Interesting read....16 Mar 2018 18:10
There seems to be little or no action taken against those who fail to make the proper TR1 disclosures, and I think that some private investors are jumping onto the bandwagon in some of the tiny AIM listed companies where you don’t need to invest a fortune to obtain 3% or more of the shares in issue.
Now there are some who genuinely believe in these companies and are taking a larger position for the longer term as an investment, but I think there are also others who are using it as a way of abusing the market and to help pump the share price!
On the bulletin boards and Twitter you will regularly see PIs getting excited about a company because a fellow private investor has crossed the 3% holding threshold and notified that position, and similar if they then make further increases to their holdings.
In fact you even see people saying they have bought on the back of this news, and how fantastic the company must be if ‘X’ is investing all that money into it, and often this causes the share price to rise disproportionately.
But I am left wondering if the same major shareholders are quite so quick to notify the market when they sell – possibly even doing so into the rise that their TR1 increased holding notifications often sparks!
It would of course be illegal for them to sell in this way, but given the track record of the FCA when it comes to clamping down on this type of abuse I would suspect that they get away with it.
Especially when many of these tiny AIM companies regularly dilute shareholders and they can quietly disappear when their holding gets diluted below 3% – one recent example though which showed that both the large PI investors were still holding at the time of such a dilution was Andalas Energy (ADL), as it was part of the Schedule 1 update on readmission to trading, so at least in this case it would appear that people were playing by the rules, but there are others whom I suspect don’t.
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