RE: Buy Pressue9 May 2019 12:51
The EHGOS fund will continue to offload shares at this price. They buy at 0.25p and then sell at say 0.32p/0.34p... that equates to a 30/40% ROI (minus fees etc.).
The quicker they can sell, the better... it is easy, quick profit.
The downside is that the sp will drift downwards on each and every large sell, because MMs need to find buyers (simple demand/ supply driver).
The challenge is getting buyers!
The solution = so, the only way DS can make this share attractive to shareholders is to introduce a 'floor' for future financing tranches. This gives the 'guarantee' that anyone buying below 0.4p will be able to sell at a later date at 0.4p... with news maybe higher.
But why would EHGOS agree to a higher 'floor' = my opinion is DS has shared his vision and business model and the fund clearly like it.
My prediction = EHGOS on average make c.30% ROI on their offloading. With a 'floor' at 0.4p, that would suggest an average selling price of 0.52p... after the next financing tranche is agreed.
Of course, DS has said the 'floor' will rise with future tranches, so the fund are betting on an average selling price c.30% above the 'floor'.
Surely, over time, this can only mean a steady drop in sp until EHGOS offload then a step up to the next tranche 'floor'. Then a steady drop down until EHGOS offload. Then a step up to the new 'floor'.
As EHGOS must keep shareholding under 30%, and they seem to agree to financing agreements of c.20% equity - we should be able to predict the next RNS release for new financing, and ergo, the next sp step up.
If I am right, this is a fantastic trading opportunity + a great long hold...
Sign In
Follow the stocks
