RE: State of Play18 Nov 2021 14:16
From 1/10/20 to 31/03/21 GGP saw a proper spike, a round-trip from 19p to 38p and back. Average daily volume during those 6 months was close to 33m, and over 4bn shares (>100% of shares in issue!) were traded at a VWAP close to 27p. Despite the high turnover during this period, the holders data tells us that most (80%?) shares remain in the hands of PI’s.
While there are clearly a group of long-term holders who bought before the spike and whose positions are still positive (see SAS above), many positions bought during the spike period will be on average >40% down. And pre-spike holders who added during the spike period are likely to have undermined materially the paper profits they were sitting on. Buying pressure was punctured by the spike and sellers have held the upper hand since, with daily volume also down by 50%. Despite the brave commentary shared daily here on “diamond hands”, “top-ups” etc, price action and volume data tells us that spiked PI’s are steadily selling to other PI’s with resulting lower entry prices. Over time this lowering of average entry price will create the pre-conditions necessary for a rise.
Far-fetched theories about “the shorter” timing trades to coincide with posts from our charismatic mega-rampers, and long-term price manipulation facilitated by LSE via organised gangs of paid bulletin-board trolls are not required to explain the price action we see. There is no incentive for the MM’s to do anything other than collect risk-free the spread on two-way trade as they are. And modern governance mean it is hugely unlikely that someone like NCM would risk being exposed for covert stake-building. So I don’t buy the various conspiracy theories; Hanlon’s razor applies and there are simpler explanations for what we see.
I think this is nothing more than the painful period after a bubble when spiked PI’s are reluctant to add, but ready to sell into any strength. Reduced volumes tell us that price action is being driven more by an absence of buyers than by concerted selling pressure. This will pass only when new news strong enough to attract new investors and their capital is released. There are likely people trying to trade the short-term news cycle, so we do see mini-spikes around scheduled announcements etc. And it is likely that the MM’s and ETF AP’s (& perhaps some HNWI spivs) will sometimes take short positions, but these will be unwound quickly as they are an instance of picking up pennies in front of a steam-roller (eg poor risk-adjusted returns). All of this creates noise that LTH’s can (& should) look straight through. I’ve said consistently that GGP is a value buy below 18p for the speculative compartment of a portfolio, given the extraordinary find at Havieron. My view is that NCM will want 100% of Havieron at some point in the next 24m or so, and that this will offer most GGP holders an opportunity to exit at a premium. But everyone should DYOR etc...
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