Member Info for StarBright

Even old ladies in supermarkets are short now… This ‘board is truly obsessed.

Happy Christmas!

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Way too much time and energy has been devoted on this board to poorly evidenced conspiracy theories, the only exogenous data-point for which is the Ortex stock on loan figure! The rest of the Jenga—tower that has been built - NCM/whoever looking to drive the price down, paid gangs of shorter trolls posting in collusion with the owners of the LSE bulletin boards, desperate shorters losing control, corrupt but colluding market-makers, trades “fired-in” in response to posts here etc - has made for entertaining reading at times. But it is no more than uneducated speculation, and should be dismissed by serious investors. It is also likely to be very off-putting to any potential new investors looking here for information.

There are no disclosed short positions, and the Ortex stock-on-loan figures cannot be treated as a simple proxy for short positions below the disclosure limit. The “laddering” idea referenced frequently here isn’t remotely credible as a driver of long-term price action (not enough capital deployed, spreads/costs prohibitive, risk asymmetry etc etc etc). No-one with professional experience in capital markets would take seriously the idea that the share price of a company with a FTSE250-sized market-cap might be ‘controlled’ for a year with <0.1% of its equity. It is - frankly - a ridiculous notion.

The largest driver of volume and price-action (over 5.5bn shares traded this year, more than there are in issue!) will have been the group holding the largest percentage of the shares - PI’s. Realised volume and price-action data tells us that it is their selling into weakness - and the corresponding absence of new buyers deterred by the sliding SP - that has driven the price down to a level where a few institutions were tempted to nibble in the recent placing. GGP has produced a fantastic stream of drilling results and commercial progress through 2021, and its market-cap makes far more sense in objective terms at this level. If good drilling results continue (and the company plays its hand well in negotiation with its JV partner) then it can continue to grow its market-cap/SP from here. I agree with those suggesting that NCM will want 100% of Hav, and that this is likely to play out during 2022. As such GGP investors have every opportunity to make excellent profits from this point!

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@Jambo813 - thank you for your efforts to bring some more knowledge to bear on this topic. One small clarification if I may; the CREST requirement you mention doesn’t prevent HNWI’s from shorting shares. Many full-service brokers offer access via their own CREST interface as a service to their HNWI (in fact to anyone with enough cash to open a fully-featured account…) clients. If you have such an account your broker will have - typically available on request - a list of borrowable shares together with their associated lending costs. Subject to your collateral position you can borrow shares on this list and sell them to open a short position. It’s an everyday occurrence.

The steady decline in GGP’s share price has likely made it a tempting target for opportunistic shorters, and I suspect that there are some HNWI spivs with IBKR accounts etc who’ve viewed it as an easy train to ride. If so they’ve made out like bandits as the end-2020 SP bubble has deflated. There is however no hard evidence to suggest their motivation has been anything beyond the stream of profits they’ve realised as the price has declined. Notably, no new TR1 holders have surfaced. As I’ve said before I think this trade is no more than picking up pennies in front of a steamroller, and they may well have given back some of their profits following the two recent RNS. I also suspect those RNS caught the MM’s on the hop with little stock on hand forcing them to raise their bids (& perhaps to borrow some shares, who knows…) as buyers for GGP made an unexpected re-appearance. Good!

As you say @Jambo813, shares on loan are not always sold to create short positions. You are right that the SB companies will sometimes borrow shares for liquidity matching. Also I have tried patiently to outline the occasionally unhelpful activities of the ETF authorised participants, who can be enthusiastic borrowers. And of course shares are sometimes borrowed to regularise settlement anomalies etc.

continued below….

The code applies.

https://www.thetakeoverpanel.org.uk/wp-content/uploads/2021/08/567845_005_The-Take-Over_Bookmarked_02.08.21.pdf?v=28Jun2021

It’s not an easy read if you are unfamiliar with the subject matter. Feel free to ask questions here…

Precisely notrader, but never mind...

A little calculation for you.

If GGP's SP were to rise by just 3.5% per (trading) day until Feb, it would be 0.1565*1.035^25 = £0.37

But why stop there..?

If GGP's SP were to rise by just 3.5% per (trading) day for a year, it would be 0.1565*1.035^250 = £850.36

Interesting calculation.

A gedanken experiment for you….

FMV works - by definition - both ways. If GGP were instead offered the opportunity to BUY 5% back from NCM for $600m (ie a discount of nearly 10%) would it make sense for GGP to raise the required capital and do this? If not, why not?

Interesting post.

It may be better to think about the price eventually achieved for the 5% as an uplift from that achieved for the 70% than as a piece of the last 30%. The original JV may first have been proposed as ending with 75/25; whoever at GGP insisted on 70/30 plus the 5% option mechanism may have added significant value. It’s unrealistic to think that the price for the 5% should reflect to any great degree the “final fully developed” value of Hav. If we’re talking about the possibility of 30/40/50m oz in time, the project is far from de-risked at this point. So the 5% is a staging post along the way for which GGP will receive a far higher value per % than it has to date, as a result of the successful drilling and the emergence of an amazing discovery.

Talk of “uplift clauses” etc is somewhat naive. NCM are unlikely to agree to a mechanism through which they may pay more, but have no recourse should (for example) geological or mining issues emerge. The price is likely to be the price.

@GGPThruandtru - I assume your 300-500m (let's call it 400m) is USD.

USD400m is GBP300m for 5% of Hav

GGP will still own 25% of Hav, valued therefore at GBP1.5bn

With 4bn shares in issue, that's an SP of 37.5p (assuming everything else GGP owns is valued at £0)

Is that what you are suggesting?

Lenz - how will the independent expert make that judgement? They will have to come up with their own assessment of FMV; the "winner" will be whichever of NCM and GGP is closest. We'll never see the independent expert's opinion of FMV, we will only know which of the NCM or GGP was closest to it. They aren't going to be judging based on the quality of the teams involved, or the excellence of their powerpoint decks are they?

It is interesting that the Nov '20 RNS said "Newcrest retains its option to acquire an additional 5% interest at fair market value (cumulative interests 75% Newcrest; 25% Greatland). Fair market value will be determined by negotiation between the parties, or, if the parties are unable to agree, then by an independent valuer."

To me, that reads: NCM says "$X", GGP says "Y". Independent valuer says "$Z", so will apply.

The "new" construct today says that the independent valuer will instead be choosing which of "$X" and "$Y" will be used. A subtle, but important difference.

I'm quite clear on what it says Lenz; the expert will decide "...which of the values nominated by the parties is to be the fair market value."

The last week before Christmas is a super-fun time to drop an RNS like this..! Game on.

@BollyR - you may be right about the moderating impact of the construct. I assume that the independent expert will come up with their own (independent!) value, and then it will be a question of which of NCM or GGP were closest. Like a multi-million dollar game of pin the tail on the donkey...

Very unusual.

Buckle up. I think this is going to be a fascinating watch over the next few months.

The process outlined in the RNS seems oddly binary. It says that the expert will decide "...which of the values nominated by the parties is to be the fair market value." This is materially different to the expert coming up with their own valuation. I had always expected that NCM would say "$X", GGP would say "$10X" and the expert would come up with a figure probably somewhere between the two. More than NCM want to pay, less than GGP are looking for. But the RNS says that the price will be $X or $10X, so there may be a big winner and a big loser.

I don't see how that makes sense at all, for either party. I wonder if we'll see a "clarification" at some point...

@Hydrogen - you’d enjoy the film “Betting on Zero” about Herbalife. I would be careful in comparing Herbalife and GGP though - watch the film and you’ll understand why…

Never mind Antigua. I was only trying to help you and JiffyBag.

You asked “ Anyone have any idea why trades (including my buy) showing as off book…” and I explained that ALL trades via market makers are reported as “off-book”. In fact every single trade today was off-book, other than the 3 UT trades between the MM’s.

JiffyBag said “ Some of my most recent buys over the last two weeks have been reported on LSE as 'Sells'.” so I volunteered a simple explanation of why this happens.

I’m sorry if my explanations weren’t what you were looking for. I certainly wasn’t looking to muddy the waters. You appear have managed that very successfully without any help from me..!

You are both fundamentally misinterpreting the meaning of “off-book”..!.

When your buy is shown by ADVFN/LondonSouthEast etc as a sell, all it means is that when you asked for a quote to buy “at market” an RSP responded with an offer price below the quoted mid-price. Your platform secured a good deal for you! It’s flagged as a sell by ADVFN/LondonSouthEast etc because of the fundamental flaw in the simple methodology they apply when trying to flag trades as buys or sells. Not because the RSP has reported the trade in a certain way, but simply because the RSP chose to accept your buy at a level below the quoted spread. They do this because they are competing with each other for flow. This is the market working in your favour to get you a good price, not someone trying to rip you off or paint a misleading picture of price action.

Could you read the article I linked earlier? And this one from Barclays: https://www.barclays.co.uk/smart-investor/news-and-research/investing-for-beginners/the-story-of-a-trade/

Together they might help you better understand what is happening here.

I’m sorry, but your interpretation is fundamentally flawed. If your trade is executed with a market maker (as are nearly all GGP trades) then it is an off-book trade. That’s all there is to it. There were 471 trades today, 468 of them were off-book. You are looking for subterfuge that just isn’t there. With respect, google is not your friend when it is combined with a lack of contextual knowledge/experience and strong confirmation bias.

@antigua18 - all trades executed with a market maker are reported as “off book”, simply because they don’t go through the order book. It’s nothing to do with a “large seller offloading behind the scenes” or anything vaguely similar.

@antigua18 - the answer to your question is also in this link I posted earlier today…

https://www.proactiveinvestors.co.uk/companies/news/81/idiots-guide-to-the-london-stock-exchanges-setsmm-0379.html