Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
I honestly can't understand why everyone is so negative. Things are on the up!
If you all carry on getting negged out about what's happened over the last few years/hours then you are in serious danger of missing out on some major signals about what is happening right under your nose.
VOD has tanked the last few years as revenues have been declining. Share prices are generally calculated based on future earnings, so the market has been pricing in the fact that revenues will continue to decline. We've now had 2 sets of results showing increasing revenues and profit. The increases are admittedly only small, but the effect on the SP will be huge as instead of applying a discount to current profits and assets, the market will now start pricing in a premium as revenues grow.
The current SP is not far off where it was a year ago when the world was going down the toilet and so was VOD. Things have improved dramatically for both, but so far that hasn't been reflected in the SP, but I can assure you it will. Don't forget shareholder funds per share are around £1.80, and that large discount will not be maintained for long once the market is convinced that negative cashflow/losses won't erode the current shareholder funds.
Someone much cleverer and richer than all of us has also figured this out which is why they are building up a large position. Forget about the SP - look at the trades and volume to work out what's going on.
Just been listening to Powell's speech for the last hour or so and he's incredibly bullish about the US economy and how they will manage the transition from hyper low rates/monetary expansion and the markets are lapping it up. Huge swing in US markets and dragging up FTSE futures and VOD ADR with it.
Santa Claus is coming to town :)
Chill Mike - have a little patience!
I warned you that the price would probably get walked down again, although I thought it would be next week. Obviously with Fed/Omicron jitters and a slight reduction in Barclays target price on VOD, today was obviously a good day to do it.
Buys outnumbered sells by a 3:1 ratio during normal trading hours today, and we are still getting the large trades being reported out of hours.
Someone is still accumulating.
I bought the dip this afternoon and will buy a few more if it goes down further.
Really not worried about this at all, as it will all come out sooner or later.
Gowerton - as I keep saying, someone is buying big time. They stopped at lunchtime as the SP was going up and it was starting to look obvious. Markets turn so let it drop then sweep in big at the end of the day.
We’re seeing similar patterns almost every day.
Sooner or later this might even make Mikey happy :)
Your guess is as good as mine, all I know is that someone is either unwinding short positions or building a long position, and that's nearly always good news for the SP.
I still can't see this being within the grasp of a private equity firm takeover bid, although I would love to be wrong about that.
Looking at the price action it's very different now. For months it was being dragged down and no one was in a rush to buy, but now it looks like someone is trying to buy lots of shares without the SP shooting up.
The why is pure speculation, but the one thing you can't argue with is the increased volume. The increased volume did not lead to the SP crashing ex div or during the Omicron dip, so it has to be the result of increased buying pressure.
This could shoot up if the buyer gets rumbled and/or panics to buy as much as quickly as they can - ie before a bid is made.
If there is no immediate deadline though then I can see them trying to walk the SP down next week when volumes are lower. If that does happen then I'll buy the dip.
I have no idea what is behind the buying or how long it will take for the SP to go up substantially from here, but I am feeling very comfortable about this now.
Interesting thoughts....
Meanwhile, back on planet Earth.....
VOD opens up, gets hammered down in the first 10 mins of trading and now the SP is slowly but surely edging up whilst the FTSE is down.
Something is brewing....
Well yesterday was a very strong day for BTI.
Steady and relentless buying all day long with a slight uptick at close. Volume was also 2.5 times daily average.
I wonder if the US markets are finally waking up to this?
BTI main competitor is Philip Morris which has a x15 PE and a yield of 5.5%, and arguably aren’t as far down the line as BATS are with ncps so don’t offer as much growth potential as BATS.
You translate those same metrics onto BTI and at current GBP/USD exchange rates you get a BATS share price of 4050
PM do have lower debt at around x2 EBITDA compared to BATS x4, and when you adjust for the extra debt the SP comes down to around 3175.
When you look at those numbers you can see how the broker targets for BATS make sense.
Average Volumes are around 10% higher on BTI than BATS, although yesterday volume on BATS was up around 80% but were up 150% on BTI so you can see the buying pressure, especially yesterday, is coming from across the pond.
It's happened a few times lately Mikey. Stop living in the past and being so negative as if you do you'll miss what's happening right now.
The reason this keeps going up at the end of the day on a down day is that someone is using it as an opportunity to buy cheap shares. 26.75m buys went through between 16.15-16.20. That's around half of today's volume and around half the average daily volume prior to November, as volume went up over 60% in November.
Someone is building a large stake in VOD and is using every trick in the book to do so without pushing up the SP.
Buckle up buttercup as something is brewing.....
All eyes for me are now on BTI.
The BTI price and GBP/USD are the real drivers of the BATS price.
BTI has been in a steady downward channel since the summer from the $40 highs.
On Monday it tested the upper limit of that channel, and on Tuesday it opened and closed way above it. At the moment it's at $36.42 and has punched through the 100MA, and after which there's not much in the way of resistance until the $40 highs of the summer.
It's ticking up nicely at the moment, despite the US markets being fairly flat. It would need a good close today and a good day on Monday to confirm, but with 8 trading days until ex div day, a 10% rise wouldn't be out of the question.
That would put us at around 3025, and interestingly the gap down on ex div in July 20 from 3034 has never been filled.
Wild cards next week could be the Fed's meeting Tues/Weds and the BOE meeting Thursday. A very hawkish Fed might spook the markets and we go back down again, but a slightly hawkish Fed that doesn't spook the markets, and a dovish BOE could see GBP/USD go down even further, which would be great for the BATS price.
Next week could be fun, and to top it all off it's Quad Witching next Friday too!
Not at all Mikey. It's still in the rising channel - just dipped down this morning to bounce off the 50MA and is heading back up again. All completely normal for a share that's about to go pop.
Feeling very confident about this now.
Closed down my trading positions in other stuff, and topped up on VOD this morning. I haven't got the time / don't want the stress over Xmas staring at charts or having positions in markets that are open outside of 8am-4.30pm. I'm not sure of the speed/timing, but this is looking like it's building up steam for a march north so I'm sure my money will do well here without me having to do much!!
Time to chill and let this one ride....
This is why...
* The U.S. Senate dropped on Thursday a proposal to impose higher excise taxes on vaping, oral nicotine and other NGPs
* Citi points out concerns around the potential impact of the proposed tax changes on NGPs has weighed on the tobacco space over recent weeks and in particular Swedish Match
* The stock is on track for its best day since July 2020 and, including today's gains, up 9.78% YTD
* Shares in peers British American Tobacco PLC and Imperial Brands PLC are up 1.2% and 0.3%, respectively
No problem Daniel. VOD is far too big for anything we say or do to have an impact on it's share price, but the average daily trading volume is tiny compared to the funds available to a trader with an investment bank or hedge fund. These people move much bigger markets like commodities and forex.
Market moves for VOD changed on 4th November. Since then we've been in an uptrend and volumes have been higher. We've had results, an ex div day, the markets go into a mini meltdown and some market manipulations since then though so it's been very noisy and easy to miss.
Now all that's behind us (hopefully) I'm fully expecting this to continue on the uptrend which resumed last Tuesday. Just look at today for example - FTSE down and VOD up. It's not massive moves, but it's happening. I wouldn't even rule out a proper break out towards 142p if we get a Santa Claus rally in the wider markets.
Nice breakout at the moment. Triple bottom on a long term rising resistance line, MA cross and broken and staying above 100MA for first time since July, results in line with expectations, market sentiment improving, broker forecasts nudged up and ex div day in just under 2 weeks and should all give this some legs.
First resistance is going to be at 2740 where we finished last ex div day
Next will be around the 2790 mark where there the 12 month downward resistance line.
After that there is the 2860 level where we struggled over the summer, which at the moment is my best guess, although it's going to start looking very overbought in the next couple of days.
Daniel - yes it can be done for a short period of time.
Large sell orders can be placed on the book which are consistently just below the current market price. Those sell orders are then removed before they actually filled, and new large sell orders are placed which are a little bit lower. At any time if you look at the order book it will be heavily stacked on the sell side, which will give the appearance of very heavy selling pressure, which can lead to the price being walked down. Anyone coming to the market to sell will place their order just above the large sell orders, and because those large sell orders are being removed and replaced at a lower price the SP can drift.
You can only do it if you already own a very large chunk of shares that you can use to stack the order book to the sell side, as you can only place sell orders for shares that you own.
Once the negative selling pressure has been established, you gradually reduce your sell orders and let the order book fill up with genuine sell orders, and then swoop down and buy all of the sell orders on the order book. That's why the SP shoots up so quickly as the only orders left on the book are at a much higher price.
If you do that then you can buy a very large chunk of shares at a lower price than you would have got if you had either just placed a very large order to buy on the book or started off buying all of the sell orders very quickly as both of those will lead to a steady SP increase and you'll end up paying more. It's not something that works for very long as people cotton on to it, but it can work for a few hours or a day or two if you are lucky.
Volume has increased significantly since the start of November and there have been other large volume days. That's not down to PIs or fund managers rebalancing their portfolios.
Someone is either closing a large short position or building a large long position. You can't tell which looking at price action/volume/order books, as they are essentially the same thing.
Either way it's good news.
I wasn't watching the VOD order book on Tuesday or yesterday, so I can't 100% confirm that's what happened, however all of the signs were there - SP starts moving in opposite direction to market, decline is very linear and is then followed by a spike in price and high volume.
This kind of stuff happens all the time, on equities, commodities, forex, interest rate swaps etc. It's market manipulation and is illegal, but hard to prove. Every now and then the regulators catch one of the big boys doing it and they get a 'large' fine which is substantially lower than the profits they make from doing it, so they keep on doing it!
This wasn’t just a spike after the release of an uncooked alert. The SP was clearly being manipulated yesterday - not only was it going in the opposite direction to the markets, but the decline from 9.20am was far too neat and linear for it to be normal price action.
Someone was deliberately manipulating the SP to get it lower ready for today’s buys.
Something is going on. Either it’s someone building a big long position or closing a big short.
Either way it’s good news :)
That explains yesterday’s prive action. I thought it was odd that not only was it moving in the opposite direction to the markets but the downtrend resistance line was way too linear and perfect.
Someone was obviously planing ahead for a big buy and driving the price down.
Good news as far as I can tell - let’s see what unfolds …
Definitely organised and sustained selling today. One of the most perfect and gradual downtrend lines I’ve seen for a while today.
Not sure if someone is closing a long position for a quick profit from recent lows or whether shorters are back.
Looks like we’ll need to be a bit more patient …
Yes you are right Clive, and I understand that lower losses will mean less of a drag on other profits and increased reported profits.
Just me being finnicky about choice of words, as the only thing that contributes to profits is profit!
Anyway enough semantics, they seem to be on track to do that within the next 4 years and everything else was pretty solid as expected so I'm happy.
Will be interesting to see what happens on US Open...
Steady as she goes....still on track to deliver FY guidance as at H1, although the markets didn't seem too impressed with that!
EPS is still going to be down FY due to FX (as expected), but if revenue growth can continue at this rate then that will change in coming years.
The only bit I don't get is this
"New Categories will contribute to profit growth for the first time as their losses start to reduce"
How can reduced losses contribute to profit growth? Surely only profit contributes to profit growth?
Give this another year or two when the FX hopefully stabilises and NCP are actually profitable and the numbers could start looking very good.