The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
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(the first point is likely applicable to THG)
This is starting to look encouraging as we appear to have a set of prosposed changes issued for final airing, these are:
> Replace our current standard and premium listing share categories with a single listing category for commercial company issuers of equity shares
> Retain our sponsor regime, with modifications, to support companies primarily at the listing application stage, and for certain disclosure obligations thereafter
> Retain discrete listing categories for other types of instruments, including closed-ended investment funds and different types of non-equity instruments
Assuming no amendments we could see these proposals being ratified by early Autumn.
Institutions will of course be aware of the timetable and may choose to initiate positions ahead of the final decision.
Comfortably within the FTSE 250
http://www.stockchallenge.co.uk/ftse.php
The first point (if ratified) will effectively remove any distinction between 'Standard' and 'Premium' listings, it could be THG has to do nothing and will be automatically aggregated into the newly formed sector.
Fund managers that are currently restricted due to existing mandates should now have this lifted, prudent move by THG board to wait despite the criticism.
"Replace our current standard and premium listing share categories with a single listing category for commercial company issuers of equity shares"
Good research guys. Another, perhaps more realistic, reason to be optimistic about this share.
Trackers are not my thing so had a nosey around to see what's what, HSBC was the first one that came up - this from their pdf fact sheet
. The Fund aims to track the performance of the FTSE 250 Index (the “Index”) before the deduction of charges and tax.
. The Index is made up of the 250 largest companies after the 100 largest stock market listed companies in the United
Kingdom, as defined by the Index provider.
. The Fund will invest directly in shares (equities) of all of the companies that make up the Index and in the same or very
similar proportions in which they are included in the Index.
https://www.ii.co.uk/funds/hsbc-ftse-250-index-c-acc/B80QG05
Whilst the FCA changes were first mooted in May, it was sometime in June when it moved up a notch and became closer to a final draft - could this explain some of the recent increase ? not many other retail stocks mirroring THG's recent (and welcome) ascent.
I feel like the funds are too conservative to buy stocks early, especially in a company with so much take over/private speculation….but either way, lots of upside to look forward to
Some general musings on all things tracking.
Betting on constituent changes within an index is big business for investors and hedge funds alike; this time around it’s slightly different due to the creation of a single index from the two existing segments, Standard and Premium.
Changes take place four times each year, Sept shuffle is a bit too close but the one in December is certainly possible.
Final draft needs to be ratified later on this year before changes become absolute, that said its highly unlikely imo that this will be overturned due to the already lengthy process involved.
Below is an example of tracker which currently holds 3,889,241 THG shares with a weighting of 0.04%, to give an idea their highest weighting is 0.34%
This is not a FTSE250 tracker but a global small cap index following over 2,200 stocks, THG is listed under Consumer Discretionary.
Consumer Discretionary is their second largest sector position at 12.97%
iShares MSCI EAFE Small-Cap ETF
https://www.ishares.com/us/products/239627/ishares-msci-eafe-smallcap-etf
No idea if this is a typical representation of trackers but noticed they operate on a similar basis, namely as a particular company ascends an index so too does their weighting.
In terms of issuing TR1’s these positions are too small but still represent 3-4 days trading given current daily volumes.
I think the reason THG gets lumped in with BOO and Asos is down to sector classification, using the iShares link below a quick search for reveals all three are listed under 'Consumer Discretionary' .
1p
Agreed,it's total bolloooxx that THG is lumped with online clothes retailers..it damages THG's rating
The exciting thing is pressure is building as the strong SP rises over the past 2 weeks have been in the afternoon yet this week it is now morning & afternoon… ‘Let the winners Run’.. GLA LTH
Going over timelines for the last few months, and more importantly divergence from other retailer such as Boo, to give some idea in May THG and Boo we only a few pence apart.
The bumper AGM TU was released on 21st June by which time THG had moved from mid 50's to mid 70's.
Lots going on of course but perhaps the new listing rules were overlooked during this period.
The first article released on 3rd May highlights the end date of 28th June, with no objections received it becomes more inevitable.
https://www.cnbc.com/2023/05/03/britain-takes-further-step-towards-london-listings-overhaul.html
This fits in with THG's rise breaking away from the pack which already have regular listings so no impact on Boo or Asos.
It would be great to get some UK institutions on board, this would really help soak up the free float.
Moving up nicely, now sitting just outside of top 200 UK companies
This sort of systematic sustained buying suggests funds are active regardless of news flow, if THG is to be included automatically in the new indexes, trackers and such will have purchase their allocation accordingly.
http://www.stockchallenge.co.uk/ftse.php
Two new funds have appeared with small holdings, around 7m shares between them - difference is they are both UK based.
River and Mercantile Asset Management
Columbia Threadneedle Management Limited
1p
one of them is subsidiary of a US based fund mgr
Yup, RM are LLP, although the subsidiary is registered in London, FCA regulation/reporting I would think apply as a UK entity.
Thanks 1pencil for taking the time out to undertake the research. It's the type of content I enjoy as it's obvious you are being objective in arriving at your conclusions
1Pencil thank you for your excellent input.
Always very useful information provided by you.
Have an excellent weekend LTH.
Our time is approaching slowly but surely.
September is not far away.
ATB
Think weve got an emotional meltdown going over at ADfVN. I check it now and then but its like peering over into the abiss of deep dark well of raging insanity.
It’s like walking into a domestic over there you may get 1 decent post per 100
We have always known US funds play an important part in supporting THG, but just how big ?
At one point US funds collectively held over 20% of THG's shares subsequently falling (along with the share price) to around 5% for June 23
The following graph represents both these indicators since Dec 20 - June 23, black line is the share price.
https://images.fintel.io/gb-thg-so.png
June seems to have been the bottom in terms of US ownership with early signs of trackers and such increasing positions, we should get a better picture as July filings are submitted along with fund fact sheets.
Please note this info is for US domiciled funds only.
Clearly something happened in June to trigger a change in sentiment, as mentioned in earlier posts the share price started its ascent upwards before the AGM update, automatic inclusion into FTSE indexes is another possibility.
The appearance of two small UK holdings supports the latter but it could be both, US trackers also track UK indexes which maybe another factor.
yespsb/Bwana4, appreciate the feedback
You're a brilliant researcher etc IP with no ego. Thanks for helping us out.
Very interesting info 1p as always
Someone posted the other day a link to a screener that shows percentage cost to borrow company shares THG skyrocketed up to 150% for 5 days mid June I've checked heavily shorted ASC & OCDO which didn't happen to them I wonder if that what makes the leverage platforms change parameters
The borrow shares info is in a drop down tab under market cap be great to heat your take on this seems a good info tool as well
https://companiesmarketcap.com/the-hut-group/cost-to-borrow/
TUI had a spike th 80% cost to borrow share after their April subscription and Rump with the spike just before and on admission 23rd April
The only info I can see on THG is the trading update and GS a full week after the spike LEAK??? mmm
That was me who posted the site 2phevs. I thought that how the info was presented was interesting. Borrow rates can also be squeezed in the repo / equity financing markets and can be seen to some extent as a signal for a potential squeeze in the cash market so I shall be keeping an eye out for this. Don’t know why THG borrow costs rose so much that day but it will cause shorters pain. Imagine the scenario where the cost to cover shorts increases massively and share price gets bid heavily. That scenario is a double whammy for shorters
1p also posted a link to another site that I look at. Very good info on it but parts of it are less granular than the other one. Unfortunately there is a lot of info behind a paywall there
https://fintel.io/ss/gb/thg
1Pencil thank you very much for taking the time to post your well researched info.
I always find you posts very informative.
My compliment to the other well researched posters as well.
Patience will be very well rewarded here.
September is not far away.
Have a good weekend all
ATB.
Cheers 2phevs, the 10 million shares available for loan (from your link) looks to be from US holders but is largely unused.
For instance we know US institutions hold collectively 45,769,487 shares, out of that number there is only one short with around 180,000 shares - that position is hedged neutral.
'Institutional Owners 37 total, 36 long only, 1 short only'
My view for sometime has been we only see one side of the FCA disclosures, its a bit like having two accounts one with IG and another with Halifax - with your IG account you have a short position of 0.5% with Halifax a long position of 2%, however you only have to report the 0.5% position to the FCA under disclosure rules.
This is why when shorts seemingly close there is no squeeze, they are netted off against one another usually in auction (but not always).
Qube have a huge portfolio of 2,481 companies which are prominently long, somewhere in the region of 99%.
https://fintel.io/i/qube-research-technologies