some musings and scenarios2 Feb 2021 00:36
Current position some musings :
Hostile shareholder with 20% stake ( major shareholder) withdraws funding.
Share price rose from 2p up to 6p and started to decline upon news of deal.
Heavy selling takes sp down to 2p where it starts recovering.
Logically youd assume AE will accumulating all the way up to the supposed deal being completed making considerable money and have potentially either sold down to a level that they wont sell below hence a new support level today , or will be looking to buy cheaply on the way back up to increase their stake at bargain levels. So in essence three scenarios from A/E perspective:
1)look to offload everything at best price available ie 2p support
2) continue to add to their position on the cheap and maybe progress towards 30% albeit easier said than done. As above, 2P secure in this scenario with A/E buying what they can at a given market price. People will see their game if too aggressive and heavy buying will commence unless buying disguised via 3rd parties.
3)do nothing having made some money whilst maintaining existing holding of 20%. With a good understanding of ARS financial position they will know funding required and in all likelihood ARS will even in a weak position get a raise away that whilst diluting A/E’s own position will remove uncertainty and lead to a rerate of the SP without AE having to do anything / committing any funds thus benefitting their holding.
Any of the above options are possible from a hostile takeover to selling down the full position but either way A/E wont be looking to destroy their own value they have accrued having spent such effort to play out this dishonest game.
My conclusion no real downside at these levels so expect strong buying until the SP gets to a point where it may be worth A/E selling down again if this happens to be the given scenario from the above.
We have Assets with broker coverage around 11p with commodity pricing and demand only strengthening so we wont be having a fire sale and this may indeed draw out parties for a friendly take over/ prompt a hostile bid, either way positive for the SP.
Where is there any downside around here at 2.5p aside from another raise with some dilution albeit the business carries on towards delivering fair value when things settle ?
A/E cant lose from their current position , its just a case of what they do or are forced to do but ultimately they decide one of the three options unless they want total control and in that respect the SP will be much further north than 2p. Ars don’t know A/E game but must press on shore up finances, once this is done then all outcomes short and medium term deliver a best SP than 2.5p
Aside from A/E we have other parties with large stakes who wont be dormant in watching their value destroyed by this bunch of crooks. i'm expecting solid buying until the SP is considerably higher around say 4p even with people knowing a raise is on the way as thats the path to security against 5p
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