RE: Held Share price20 Jul 2018 23:44
This idea that mm’s can “hold” a price (that would otherwise be rising) for the benefit of an institutional investor appears frequently here.
If the mm’s were net long in sufficient size at the point the mythical order was received, it would just have been filled. As this didn’t happen we can can conclude that they didn’t have enough stock so needed to acquire more. In the normal world this would mean they would raise their bids in order to attract sellers. But this is the Alice in Wonderland world of LSE, where the convention is that mm’s in need of shares always lower the bid to snaggle the stops of nervous pi’s - the famous “tree shake”. Either way, if they’ve accepted an order at a certain price they need shares now to fill their short position. In a stable large cap they might be able to borrow some shares, but not in a volatile minnow like UKOG. And as market makers they are obliged to transact with everyone in normal size at their quoted prices, so their short position can grow and grow as long as the price is “held” down. They have a growing and increasingly risky short position against which their parent must post regulatory capital...
Also relevant here are the DTR (ie TR1) regulations which compel anyone who holds 3% of a company to disclose their position. Contrary to LSE rhetoric, everyone in the markets takes this pretty damn seriously as DTR breaches are career limiting.
On balance then the idea that UKG’s share price is being “held” to facilitate position building for an undisclosed large investor doesnt really stand scrutiny. There are murky practices in the AIM market, but not typically in the areas under discussion (trade execution, market-making and disclosure) which have become far more heavily regulated and scrutinised in recent years.
It is more likely that the current price action reflects the fact that PI’s - in truth the only material holders of UKOG - have largely stopped buying. The possibility of positive EWT results was widely publicised and discussed over a period long enough for most investors to build positions in the size they want. The idea that there were other PI’s and II’s waiting on the sidelines for the first confirmed tanker sighting has been shown to be false.
Until new buyers enter the market, or more positive EWT news further narrows the gap between UKOG’s mcap and earnings potential, the share price will not spike upwards. Posters here expecting to see the price fly simply because the mm’s will be forced to “let it go” are clutching at straws, and will be disappointed...
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