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It is certainly very interesting.

As you say with positive news there is potential for a spectacular short squeeze.

To me it all depends on the Supreme Court appeal. If that is allowed I would expect a significant spike upwards that could be sold into, if you are trading this. It isn’t priced in either way.

But I don’t see that determining the medium to long term trend. Surely that will be decided by what their ruling is, assuming they actually allow an appeal?

Thanks Sheltie!

Very much appreciated. As you say all this stock market bollcks pales into insignificance compared to one’s health.

Yes I’ve had serious health issues and been totally out of the markets for a while.

My brother has a position in CBG though, and told me about the sell off. Then I had a more detailed look and I could see the potential for a multi bag turnaround play (which don’t come around too often) but also the warning flags re upcoming news flow, so here I am, waiting to get in if an opportune moment arrives.

I like to think I’m being realistic, not negative, but in either event I’m just calling it how I see it.

And could well be wrong, I often am, not just in the stock market, but also in life. Aren’t we all?

Do what you think it best whatever I say, obviously, and I hope it works out for you.

Well at least you aren’t criticising my English I suppose…

It was just a figure of speech, and hardly disingenuous since I’ve made absolutely no secret of my position here (as you yourself point out!)

Short covering is just panic buying caused by momentary fear. Once they no longer have a position and are at risk they will be looking for an entry point (the higher the better) to sell back in again. It’s just the obverse of a long panic selling on extreme weakness and buying back in on a dip.

Why do you think they will then go away, any more than you do now you think this share is on a long term trend up? You both think you are right but only one of you can be.

If I were short I’d be licking my lips at the potential future news flow too. What do you think is going to be the impact on the share price of the Supreme Court disallowing the appeal, for example?

It has been pointed out that the large institutions have so far remained largely steadfast and loyal. That is the real danger here because they often hang around too late. If we get more bad news and they start to capitulate, accompanied by further shorting, it isn’t going to look pretty I’m afraid.

It depends on news flow, it is as simple as that. Both you and the shorts are gambling that it goes your way.

Accepting your premise…

What did the Shorts know, when the price was 400, that made them sell DEEP out of the money puts? (If they did of course). I’m not questioning your analysis, I haven’t been following this share long enough to know what the news flow was like at 400, I’m just interested, because it seems a very well thought out play. Did they just take a punt on the CoA ruling going their way?

What’s the background of the timing here?

Second, what are the expiration dates of the Puts, do you think? Because that surely is crucial, both for your analysis of the impact of CBG being kicked out of the index, and the Supreme Court ruling. Obviously they can’t have known the timing of the legal shenanigans when they took their positions.

(If your (guess?) is correct, btw, it seems to me that the shorts have played (and are playing) this admirably well. Deep out of the money Puts at 400 will have been ridiculously cheap to sell. They stand to make a lot of money here).

Lorenzo

I suspect that a lot of the shorts will get out BEFORE any possible appeal to minimise their upside risk, so actually any squeeze on them if it is announced might be of limited duration. In fact I’d expect them to get back in again once the rally starts to show signs of a loss of steam to add to the pressure caused by profit taking.

So if I were trading this on the long side (I’m not going to) I’d get out on the spike pretty early once the appeal has been allowed. Very difficult to get out at the exact top, just be happy with the profit you do make, kind of thing.

It’s funny how everyone loves a short squeeze, but other than that they are vile parasites…

😹

Shorts can’t destroy a healthy company, if it is heavily shorted blame the company itself, not those doing the shorting. And indeed, if CBG is worthy of survival, massive short covering will turbocharge the rise, as is hinted at here.

Shorting is a perfectly legitimate trading strategy. Focus on what management does in a crisis like this, and if successful the shorts will take care of themselves.

Why is it somehow immoral to borrow a share to sell now hoping to make a profit from buying it back at a lower price, but virtuous to buy a share from someone (who perhaps has lost a lot of money on the trade) hoping to make a profit from selling it higher?

Trading is a morally neutral activity, a Darwinian struggle for survival. For anyone to gain, someone has to lose. Shorts add liquidity to the market, in fact.

I’m not panicking, I don’t have a position.

I have no idea what the potential exposure is here, and neither (it is my contention) do you or anyone else.

All I am saying is that, with SO much uncertainty, there is a strong likelihood that this isn’t the bottom. I’d like to get in at a better entry point, if there is a huge sell off (if for example the Supreme Court disallows an Appeal) but if it doesn’t happen, and this is the bottom, and I’ve missed an opportunity, so be it. I’ve lost nothing.

What I’m not going to do is to buy in now and then become a bag holder when there is some news driven sell off. Been there, done that.

Hope it works out for you, and I’ll certainly be keeping my eyes peeled here.

Moody’s have estimated the potential liability for the whole sector at £30 billion.

https://www.thetimes.com/business-money/companies/article/car-finance-scandal-could-cost-lenders-30bn-warns-moodys-fwr2ssv3t

(It’s behind a paywall but I am sure you can find it elsewhere).

I’ve seen another estimate (from the Motley Fool) that CBG has 20% of the market. If that is wrong and you have a better estimate, fine, post it. I don’t say that my source is accurate and am willing to be corrected. Others may have better informtion).

Now I accept that these estimates (even by a reputable organisation like Moody’s) are essentially wetting your finger and sticking it in the air.

BUT if they are anywhere close to true, I put it you that this would be an “existential risk” to CBG.

I struggle with those on here who think there isn’t an existential risk to the company.

If CBG thinks it is going to win a legal case and they have no exposure, why did they sell their Asset Management Division to raise emergency cash reserves?

Been watching this for a while, took a long position after the $hit show announcement and then closed it for a small time profit, now sitting on the sidelines.

To my mind there is a long way to go, and I very much doubt this is the bottom. There’s a reason there is so much short interest still. Just as most on here as longs believe the only way is up, these guys think it has a way to go down. They may be wrong of course, but the question is, why?

It’s because of the possibility of adverse news events coming out of the legal proceedings that would hammer the SP. They want to profit from that, selling higher now, and buying back in for a profit after the huge fall. The fact that you have money invested skews your perspective as longs. You don’t want to confront that possibility and dismiss it.

If I’m wrong I will miss a lot of upside. But I’d rather wait to see what happens over the next few days, perhaps weeks, to derisk.

But big picture, long term I think the company survives and this is a significant opportunity to make a good return on the long side. Within a reasonable time frame.

I just see no rush.

I closed out the rest of my position earlier.

Why?

You don’t go broke taking a profit. Plus I won’t be around early doors so can’t trade a spike. Followed by a collapse, which I fear.

Maybe I’ve got it wrong and am leaving a lot of money on the table. The thing that has always given me pause, though is that my positions have been significantly larger than the CEO’s derisory take up of the placing. A measly ten grand.

If he doesn’t have much confidence who am I to disagree?

We’ll see. Maybe I’ll regret my caution.

This board has been inundated with ultra short term traders since the latest rise, and pre the NICE announcement.

I’m pleased to see them of course, and even better their money, even though they have absolutely nothing of interest to say.

It does make me nostalgic for the long term holders, though, who appear less now, and who one hopes will eventually be rewarded for their long suffering patience.

There will be a correction after NICE is announced when these short term ears take their profit. And fair play to them. A very good trade.

But I do wonder if the big bucks will be made here holding long term. Which will also be good for the extant LTH’s. We’ll see..

We’ll see Gloria.

Are you in the stock now or did you miss out on the rise out of interest?

You’ve been a long term sceptic and sometimes that can blind us to trading opportunities.

This is a propos of nothing really, but I knew Simon Cawkwell’s father George (now long dead) at university, although he never actually taught me…

As for his son, well he is somewhat late to the party. Some of us participated in the placing, quite a bit south of here. :-)

When this stock moves it really moves!

You know what they say. Let your winners run.

Yes, I said this on the day the NICE publication day was delayed.

As I remarked then, and will repeat (as posts soon get forgotten here in the blizzard of new ones), we simply don’t know whether the delay points one way of the other.

BUT we do know that the delay gives much more time for PH to fully unwind their position. And that has to be good.

Once they are out a significant headwind against the stock will be removed and the longer we have between then and publication date, to gather buying momentum, the better.

Glad I was out of the stock for all this. This company always seems to disappoint.

Time to get back in soon I think. I’d like to see it bottom though…

We don’t know whether this is good or bad and anyone who says they do is not worth listening to.

What we DO know is that it gives more time for Peel to completely unload their holding. That has been a significant overhang weighing on the share price, so I can’t see that as anything but a good thing.