com/news-article/market-news/form-8-5-ept-ri-aa-plc/14642496
The extent of shorting in all seems unclear on all shares. it would be great to have better information & free float, If anyone has any suggestions of sources of information.
It was only recently that the poor management of one of my investments made me think a rational response might be to sell to buy at a lower price!
can we read anything into all the RNS's?
It is a subject that fascinates me I do as much research as I can and try to pick up as much info as I can on the boards off more experienced traders and still find it complicated all smoke and mirrors.
robortsmith "can we read anything into all the RNS's?"
No, and certainly not before the SP has moved to reflect the facts.
deemule " It is a subject that fascinates me I do as much research as I can and try to pick up as much info as I can on the boards off more experienced traders and still find it complicated all smoke and mirrors."
deemule it appears you are taking a bottom-up approach to invest. It will not work. The institutions are better than you and I at this. Insituions understand the rules and quant data. However, as PI's we can ask the more qualitative queastions and instead of looking at companies bottom-up, look down from asset-allocation, to sectors and then to possibly individual stocks but prefer to look at tracker ETF's, index's, sectors and funds where you will easily stand the best chance of success. Investing now in the AA is punt based on qualitative question like a takeover, I think its OK to do.
Mr Flibbles I do take A top down approach in all my investments which as you say does work and luckily for me successfully over the years.
However I am like a dog with a bone at times and shorting even though I would not short myself continues to stir up my curiosity.
And so curiosity has bought us together :-)
So the price drifts lower ..why ? the basics of shares, MM were never going to get "excited " by bids of 40p, 60p . £1.00 etc they know the real value and the debt is colossal for a mkt cap of £150m .Who ever does buy the AA ( if indeed they do ) will be looking for two things 1/ to purchase at lowest price possible to make any deal viable ( think about the basic principle ,,car seems cheep at £5000., very economical etc..but needs £50000 spent on it ,simplistic but you get the idea ) 2/ financing the deal . ( again think of the conversation with the bank manager to finance the deal ) MM and the market players are key and MM do not like to be caught the wrong side of the market... (they hate rns in the middle of the day ) so will keep the price to reflect certainty or uncertainly in the price .
Shorting occurs when you sell more shares than you own. Since a stock's price is determined by how many people want to buy a share vs. sell one, short selling increases the number of sellers and typically lowers a stock's price.
cteal, while your opinions are valid, you fail to include rising operating profits at almost the marketing cap. Don't be so dismissive afterall it is not one bider but multiple. Free cash flow (pre-dividends, refinancing costs and bond buy-back) up significantly to £83m is not to be sniffed at. Some of the debt that needs to be refinnanced will be replaced by cheaper equity if the private equity owners buy, allowing them to grow the insurance. business. If you take away the debt the business is worth 500-700p.
"An official confirmed bid of 40p would send this stock very close to 40p"
CORRECT
the action has been if in with a large holding sell may be 50% on the rise as it hit the market this week on the speculation.[as one can normally get back in at a lower price whilst the 30 day wait as it makes nervouse trigger fingers]
come september deal or no deal 25, 35, 40p 50p ???????? that is the question or if NO bid ...time for a sharp exit one would say.
Thanks Mr.Flibbles for your polite reply ,we all have different views ( its what makes a market ) ,but have learned that cash in the bank as a opposed to owing the bank puts me in a much stronger position , yes AA has cash flow ,but debt was about £2.7 billion ( yes billion ) and the bidders like the last bidder that took this company private need 10-12 % return ,and the last owner CVC managed to bring the share price down from over £4.00 ,heavy levels of debt and high levels of customer service rarely go together
sharehounder, that is true but we must not forget the pre-close trading update on Tuesday.
Cteal makes a new account to tell us all this lol...
Just shows how desperate some are getting.
cteal wrote: "...the bidders like the last bidder that took this company private need 10-12 % return"
Absolutely. And they would have worked this out in their cycle and will not overpay. But we PI's can not work this out ourselves and rely on the qualitative facts to hand like 3 bidders.
Thanks ammu123 for showing me how "desperate" i must be for giving my view, ,not sure why im desperate ? And then i remember why i avoid these chat rooms ,experiance and knowledge are allways dismissed if it sheds light on a position we hold , this quote comes to mind " Being ignorant is not so much a shame, as being unwilling to learn.
Benjamin Franklin ps all the best