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Thanks @AML_007. I'd missed that the rump placing was moved from today to tomorrow. Placing dip tomorrow then?
What I'm trying to get at is recent disclosures of percentage of AML short positions aren't very meaningful when there are 400% more shares hitting the market. Also, remember the 23.3m placing shares will have reduced the declared shorts percentage by about 15%.
If you are still short AMLN short today I think you can still run them, just you will be liable for 103p per share tomorrow and then they'll them become fully paid AML short positions.
Well thanks for the link but does it answer my question? I notice long disclosures are in terms of the AML shares, not the rights. Are the short disclosures and different?
My point is, the figure isn't very relevant if you don't know the shorts in the rights shares.
"Shorts down to 5.48% now, from 7.22% on the 22nd."
Is that shorts in AML or AML and AMLN combined?
If only AML what do you know about shorts in AMLN (which now make up 80% of the company)?
Looks like a dip this morning as the rump gets placed.
"At one point, they need to close and the price will tick up."
I don't think shorters need to close any more than longs do. It's more expensive to run a margined long position than a short position and, with interest rates increasing, shorters may actually start receiving daily interest on short positions!
I think there's probably worse to come and a heavily discounted rescue fundraise is one the horizon. Shorters will have seen this coming for a long time. If nothing else, their lengthy Going Concern statement in June should have got alarm bells ringing, plus the toing and froing of directors. The last para reads
"On this basis the Board believes it is appropriate to prepare the financial statements on a going concern basis. However, this material uncertainty may cast significant doubt on the Group's ability to continue as a going concern and therefore to realise its assets and discharge its liabilities in the normal course of business.
"If you buy the Nil Paids at 48p, with a view to paying 103p = 151p with the Ords trading at 160p?"
Exactly. It's madness to buy AML if you can buy AMLN. Not all brokers will let you though.
If you can long AMLN then there's a great low risk arbitrage to be had:- Long AMLN/Short AML
With the current price difference they're actually good as an arb trade at the moment
Long AMLN/short AML
That's a nice low risk way of scalping a few percent.
Sadly IG aren't taking new positions online in AMLN. Perhaps you can if you phone.
"Much better to buy the rights in the short term I would say. Same upside long-term and less monetary downside short-term."
If by "buy the rights" do you mean buy the AMLN nil paid shares? If so, you'll only have about ten days before you have to decide if you want to sell or cough up 103p per rights share.
If by "buy the rights" you mean exercising your rights please remember that the actual cost to you is not 103p. It's 103p plus what you might otherwise have got selling your rights (AMLN).
As it happens it does work out about 7.5p cheaper at the moment to buy AMLN and exercise the rights than it does to buy AML. (68p + 103p vs 178.45p), if your broker will let you buy AMLN. I suspect that gap will narrow.
Unless you are concerned about your voting power I don't think stock dilution is much of an issue with a UK rights issue.
With a rights issue you get to control how much dilution you'll take.
If you take up the rights in full you get no dilution.
If you tail swallow (sell some rights in order to fund taking up the remaining) you are diluted (in this case by about 50%) but this is offset by the increase in the market cap and you still retain the same level of investment in the company.
If you sell all your rights or let them lapse you've effectively opted to sell part of your holding. In this case about 60%. What's the big issue with dilution? It's hardly reasonable to expect your stake in the company to remain the same when you've got 60% of your investment back, is it?
sudnal, "selling to the nunderwritter"? What are you on about.
Holders in AML at close on Friday should now see another line in their account - AMLN (Aston martin nil paid). They should be able to sell them via their broker, just as they would AML.
If holders let their rights lapse they'll receive lapsed rights proceeds (assuming AML are trading above 103p at that point). These are distributed from the proceeds of the rump (those rights that haven't been exercised), less minor costs. The lapsed rights value will be similar to what you'd have got selling the rights in the market, perhaps a bit less but within normal market noise.
No, because the rights have value. If you don't take up the rights you get the money from the sale of the nil paid rights shares you now own (ticker AMLN). They'll track at about 103p below AML and are currently trading at about 90p. You therefore have 4*90p = 360p worth per AML share held on Friday.
I think the placing shares would have already been factored into the share price, before they got admitted.
The rise on Friday could be down to shorts reducing or closing, so as not to be exposed to the rights.
Looks like TERP of 179p with the nil paid rights (ticker ALMN?) at 76p.
Taken to the extreme, how would a 6 for 7 at 481p grab you? Not a lot I suspect, yet for anyone taking up the rights the end result is the same. The main difference is for those opting out of the rights, who receive little or nothing from a 6 for 7 because they're barely getting diluted.
I've long thought rights issues were a devious blag, if not an outright scam. They're a financial conjuring trick with terms like 'discount' and 'dilution' introduced for misdirection.
In fact, they're no more than the company begging you to buy more shares, but brand new ones from them rather than equally valuable used ones.
It's 4 rights shares for every 1 existing AML share held at close yesterday (Friday 9th).
For those exercising the rights can I ask, would you have been less tempted if it had been 1 for 1 at 412p, i.e less of a 'discount'?
It seems it's almost certainly down to FTSE shenanigans .
FTSE had said they'd increase the investabily weight from 31% to 76%, effective 19 Sept. Tracker funds would have been more than doubling their holdings. That probably accounts for the recent rise.
On Thursday FTSE changed their minds. That probably accounts for the fall yesterday.
Imagine being an insider at FTSE!
https://research.ftserussell.com/products/index-notices/home/getnotice?id=2605512