recent price falls3 Nov 2022 16:11
Please understand that what is written below is not any kind of ‘de-ramping’ exercise, but simply a cold-headed analysis of what might be happening. Of course, this all assumes that there are no fundamental issues or nasty news in the pipeline.
Might there be a distressed/forced/newly-bearish (institutional) seller out there, pushing the price down? Well, of course this is entirely possible. However, I’d point out that public trading in any kind of institutional-material size in a stock of this kind is difficult, and so institutions are usually very reluctant to do so. Also, brokers watch the list of registered shareholders like hawks – they know who might be sellers, and are quick to move prices against them if they start reducing stakes. (In summary once IIs are in, usually via placings etc., it’s very difficult for them to exit). I have seen no IIs on any lists of significant shareholdings (3% of the company is c£5m, which is peanuts from an institutional perspective). So, in summary, I find the II-selling argument difficult to buy in to.
So, who else might be selling? Well, I note that approx. 39% of the stock is with Hargreaves Lansdown, Interactive Investor, Halifax Share Dealing, Barclays Wealth & AJ Bell Securities, ie. nominees for private punters. No doubt there are a number of smaller retail brokers out there with significant, but not declarable, holdings also. Plus, there will be positions via the plethora of CFD, spread-betting and other punting outfits. I’d guesstimate that well over 50% of the stock is held by or for private punters like, well, you (or me).
A lot of people invest/trade with stop-losses in place, for understandable risk management reasons. However, price declines can become self-reinforcing as stop-levels get triggered, and people start panicking and running for the exits simultaneously. So, yes, I’m afraid that while you personally may not have been panicking recently, some people like you have been getting stressed-out and have sold. Needless to say, when prices reach a more attractive level, then buyers will emerge (may be happening already).
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