Member Info for StarBright

How - in practice - do proper II’s buy shares in companies that are new names in their portfolios? Here’s a brief illustration of the typical steps involved:

- Idea generation (perhaps prompted by an event like SD)
- Validation (“Is this one of the ideas we want to pursue?”)
- Due diligence (what needs to be verified & how - this could take time)
- Articulation of investment thesis (formal/written for some pm’s)
- Stress-testing of investment thesis (“Are you sure about XXX?”)
- Determination of initial position size (“Let’s start with 2% of the portfolio”)
- Discussion with equity dealers (internal colleagues but segregated reporting line etc. from pm’s) regarding liquidity, market dynamics etc
- Trade modelling / market impact assessment (by equity dealers, “Will we move the price?”)
- Determination of desired entry price range, acquisition timescale and funding availability
- Internal order placed on dealers blotter
- Confirmation that no compliance blocks (eg a colleague is an insider) exist
- Dealers start working orders with market counterparties, aiming to build the desired position in the desired timescale within x% of VWAP or similar
- Ongoing liaison between dealers and pm’s regarding market impact, price target and timescales
- Confirmation of completion of position build and post-acquisition review (formal for some pm’s, less so for others)

Some of this can be compressed to a degree - for example if your equity dealer is made aware of a sizeable line of available stock - but the intent is to buy quietly off the radar, not leaving footprints in the market.

@Wyndrum - what I have said (several times…) is that II’s prefer to buy primary issuance and are extremely unlikely to create a near-term multi-bag by chasing the price up in the secondary market.

There is a clear middle ground between these extremes. The best credible outcome for Avacta is that it gains support from some new institutional investors whose carefully managed buying provides stability and support to the SP over an extended period. Best of all if they attract a couple of new marque name investors who get to TR1 level over time. This is the outcome I am looking for.

Reality: the most impactful portfolio managers are likely to have sent their juniors/analysts to the event itself. These attendees will now report back. Bigger players who are interested will then seek 1-1’s with Avacta’s management team.

These processes take time. They absolutely do not go from info to orders during coffee breaks….

Remember that "material" for AVCT's naive ramperati comprises irrelevancies like LinkedIn likes and local office park conferences. The company's definition will be somewhat different.

The data/detail/results that holders are looking for can absolutely be provided at the Science Day today, and I expect it will. The company will maintain that these are just supporting details, that the material news was RNS'd on January 17th. It's the safest position for them to work from.

"No material new information will be disclosed as part of this meeting."

The key word in this sentence is "material". In this context it refers to a judgement call (made by the company) on what constitutes price sensitive information. Their judgement is that they discharged their formal disclosure responsibilities in the January 17 release. I'm sure that there will be plenty of interesting detail today, but the companies generally like to make a narrow definition of "material" to avoid setting precedents.

The message of the Science Day for the invited II's will be "We told you this on January 17th, we're going to help you better understand the implications of it today."

I think they have enough gas in the tank to hang on for a successful outcome following which they can raise from a much higher level.

If skullduggery and conspiracy theories are your thing, then how about - the drilling has been going just fine, but a well managed delay created a nice dip for friends and family to top themselves up on shares sold by nervous PI’s.. ;>

We’re still in the game here. It wouldn’t be the first time a company released a 1730 RNS the day before an event…

Nothing will surpass a certain explosive rampers repeated attempts to hype a countdown to the Jawdrop (Pindrop?) Summit featuring the local councillor and Avacta’s fellow tenants in their urban regeneration project…

All the way from 40p+ to 3.75p…?

Doesn’t look like a “false drop” to me. Painfully real for the gaslit flock of holders.

The aptly named “dummy sells” on different brokers/platforms will reveal different results according to which RSPs are on that platforms panel.

As a result all of the endless “can’t buy / sell” posts on LSE ‘boards are pointless - they tell you nothing about the available liquidity in the wider market, only a snapshot of what was available via the posters platform at the point they tried the aptly-named “dummy trade”…

There are many more posts about FUD and FUDsters than there are posts containing any actual FUD. Is there really anything more than @TerryMC1's primitive offering and a couple of at-worst ambivalent posts from those not caught up in the "only x sleeps" hype..?

If you want to see what FUD looks like, try these:
https://hindenburgresearch.com/adani/
https://theboatmancapital.com/wp-content/uploads/2021/12/Argo-Blockchain-061221_.pdf

Speak to your broker / platform...

Correction:

“Now consider what happens if ONE of the MMs decides that they are a little *short* of shares, so moves THEIR quote up to 168-174p. Another market maker decides that they are a little *long*, so moves their quote down to 164-170p.”

Sorry.

@Toukankahmoon - I'll have a go at answering your question, but it's a little complicated so the answer won't be short. What follows is also somewhat over-simplified in that it considers only online quotes for trades upto the EMS (5k shares for AVCT). Anyway....

The first point to note is that AVCT has multiple market-makers. They are competing with each other for flow, so they don't collaborate in the way implied in your post. They don't have collective objectives and they don't work together as a cohesive group despite what you might read on the LSE discussion forum. In fact they are generally bitter rivals, each keen to put one over on the others.

Each MM is required to maintain executable quotes through at least 90% of the session, each with a spread below the maximum permitted - typically 5%.

When the market spread is (say) 166-172p what you are seeing is the best (ie highest) bid from across the full panel of MMs and the best (ie lowest) offer from the same panel.

Let's assume (for the sake of illustration) that this is because all 7(?) MMs are quoting 166-172p, all with the same 6p or 3.6% spread. Now consider what happens if ONE of the MMs decides that they are a little too long, so moves THEIR quote up to 168-174p. Another market maker decides that they are a little short of shares, so moves their quote down to 164-170p.

The market spread is now 168-170p, which is closer to what we are used to seeing. The MM on the offer at 170p will fill all the buys, and the MM on the bid at 168p will fill the sells until something changes.

Think about what this means... No individual MM can widen the market spread by moving their own bid/offer prices. An individual MM can only narrow the market spread by showing higher bids or lower offers. It is an elegant balance that works in investors favour.

When the quoted spread looks wide (as it was at 6p today) it's generally because all of the MMs are showing prices in the same area. None are acting to narrow the quoted spread by showing better (higher) bids or lower offers. This situation typically doesn't endure as any of the MMs can win whichever side of the flow they'd prefer to have with only a small change in the prices they are showing.

"Wall of sells" might be better phrased as "Wall of trades below an artificial mid-point based on RSP quotes for online trades".

Other prices may be available, and other trades may be reported.

Those attempting to use the buys/sells reported on LSE/ADVFN etc, alongside "dummy trades" to draw real-time conclusions on liquidity and flow are doomed to failure. Like someone peering into a house through the letterbox they have only a partial view of a few of the rooms.

Some of the reasons for this are:
1. For dummy trades (for example) results will vary according to which broker platform you are using, as not all platforms have the full set of RSPs.
2. There are other (non-RSP) venues through which orders can be filled if your broker has access .
3. RSP's routinely give different (ie better) quotes for telephone trades than for online execution
4. The real-time utility of trade reports is fundamentally undermined by exchange provisions for delayed reporting
5. Similarly, the processes used by sites like LSE and ADVFN to flag individual trades as buys or sells are fundamentally undermined by exchange provisions for delayed reporting

The processes of price formation, order filling and trade reporting are more complex and diverse than many bulletin board contributors acknowledge. As a result. most of what you read on boards like this one regarding "tree-shakes", "manipulation", "iceberg orders", "mates rates" etc is the inevitable outcome of incomplete data and inadequate understanding rather than anything underhand.

My hope is that they will use the science day to demonstrate to interested II’s that Avacta is anything other than a “covid stock” with a failed LFT project. That it is a credible UK company with the depth of intellectual capital and management capability required to bring a pipeline of innovative new treatments to market. AVA6k is the carrot, the live example if you prefer. But the message will be that II’s should look holistically at the company and the capabilities it has built. They will be invited to view it as a value-creating franchise not just at the discrete opportunities afforded by the first drug in its pipeline.

I invite my neighbours to come for a barbecue and some drinks in the summer to maintain good relationships. One day I may wish to apply for planning permission, and it’ll be better to have them viewing us constructively from the outset. Inviting them doesn’t mean I’m about to start the process.

One of the most positive aspects of Avacta is that they seem genuinely able to manage with the long-term in mind.

@Neutronic, I think that is a very transactional view. Whilst there might be a raise (remember - that’s why companies are listed…) I wouldn’t interpret the science day as signalling one.

Avacta will benefit from broader institutional awareness and support. The science day looks designed to stimulate interest in the investing community. That’s a valid and worthwhile objective for the company to pursue regardless of any immediate needs.

Timster is correct, although there’s an interesting grey area around the expressed opinions of the invited independent speakers which will be heard first by attendees.

In any case, there’s very little chance of immediate insto buying creating an SP inflection point.

The debate on this board between the “It works” contingent and the “More data required” viewpoint is moot. Absent the announcement of a licensing deal or takeover - each of which might be viewed as grey swans - the share price will only re-rate if new buyers with deep pockets chase shares in the secondary market. It’s highly unlikely that any of the institutional investors attending the science day will be waiting for a puff of smoke, for specific data upon which they will commit their investors capital in this way. That’s just not how they work.

Myles McNulty suggests that some sort of grand unveiling with mainstream press coverage etc is planned for Science Day. I will be surprised if that proves to be the case; the event isn’t structured to support such goals. If that were the objective, a press conference with survivor stories etc would be far more effective. My sense is that there is still road to travel before the time for this arrives.

I am hopeful that the Science Day will prove to be an inflection point for the company - because broader/deeper institutional support is a key objective. But those expecting a dramatic price dislocation are likely be disappointed.