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JPMorgan and their professional shorters are making money at our expense.
If you are interested in attracting attention to that, please message me there. I'll write posts and you could like/contribute if you have a few seconds/minutes to spare. We start once we have a critical mass of members. There's a big audience there and they'd be interested in JP MOrgan... as well as making profits from shorting squeeze.
Please message me there:
https://www.reddit.com/user/Professor979
*Back to SIG: The shorters using c. 3% of the shares will need to buy back very soon
Greatcrested -- everybody should be free to buy and sell everytime they want, of course! No sane person would dispute that.
But when it comes to manipulating the market on purpose... we should draw a line.
I'm a big advocate of free markets but only if they're working well and there's no exploitation.
Back to SIG: The shorters using c. 3% of the shares will need to return very soon. The next trading update will be coming soon and it will more positive than expected (I hope). Also, SIG is on the up, they have money and they have a board that need to prove themselves to stockholders (the owners) --> I think there might be more acquisitions soon. And a lot of funds will descend here.
To those who play SHI (and you probably read this board from time to time): You're risking more than you think here.
TRINID -- the basic theory is simple:
You borrow shares from JPM (for example, 12m shares I showed in a previous post). Then you wait for some genuinely bad news to emerge. It can be something macroeconomic or, ideally, something company-specific.
You start selling 10k, 20k, 40k. Especially at the end of the day. In a shallow market, your 12m shares (c. £3m) drive SP down.
You do that for a few days. You create expectations that this SP is "tanking". As SP falls trigger losses get activated -- so more people sell. People also panic -- the pensioner who relies on these shares, the newbie, the people who haven't done much research on the share. Another category of investors try to be smart: "I'll sell now and buy back at 25p... I can read the market me". They all sell. SP falls more and more. It's a self-fullfiling prophecy indeed.
And then you buy back. So, you borrowed shares and sold them at 33p. You bought them back at 28p and you hand them back to JPM (cash-equity swap) plus a fee for their trouble/risk. You made a tidy sum over just a couple of weeks.
You could amplify that with CFDs yes. Although they're illegal in many countries and corporates are not supposed to invest there (although they do). Or you could use CFDs to hedge for your risk (in case that good news emerges while you're shorting and you get into trouble).
Greatcrested -- Thieves also "take risks" and have to "pay a fee" (to the pawnshop I guess). That doesn't mean that they're doing the right thing.
When you're long, your earnings don't harm anyone. In fact, as the company grows everyone wins. The employees, the customers, shareholders, your suppliers. Even the state gets tax. It's a Win-Win for everyone and we all get rich and happy.
When you're shorting something, you win at the expense of all the others. You take the money of the pensioner and the family man and you can even cause problems to a company (for example, a CEO gets under pressure to "do something" to stop volatility. That's a forced move and it's rarely good). In my book, shorting is preying on the weak and that's not an honourable thing.
Shorting is blatant market manipulation. It should be illegal for the same reason that monopolies are usually illegal.
The way I read the last couple of weeks in SIG: very soon, someone will need to buy back big here.
GLA
If someone wants to short, they should be using CFDs, not real shares. But the problem of CFDs is that they don't force the share price to fall.
Sipp-it -- I'm looking forward to more good news, profits, dividends and some multibagging profits here. Hopefully most of it will happen before the 5 years too!
Greatcrested -- Shorting is nasty, criminal almost. The market is a zero sum game in the short run. So, their profits will be the losses of the little guy. In SIG, they take advantage of the shallow market, use manipulative tactics, panic the little guy, trigger stop-losses and ultimately rob the small out of their money.
Truly great investors like JM Keynes refused to short the market.
The EU always considered banning shorting but the UK gov blocked it. Lets see what will happen over there now.
With SIG, more good numbers will speak very soon.
GLA
* meant Half Year Results.
Manic days.
https://www.lse.co.uk/rns/SHI/sig-plc-half-year-results-p9hpys0ci4tld78.html
You'll see that their underlying profits (excl "properties") were about 30m. The SP was 160-170p.
They also had more net debt back then (166m). Now their net debt is only 5m (!!).
In addition, now they have a better plan and backers as a company + the government has made construction a priority.
Short this at your peril.
Carllapos -- you see what they shorting has done to expectations? They've convinced people that this will fall further... all the way to 25p. As if we're in the same situation we were months ago.
They've caused many daily falls and now people expect that this will keep falling. No doubt, some tried to be smart and sold some of their shares, hoping to buy them back at 25p.
So the price keeps falling and the ones who started/sustained that ended up selling high and buying low (because they always need to buy back).
I just ignore these falls and look at the fundamentals. When you're long, time is your best friend.
The UK market is NOT a bubble. It's well below its level before the pandemic. Some companies are overpriced but many others are undepriced.
There are constructive shareholders such as IKO and CDR. And there are neutral ones such as ourselves - the small fish.
And then, there's JPM. Facilitating shorting and volatility for the company. Look at the RNSs for the last year and before.
https://www.lse.co.uk/rns/SHI/
Nearly all Holdings in Company notifications are for JPM shares. JPM shares seem to go up and down every few weeks/months or even every few days -- that's because they lend out shares for shorting and then they receive them back as agreed (that's how shorting is done usually, with borrowed shares)
See one of the older ones... have a look where it says cash equity swaps, at the bottom of this RNS. These are all shorters who borrowed JPM shares. You'll see that one of them borrowed 12 million shares (about 1% of this company). In total, these shorters borrowed from JPM nearly 3% of their shares.
https://www.lse.co.uk/rns/SHI/holdings-in-company-kocpypapk0gonza.html
In a shallow market like SIGs, that 1% by a single shorter or 3% by all of them together, will give the direction.
SIG is ideal for shorting because its a shallow market and also because it's a company with problems (downward pressure, causing panic occassionally) but also good fundamentals and prospects (so there's also upward pressure).
Some of the people posting here can be these shorters. A good shorter keeps an eye on boards like this, to gauge the sentiment.
So... shall we post something on Reddit?
ONLYMEE -- here's a link with info on what needs to be disclosed and where. There are even better sources out there. The more we read the better our chances out there.
https://www.aosphere.com/aos/shareholding-disclosure-united-kingdom-summary
*Shorters need to buy back the shares to hand them back to JPM. They only borrowed them and pay money for each day they hold them. It's a very risky business being a shorter because each piece of news can mean that you need to buy at a higher price than you sold. They're skittish...
Expect this to rocket at the first hint of good news.
The minimum threshold for RNS notification is 3% in the UK.
In the last RNS from 18 of December, JPM are only below the minimum threshold because they've split their shares into shares they hold and shares they lend out. So, each of these portions is less than 3%.
Contrast the two holding RNSs from 18th and 16th of December.
On 16th of December, you will see that their total holdings is 5.03% but they mention that the minimum threshold has not been reached for each category (8B1 and 8B2) and so they don't need to disclose. On the 18th of December it's reversed that.
So, what happened? On the 16th December they notified us that they had gathered back the shares they lend out and crossed threshold upwards. On the 18th they notified us that they gave them out again and went below threshold (for each category of instruments).
SIG experiences downward pressure because JPM lend out their shares for shorting. SIG's shareholders are at least 70% institutional and about 25-30% retails like us. Many retail traders don't trade daily either. So the market is shallow here. If JPM offer up to 5% of shares for shorting, that's a huge percentage of the total number of shares traded daily/weekly and this percentage can easily manipulate the market.
I think I've seen quite a few strategic sales giving direction to the share. The guys buying 5 or 500 shares don't give the direction.
But remember... it's shorters need to buy back the shares and hand them back to JPM. They only borrowed them and pay money for each money they hold them. It's a very risky thing being a shorter because each news can send the share rocketing and you need to buy back at a very high price.
Expect this to rocket at the first hint of good news.
Just topped up. Another £10k.
Extra 33,139 shares
GLA
I'm scratching my head about SIG... we should have been over 40p by now.
The company is doing better than expected and the fundamentals got even stronger according to the last trading update.
Nearly all other shares are rising but this is one keeps falling day after day. On a day where Rolls Royce announced even more cashburn than the massacre they had been experiencing, SIG falls more than RR. Go figure...
I attribute this to shorting, facilitatred by JPM. But with shoorting, whoever sells need to buy again at some point.
GLA
I also expected the sp here to be north of 40p. There was a positive Brexit deal (for goods only) and we also had the very positive trading update we had earlier in January.
We need to acknowledge that SIG is still loss-making though and construction is regarded as a cyclical industry -- with clouds are gathering again over the UK/EU economies. Construction is also a slow moving industry and not a particularly sexy one.
Even if CDR make an offer for 30p or 40p, we don't need to sell our shares. We are only obliged by law to sell if they acquire over 90% of the shares. If CDR get control, the shares in circulation will then be way fewer and the company will be considered less risky. SP could rise considerably. However... the danger in that case is that CDR would break down and sell assets of the company and we'll be left with shares of an empty shell.
I think we need to step back a little and look at the fundamentals here. SP has not moved much but everything is improving drastically. This company is getting out of the woods. They have a new talented board, strong/knowledgeable backers, loads of cash in the bank, 500 branches, very little net debt, the government is pushing construction as the platform for growth, they started to recapture market share, made small acquisitions, re-opened branches and more.
The idea here was to buy something extremely undervalued with strong fundamentals and... just wait a couple of years for the numbers to speak. Profits in 2022 will bring dividends, income, attention and loads of people will be panicking to buy SIG then.
One last point: US, Chinese and Japanese markets are in bubble territory by many measures (my favourite is Shiller's CAPE).
But UK markets and particularly SIG are not in a bubble. If the markets start deflating abroad, this will not affect SIG much. SIG might even rise (cause all that money has to go somewhere as Krugman said).
Like many of you, every time I lost my patience I lost money in the medium term (in the sense that I made minimal profit). I will not make this mistake here.
GL
JPM usually are not selling their shares -- they just lend them out for investors to short (and they collect a risk-free fee every time). Have a look at their RNSs. Their shares go down but their number of votes stays the same. This is why they seem to up/lower their shares every few weeks/months.
https://www.investopedia.com/ask/answers/05/shortsalebenefit.asp
This share would be much higher if JPM didn't help short this and if small time investors like us didn't trim down their position at the first sign of a 10% profit.
All this doesn't matter much though. The important thing is developments on the ground. The real business. If the company turns around (and it certainly looks like it will), then the share will skyrocket. It doesn't matter if it goes to 100p slowly or in a big jump (once we get guidance on profits/dividends). It will get there.
GLA
How can we get to 100p?
Well, if SIG starts giving a dividend of about 3p per share, there will be a case for SP 100p.
When SIG gave out dividends of about 3.75p per share in 2016, 2017 and 2018, their price was consistently over 100p (closer to 120p actually).
If you buy a share at 100p and you get a 3p tax-free dividend, we're talking of a 3% return on your investment year in, year out. In a situation of practically zero interest yields in current accounts and govt bonds, a 3% return makes a strong case for 100p. Yes, I know that's a little too simplistic because investors need to factor in some risk as well.... but let's assume that a 3% return will make many institutions and individuals happy to assume some limited risk. like it happened in previous years.
If SIG give 3p per share and we have about 1.18 billion shares in circulation, that means that SIG will need to spend about 59 million £ for the dividends in total. Let's call this 60m.
Francis has said in a speech that he favours a dividend cover of between 2-3. With a cover of 2 (let's be generous to investors, they've waited long enough), SIG will need to have functional profits of about 120 million.
If revenue is about 2bn, 120 million profits is perfectly doable I think.... it won't happen in 2021 but it may well happen in 2022. New talented board, loads of government initiatives, small acquisitions, restructuring, recapturing market share, loads of money in the bank, small debt and a great potential in SIG. That's why CD&R invested here.
The important thing is not when SIG yields 120m profits. The important thing is when the market gets convinced that this will happen. So, I think that with a little luck and a lot of hard work y SIG we'll be there in late 2021 or H1 2022.
100p. Give it some time and we'll get there.
GLA
My best guess is that within less than a year, SIG will be profitable, capturing market share and offering solid guidance about the dividend. It could be flirting with re-entry into FTSE 250.
There is always a resistance point but it won't be 34p...
I read this on foot but I'm positively surprised.
H2 revenues are up 4% compared to last year.
Much better than expected revenue overall for 2020. 18% up!
A lot of cash in the bank. 233m is a lot for this capitalisation.
Net debt only about 5m. Very little for such a business.
Restructuring completed.
Mentions that in the last week's of 2020 they even started to claw back market share.
Expect profitability to return in 2020.
My view is that in the worst year for the UK economy, plus starting from a problematic 2019, SIG are actually doing very well and Better than expected.
Share price should rise considerably. A big part of the risk here has gone away.
Well done to all who didn't sell prior to the update.
GLA