Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
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TakingMyTime
whats stopping them saying we will buy what we want due to the mistake, not buying the extra?
Jerry, you ol' stirrer you haha. Yes, I see what you are saying and to be fair it was LadyMush who had queried it (I was just a poor messenger) and I had answered her the same way but with less conviction!
So, pretty serious stuff. What the heck will they do??
@Z, the ETF is huge because people want to invest in Gold Juniors. If it gets shut down, another will take its place, very, very rapidly.
More likely the ETF licenses with a different, independent index provider, probably licensed to use the same rules but blinking do it right and not be idiots.
Every UK company in an MVIS index which is licensed to a tracker should be checking their numbers. I still can't believe this. I'll be hearing about this one in my work for years. Well, maybe not, I seem to be rushing towards a GGP-induced early retirement, LOL.
TmT. More good points and fortunately all were covered in my email!!!
...pass the mushies on the left hand side...
Mushy they could say that but then they would have to change how they describe the composition of the index. Otherwise they could be in danger of misrepresentation as the index wouldn’t be as described and GDXJ would be tracking something composed wrongly. Naturally that was something I pointed out in my latest email to them tonight.....
good point earthling
but in answer to mushrooms question, why can't GDXJ say we are not buying the extra due to the mistake?
TMT...what goes round comes round eh?
If these implications are confirmed then this particular ETF could be shut down. How might that affect us?
Z
Goldenl, fair point, but not all companies in the index have this many shares held in nominee accounts. I'll just give one example, De Grey, who just got added. MVIS says they have 986 million free float shares. Total shares outstanding is 1.2 billion. 163 million are owned by DGO Gold and would be excluded from free float. MVIS essentially has their free float right. I think it only affects UK listed companies, so they probably all get a boost. But many of them have some big institutional holders and so will be less influenced than GGP.
A time like these? I'm losing it.
Thank you for your reply TmT. It's a time like these I wish I could play the 'get me out of jail' TATSP card. It's all a bit beyond my comprehension.
@mushroom, I think that's pretty much what they will do this time, but promise to do better next time.
The thing is, it isn't just this one index. Every MVIS index that includes UK shares will have this issue of shares held in nominee accounts. If they've messed up all of those, this is a huge story. It's the kind of thing that could seriously damage the credibility of MVIS. This is potentially a lot bigger than just little old GGP.
... and if other shares in the index have incorrect weightings due to possible miscalculations of their free float, would that not reduce the potential % additional fund monies moving to GGP in December?
ok, this might seem very, very simplistic but what would prevent the index simply saying to GGP, "Sorry guys, we made a mistake. We should have bought more shares if we had done the maths right but we didn't so that is that. It is our choice. We can put in who we want and allocate as much to the fund as we wish".
@Z, LOL. Would you like it in another new thread?
Brilliant summary TMT ..... It appears December could be the Perfect Storm mark 2 for the share price....
TMT - sorry I missed your post...can you post it again please.....:)
Z
I was asked to redo this in a new thread, so here it is:
Hydro, you're a hero. That's absolutely amazing. You probably remember AM90 and I discussing their free float number and saying it didn't make any sense. Someone even suggested it might be excluding nominee accounts and I said something like I couldn't imagine they'd do that. I still can't believe they'd be so stupid.
I don't think you'll get far by hinting at legal action. They'll have their legal people all over this already, and it will be hard to prove damages. How much would the SP go up if they did it right? No one knows, and they'll have all the evidence of the times when SP dropped when they bought in. Also, you'd have to sell shares to have taken a loss.
My guess is it is too late to fix it, they'd have to check others as well. It's not just us. Mind-bogglingly stupid. I don't expect them to fix it this time. I could be wrong but they probably can't get it through legal and get it done in time. I expect them to fix it for three months from now.
But here's the fun part of it. If they don't fix it this time, what does it mean? It means we're doing it all again in December. It will be based on the SP and free float at the end of November. Let's just think about this.
Their current weighting was based on 2.3 billion instead of 3.3 billion, and a closing price at the end of August of 14.8. Let's conservatively assume the SP is still at 25 at the end of November (with an incoming MRE, does anyone really think that?). So current weighting (0.44%, roughly £22 million buy) is understated, compared to the December weighting, by a factor of 25/14.8 (change in SP) which is 1.69 AND a factor of 3.3/2.3 (free float shares understated) which is about 1.43. That means, all other things being equal (and they won't be), if we just maintain today's price, when December hits, we'll have a weighting of approximately 0.44% * 1.69 * 1.43, or about 1.06%.
So, if they don't get this corrected by Friday (which seems doubtful), what happens in December? Our weighting goes from 0.44 to 1.06%, an increase of 0.62%. Which means that the December buy will dwarf this month's. If those numbers don't change and the ETF is still six and a half billion, we'll be looking at about £35 million in buys in December on top of the £22 million this month.
What this means, if they don't fix it this week, is that December is going to be even bigger. If so, anyone who top slices now, if they don't have to, is absolutely mad. The GDXJ news is going to be rolling in just before the MRE, the actual buy might be after the MRE.
It's not going to be a Happy Christmas for GGP shareholders, it's going to be a Hydrogen Christmas. Looks to me like you did this one, you're the hero here. I sat on the sidelines and said those numbers don't make sense, you pursued it. Well done to you, and I hope you get very, very rich off of the effort.