George Frangeskides, Chairman at ALBA, explains why the Pilbara Lithium option ‘was too good to miss’. Watch the video here.
I knew D4E was a possibility, but with 2 years until the bonds were due, I thought there was a good chance they could pay off the small term loans in November and the bank would renew their facility. It felt like they had time on their side to work on the 2026 bonds.
D4E of substantially all the bonds is going to mean massive dilution (2-3x). There is going to be very little to support the share price in the near term and shorters are now going to have better opportunities to close.
I unloaded all 300k of my shares first thing. Good luck all, but I feel this is going to trade lower over the coming weeks.
The institutions that are short had approximately a month of the price being 23-25p, plenty of days with sufficient volume to buy at those prices, where they could have reduced their positions yet they didn't. In some cases, they increased their positions. Either they know something or are very confident about the outcome and are wanting to hold out until the financials in April to cash in on the value of their short positions or they are about to have an uncomfortable time over the coming few weeks. The price movement today indicates there is likely some news about to come out, but it's not going to be the balance sheet / funding news that all are eagerly anticipating just yet. So it'll just be a question of how comfortable they are letting the price rising without reducing their positions, because I think if they had wanted to reduce ahead of April's financials they would have done so already.
Very thin liquidity today. You can only get quotes close to the market price on small trades 30-60k shares, so it's no good trying to trade any volume today. Anyone selling, even very small trades, are driving the price down.
TFG must be underwater on their position too. I reckon their average entry price is low 20s. They started on 28 November when the SP was in the mid 20s and increased on days when the share Price was trading between high teens to low 20s. At least they only have a 1% position to close!
Helikon look the most desperate of those that have shorts open. They arrived late and only started shorting from 6 November when the SP was mid 40s. They kept aggressively increasing all through both announcements, when the share price was in the low teens and 20s and now increasing again in the mid-high 20s. I'd like to know what their average entry price is, but it can't be much higher than 25-30p. Their short position is 3.5% of issue share capital - they've got to be the ones in the most trouble and vulnerable to any slight upwards movement in the SP.
Helikon and Millenium increased. How deep do Helikon want to get! They're digging themself a few big hole...
Helikon Investments Limited 3.48% 0.18% 9 Jan 2024
Millennium Capital Partners LLP 1.23% 0.13% 9 Jan 2024
Total 10.58%
The shorts are betting on one outcome only now, equity issuance and dilution and they are betting big on it! If equity issuance doesn't take place, with close to 60m shares short, average daily volume of 5-6m, buying back to close their shorts is going to be hugely problematic. When the share price spiked from 20 to 40p, there was less than a 1% decrease in short positions, so didn't account for much of the buying. They have 10x that to close out entirely. It seems easy for them to add to the shorts now, with little volume and with each sell pushing the price further down, but the aggregate position they are building is going to seriously work against them if dilution doesn't happen.
The market makers are definitely artificially controlling the price of this. The movements up and down in price aren't representative of the volume flow. In the mornings tiny volumes of sales bring the price down significantly, buys in the morning have negligible impact on the price going up, yet similar size buys in the afternoon and the price jumps up. Same pattern the last three days now. There has been very little volume in the last 30 mins, but the price has jumped up almost 1 pence. You can't explain it using the trade flows / volume.
There is very low volume this morning, as with yesterday morning, so the the price can be driven down with very low volume sales. The shorts haven't got a hope of being able to buy back in any volume at this price level.
The short report will confirm this later, but I anticipate the shorts sold more shares yesterday to keep a lid on the price and cause some to panic in to selling. The volume was quite heavy yesterday (21.5m). Today the price has drifted lower on low volume (only around 3.25m so far), so don't think the institutions / big shorts have been that involved today. The only notable trade really was a big 300k buy earlier, it's been the only trade of any size really. If the shorts need or want to reduce / exit, they will aim to do it when the share price isn't gapping higher like it was in the last week of the year.
I can't wait until after the close today when the short positions from yesterday are published. If the shorts didn't reduce yesterday, those with 2-3% short positions are going to be in big trouble. Helikon must be well underwater now, as they were late to the party and only started a short position in early November when the SP was mid 40s. They aggressively ramped up up their short position in the 20s and high teens and are still yet to reduce!
I think the total short interest has probably peaked and doubt there is much more headroom to borrow shares to short. It must be getting pretty expensive to short with this level of short interest and the current share price. Individual parties seem to be increasing only as others reduce and therefore more shares become available to short.
No problem! Absent complete wipe out through administration, which seems a low probability of all the potential outcomes, holding though it seems to offer the best chance of capital recovery given the current share price and future prospects for the business.