The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
Agree highly doubtful it's a strategic buyer - all they would achieve is to move the price against themselves and, worst case, put themselves in a position where they were forced to make a bid. If MMs are working with bigger buyers most likely they are individuals or institutions.
Looking at the trade summaries it would seem to support that theory. Tiny volumes, because everyone is a buyer, but at yesterday's price, so no supply. One big trade, of 1.5m shares, which was a buy and will have resulted from one or more MM putting together lots of scrappy little trades.
Periods of low volume where the market is one-sided and looking to buy at yesterday's price often/usually result in a breakout to the upside in my experience.
are an essential component of success.
I've been fortunate enough to be involved in a number of transformational trades over the years.
One of the acid tests is always that you need people telling you you're an idiot, and that the trade is doomed.
This is quite different from those simply looking for reassurance. They add no value and are essentially passengers. But the ones aggressively telling you how wrong and stupid you are, they are gold. Embrace them!
Totally agree with you SH. One minor correction is that I think they referred to FCF of $25m.
What's the right capitalisation rate for that cashflow? I would argue more than 5% but less than 15%.
For the sake of argument, that's a mid-point of $250m or 3x the current MCAP from Cheyeza ALONE...
Naysayers are part of this game. Motivations vary, but typically range from envy/frustration to personal grudges to a desire to move the share price down - either to cover a short or to build a position lower. The nonsense coming from this guy is a teddy bear's picnic compared to the vitriol on Tesla - and look what happened to that stock last year...
This guy sounds like he has a grudge to me. Happy to take the other side.
I'm with Bloodshot. The "soul-searching" by those hoping to re-load positions lower is tedious.
That said, it's all part of the game. And we're all big boys (and girls). Especially Peggy, at least in my imagination.
Talk of elitism is, however, complete BS. There's nothing "elitist" about a bunch of retail investors trying to make money. I dread the day when the UK is infected by the same political nonsense as the US, where even the way you tie your shoelaces is reduced to some form of political statement. So I say b*ll*cks to all talk of "elitism" and other new-age US-imported BS. Go and storm the Capitol, if that's your bag. Or get a Reddit swarm going to ramp the price of flea-ridden dog corpses. But keep your snowflake, neo-liberal, post-Trump accusations of elitism where they belong, namely within the tortured confines of your head.
If there are more buyers than sellers, the price goes up. If there are more sellers than buyers, the price goes down. Price movements are not always correlated to changes in value. Other factors at play include sentiment and liquidity. On a market like AIM where liquidity is at a premium, those seeking liquidity either as buyers or sellers will always have the capacity to change the price. Right now sentiment is weak across all equity markets. Liquidity is non-existent. Sellers who require liquidity will therefore move the price down. This is a period where buyers have the upper hand - a buyers' market. Next week it could easily be the other way round. If you don't like the price, then you are free to buy. We are the market, uncomfortable as that is sometimes..!
Agree with iBloch. Trying to interpret the movements of an illiquid security is a waste of time absent any news, as they are solely driven by the MMs needing to find liquidity and therefore moving things up and down until they find it. Whilst we might find their machinations annoying/frustrating, imagine what is must be like to have to make a bid and an offer, at all times. Who do you call? In terms of the more outlandish statements made by one or the other contributor here or elsewhere, once you can set them against the backdrop of a never-ending search for liquidity, they begin to make more sense, though of course should not always be taken at face value. We should continue to make upward progress in fits and starts, but what we really need are more institutional buyers, on-market rather than off. So it's partly chicken and egg (we aren't big enough to attract the institutions but need them to get bigger) but mainly marketing. The report from WH Ireland was a decent start, but it doesn't really say anything. Newsflow and banging the drum with concerted marketing to create new, deep-pocketed buyers is what will take this to the next level. In the meantime, we are the market on some days, with all the frustration that implies...
Looking at the lot sizes my impression is that we are not yet seeing any institutional buying. Since the institutions will be bid only, and since they will not be interested in buying multiples of less than 1m shares, that will be the rocketfuel here.
Caddy1 a big part of the reason we are moving so far so fast is the combination of the Anglo announcement and the HH investment. When you put 5% dilution in the context of 50% SP increase I'm not sure why any PI would complain, unless it's simply because somebody else did very well, very quickly.