Goldenbadger113 Apr 2019 22:07
I owe you a reply to your post of 4th April:
Goldmans are disclosing through the RNS a near 6% position in Premier Oil. This is mainly through CFD’s.
Having consulted with my sources and drawn a blank as to any material event news, such as potential bids etc, their thought is they (Goldman) are simply acting as a counterparty in facilitating their clients positions between buyers/sellers.
The RNS disclosure reveals a very modest holding in physical shares, but a near 6% position through CFD’s. Typically a bank would hold these to hedge exposure risk it has elsewhere.
An instance might be securities lending, where Goldman is ‘lending’ stock to clients where they will then sell the shares in expectation of a market fall. To facilitate this client position, Goldman need an equal and opposite positon otherwise they have exposure to Premier Oil shares (and typically the bank when acting on behalf of clients and not executing its only principle trading) would only want to hedge the exposure and earn a fee from the client’s trade.
Another example would be if they are providing a market in CFD exposure to clients, so their clients can ‘bet’ on movements in Premier’s share price without physically owning the shares. Again, Goldman’s role would be to facilitate the trades but mitigate the banks risk, done by netting off client positions and holding a balance of CFD’s.
Their view is Premier’s share price continues to recover, predicated on a rising oil price and continued company efforts to reduce net debt. Operational activities and potential development in its pipeline and reaffirming production expectations seem to have been a support as well.
Sign In
Follow the stocks
