RE: Seller in background30 Apr 2020 20:29
The suggestion that there is a seller or several in the background has been made since there has been for a while now large delayed trades appearing after hours for several days now. This has also been supported by the fact that the share price has been drifting in a negative direction and further confirmation by the fact that there was a TR1 released by landsdowne to show they had disposed of some of the shares they acquired during the recent placing.
The assumption has been made that they will sell all of the shares they received during the placing and are probably nearly done. Important to note that they still hold a significant holding here.
So why would an institution be selling when the outlook here is so positive?
My understanding of Institutions from dealings with fund managers in the past is that they have a very strict set of rules to which they have to abide to.
When someone invests in a fund that fund is advertised at a specific risk and advertises how it's investment choices will be managed. If the fund is targeting investment in FTSE 100 funds it cannot for instance invest in FTSE250 shares or AIM, if a stock slipped from the 100 to the 250 the fund would have to make an exit from their holding in that company.
That's obviously an example where a company may have been underperforming.
Lets look at a case of a share price on the up.
A fund may have a rule that it cannot hold greater than 1% of the funds capital in a single stock, if one of the shares is performing exceptionally this fund would be forced to sell into the rise regardless of the outlook for that particular stock.
In our case I expect that the increased liquidity of our stock is providing the II's an opportunity to reduce slightly without hammering the share price and also they received these placing shares at 35p so are making a decent profit at this price without any risk of holding for news.
Hope that gives you some insight there are plenty of other reasons.
Sign In
Follow the stocks
