Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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Hi onedb - today's RNS's. One confirms what was forecast and the other is welcome news of a new larger holder but both need a calmer assessment. I'm hoping O/T keeps the trolls away.
GE - I quite like the way and time EnQuest released the news. Message board readers and holders (me too) like a bit of excitement in the day but it is transitory and the company have clearly moved on. Bit like Cantona and the seagulls. They keep bad news brief and good news the same. It is for the best because as L7 says "sh*t happens". It is unavoidable and not worth the time and effort on recriminations. There is an absence of panic and desperation with EnQuest. I like that. If you want roller coaster and hyperbole follow the likes of Malcy or David Lenigas.
Cobasam - MrD made the effort to read their website and I copied. I will study it further but you might enjoy this "We use market declines to buy our selected stocks at lower prices, even if this means taking a hit in the short term. That is why we will always be invested at a level close to the statutory ceiling of 99%." Their ESG seems vague and nowhere do they give an opinion on bullfighting but they see oil demand higher (108mn barrels 2030). One of their requirements is good management teams in the companies they invest in.
I couldn't find information on their senior analysts/management and it is early research. You and others are better at it than me. I was trying to find a connection with us and as an outlier I wonder if they were in the HYN's. We could be seeing a moving out of the debt and into the equity which might explain the (to me) contrary movement of the past days in the HYNs. It isn't a totally wild suggestion as bond/note funds will have done as much research and analysis of the company as equity analysts. It would be a simple switch to the vehiclle that promises the best reward. They may already have been HYN holders. [maybe I should have moved some RB into ENQ shares]. Some are making the mistake of searching for the impossible. The stake was reached on 20 October and could have been less than 1 million as they don't have to report until they breach 3% though unlikely. I say this because why wait 2 days to announce if it was tiny. It is also accepted market practice at their level that whoever they dealt with have 2 days of grace to hedge and lay-off. You don't ostracise yourself from counter-parties and this is a professional outfit trading in professional amounts.
There will (I believe) be a connection we haven't discovered. Even without that they were in the sweet shop of undervalued stocks (oil equities) and they chose us. I think they have good taste.
Be Lucky
Be Lucky
Romaron , Blimey I didn't get bored reading that post. More of that please
Hi onedb – bit more colour. Back in the days of steam everything FX went through the banks. Most trades were too small to hedge and the brokers wouldn’t look at anything less than $1mio. Nowadays those individuals making those trades can often go straight to market via electronic platforms and there is a Universe of them. A bit like Starbuck’s H.O. instead of getting braches daily sales get everything live, individual coffees and muffins, with pointy heads breaking that down further into specific ingredients. I very occasionally look at the trades and you often come across a string of them for similar amounts as though the instigator is too lazy to bundle them. Maybe it was a button press that took out every bid/offer up to a level. Who knows, who really cares? But, you can bet that some algorithm has a good idea and the info goes somewhere to click another action.
Your point about future EnQuest pricing is of value. There are prices out there and I’m holding 2,000
Dec spread and it closed last night at 25.77-26.08. March is 25.96-26.27. Quite big spreads but holding a position at 26.27 5 months ahead looks tasty.
If City Index can go 6 months and futures a year in size then it is not beyond the ability of derivative traders to accommodate Helikon. I met some of these guys who created synthetic derivatives. I met one at SBC who went to Stanford and did Particle Physics. He really was a rocket scientist. I was close to another at Chase (now JPM) who would make me the odd 2 year price. When I wanted to know more he said that the variables got fiendishly complicated further out and I wouldn’t understand; he did Maths at Cambridge. We did employ the brother-in-law of the Chemical trader who created a program to calculate the 2 year price. We cleaned up. There were threats that we had stolen intellectual property but as I said; he was family. Longer dates were particularly active in Italian Lira as the swaps directly relate to bond prices and they funded their National Debt through regular auctions of BOT’s and new issues of debt which is catnip to Investment banks.
City Index may not hedge my 2000 (equivalent to 200,000 shares) but it adds up and as you say they’d have to go in and out at different times. Forward share prices will link to oil futures as you can hardly ignore them. Also debt will play its part.
Over the past few days the HYN has been going in the opposite direction to the RB. Not massively but Tullow has gone up. I read this (may be wrong) as some funds moving out of EnQuest because basically they’ve made their money and although most retail would be happy with a 7%+ return they are looking for more with distressed debt with higher returns. They could even be transferring it to another inhouse fund as it has become investible now. It might also be an early signal that we’re preparing for a new HYN issue.
Moody’s upgrade soon?
Be Lucky
Sure onedb - I'd look forward to it. I'm retired and always interested in meeting new people. Glad that you have a professional side and take it seriously. It is the constant news and information flow that is hard to get (and afford) as a private individual.
I spent too long staring at screens (even worse when you had the wrong position) and have little interest in revisiting. My discipline wasn't the best even then and it certainly hasn't improved. There's a few of us who are in touch directly as well as on the message board.
Be lucky
you can get me on romaron49@gmail.com
the counterparty to the trade is an investment bank as they always are. For obvious ISDA reasons and minimum capital requirements. What I wrote is correct. The movements are movements in collateral , so a fraction of the trade in share terms needs to move to keep the hedge in place for the counterparty that will buy or sell shares to keep it's hedge in place.
I could give you my background if in London happy to buy you a coffee if not snow under. Enquest is part of my private portfolio , not my professional one . As those I can't disclose nor discuss on a bb .
Hi onedb - call it serendipity but I bumped into Tony Shiret lunchtime. He is a long standing analyst that I have known for over 20 years. I asked him directly "what is an equity swap" and gave him details of the Helikon trade. He replied (as would I) that it is an impossible request because you are missing parts of the trade/equation. One thing for sure is that a bigger hedge fund would have to be involved and I'd suspect Jefferies or Goldmans. I'm not sure that was what you're referring to but as for the multitude of movements and trades each day I have another explanation.
In the days of steam (1970's) practically every foreign exchange trade went through a bank's dealing room and larger trades also included a broker. In fact if you dealt directly with another London bank in a swap you had to (Bank of England rules) give details to a selected broker (abolished mid 70's). Everything was recorded.
The trading rooms would have to be involved in everything. Promissory notes, trade bills, ECGDs, Trade Finance, Traveller's cheques etc...but of course the main trading was speculation but nowhere near the scale of present movements. As sophistication improved companies no longer put everything through their banks. Departments within an organisation didn't have to do everything inhouse. They could net out with other counterparties and run smaller risks. What we are doing here would have been impossible back then. The phenomenal growth in transactions away from regulatory and reporting eyes now means that almost nobody knows exactly what is going on. I stopped trying years ago.
There are various ways to (attempt) take advantage of EnQuest share movements if you're a trader but unless you have size to do I'd suggest something like City Index would suit most. Is there another outlet for bigger punters? I don't know. What I do know is that nothing would surprise me with the pointy heads and mathematical ability of derivative traders.