Member Info for taufour

Some of HMI's (very interesting) Q&A RNS published today is relevant to SXX

Q: Has the [Brazilian] Government updated its target to be self-sufficient in fertilisers by 2020?

A: The target is still in place but looking less achievable as the demand for fertilisers continues to grow and the sources of local product are not increasing to meet the demand.

Cheers.

Buy just now (15:50) was me, price=1.60, bid=1.50 and ask=1.70

It's funny, it seems almost as if the MMs don't want people to know if something is a buy or a sell, and they do it by making the trade exactly half way between the bid and the ask.

sorry I meant 3,750,000 shares

mail2: "buyers coming in at 25p"
duracell: "Not sure they are buyers??"

Hi. By far the biggest trade today (so far) is 3750000m shares at 10:26

You are right it is hard to be sure if anything is a buy or a sell when the bid and ask are moving rapidly.

I have made an app to try to help with this problem. It shows in a quick and visual way what is going on with the bid/trade/ask behaviour.

In this case I'm sure that the trade is a buy, see diagram at luku.org/cache/SXX/example1/

Gasher, "Did CF not at some stage that the project was on time and on budget, while I appreciate that miscalculations can occur, would that not be the fault of the planners!!!"

In Q1 update they said "on time and on budget"

In Q2 update (published 2nd July): they said "The project remains on track to deliver first production and commercial production on time. The Company has now entered the final phase of the procurement process involving cost and risk estimation which involves an iterative process of evaluating contractor scopes of work, commercial risk allocation and contingency requirements. In addition to this, the outcomes of this process are subject to review by the lender's technical consultant as part of the stage 2 financing process."

People complaining that the company have not sufficiently guided the market do not have a case.

Additionally ... and this is my personal opinion ... the original tunnelling estimate was probably not a simple mistake that needed to be corrected. More likely (I think) there was always a range of parameters, and for stage 1 they went with the low end for tactical reasons, and now in discussion with Strabag and the banks' technical consultants, they have been persuaded to be more ambitious in order to reduce risk.

According to http://www.eng.dieselloc.ru/railway-engineering/lining-of-tunnels.html "On the basis of field experience, railway engineers have devised a thumb rule of providing 2.5 cm of lining for every 30 cm of the diameter of the tunnel."

For tunnel diameter 4.9m, this would mean lining thickness of 400mm instead of the 350mm now proposed.

Well maybe railway engineers are overly conservative and 350mm would actually be OK for a conveyor belt tunnel. But we cannot just believe it on the company's say-so. They should give out some more information justifying their choice. Especially now that they admit to having got it wrong before.

Quote from presentation [two words added to make grammatical]:

"The mineral transport system, which is obviously where we have seen two things - the largest capital increase compared to where we expected to be, but also the greatest risk transference in our contracting and delivery schedule - the tunnel really doesn't change too much in terms of concept, but when you look into the details, and there's a small table there showing you the differences between the estimate that was the basis of our stage 1 funding in 2016 [and now], you can see the diameter has increased, the lining thickness has increased, and the rates of advance that are now essentially underpinning the Strabag contract are fairly significantly lower than what we had expected in 2016. That has come around through a couple of things that are largely due to the risk allocation where that delivery risk now sits very much on Strabag in terms of driving those tunnels and delivering us that part of the project on time and with effectively a fixed price for the whole system. Obviously they will be working to deliver that project a lot faster and the advance rates that we assumed back in 2016 remain the target rates of where we hope the system will be delivered which would result in it being delivered earlier. Strabag, although they have a fixed price essentially for that whole system across the three drives, there are also incentives which align them very much to us as equity in terms of delivering that project sooner. So if they deliver sooner they bank the savings that they make that come by simply delivering that project earlier, but then there are also bonuses available for them to do that."

Weird question from Yuen Low about ventilation arrangements at the mine shaft

He had to say "ventilation" about three times before CF could quite believe his ears

I imagine it was his way of saying he thought there was a leak.

It sounds as if the banks are asking for offtake agreements more like 8.5 mtpa rather than the 6.5 mtpa previously mooted.

Remember, it's not in the banks' interest for sxx to make overly vast amounts of profit. If they can engineer a situation where sxx gives up some profit to achieve significantly less risk, they will do it.

Good realistic rns.

Thanks shale and PAAA for what seem like good clear explanations and it's making me a bit uncomfortable to have to admit that I don't understand them.

At risk of trying your patience, could I distill it down to a simpler question.

If I sell a car to a dealer, and he sells it to a buyer, I would call that two trades involving one car.

Similarly if an institution sells 15m shares to a market maker, and he sells them to another institution, I would call it a traded volume of 30 million involving 15 million shares.

Is that acceptable terminology and a sensible way of thinking about it?

I would think of the number of shares involved as being a more important indicator of what is going on than the published volume of trades.

When it says volume = (for example) 30 million, is there a way of estimating how many shares are involved?

If all of the volume is either seller->MM or MM->buyer, then it would mean approximately 15 million shares are involved (barring short term imbalances due to MMs systematically building up or running down their stocks).

But is there also any direct trading between sellers and buyers, without an MM? That would change the calculations.

On a perhaps related note, does 'trade type' (for example O or A) give any useful indication? If one added up all the O trades, and separately all the A trades, would it say anything worth knowing?

Thanks.

Ob, "that drawdown of the loan ($25m) speaks volumes to me!" ... well it surprised me too, and I am wondering if they have gone ahead and started ordering the long-lead-time equipment ... and would that be a good idea?

Hi Ob. "part of the loan (millions!) has been drawn and being spent" Well that is precisely what raises some cautionary doubts. Should they have started drawing on the loan in advance of getting the total funding package sorted? I don't know the answer ... which is why I am asking the question.

Hi Lionel, "Any objection to me posting a reference to it at BMN?" no probs, go ahead but please make it clear it is a home made app.

I'm experimenting with several sources of data feed and some of them say something like "only PIs allowed". Maybe I should put a remark on the front of the app saying "if you are not a PI please do not look at this app". But I think we can safely assume that professionals would not be looking at a home made app, so we are on solid ground.

It is now on version 3, and version 2 is saved at luku.org/tau/v2/

In the new version there is an additional diagram inspired by a remark by V2020 earlier in this thread (thanks V2020):

the arrow at top right of the window leads to a second diagram where trades are ordered by value size rather than by date; it shows more clearly the distribution of trade sizes; here the prices normally form a horizontal misty band, and any unevenness would suggest a correlation between trade size and price.

Hi. Well, no one has told me to stop, so I've carried on tinkering. The home made app at luku.org/taunine/ is now on its second version.

In case I broke anything, the previous version is saved at luku.org/tau/v1/

Recap: it illustrates ask/trade/bid behaviour ... it plots recent trades, up to a week old, with ask and bid lines.

When a market is behaving well there should be two bands of trades discernibly snaking between the ask and bid lines, and the distance between the two bands may give an idea of the actual spread, as opposed to the nominal spread which is the distance between the ask and the bid.

This new version includes an indication of relative volumes, scaled so that the bottom of the diagram means zero and the largest volume reaches nearly the top.

And it has a 'zoom' button where one can choose a date-time range and zoom in on any trades in that range, adjusting the x-y size of the diagram as desired.

HF! (have fun)

Hi GK, re your 08:30 post today "All buys this AM" ... are you sure? Looking more balanced at lunchtime today,

http://www.luku.org/cache/RGM/jiota/0809-1316-117.html

Two bands of trades discernible (presumably buys and sells) snaking in well behaved fashion between the ask and the bid.

( for latest position, http://www.luku.org/taunine/?RGM )

"... graphical representation of the trades and the spread. It provides a lot of info at a glance."

Hi GK, thanks 4 encouragement. I've carried on tinkering. Afaik one can't include images in posts here so my first thought was to perhaps move the discussion to the forum at blue S where one can, but I couldn't register an account (Recaptcha would not load), if anyone is in touch with the management there please could they let them know.

Anyway, then I had the brilliant idea of making a web front end so that intrepid forum members could try this directly.

Now online at http://www.luku.org/taunine/

One enters an EPIC and it (hopefully) will plot a diagram of trades over the past week, or the most recent 200 trades if there were more than 200 trades in the week.

It is pretty good fun I think. Though I should say again, I feel sure that this kind of info must be already freely available somewhere, and probably with nicer pictures than I have managed to cobble together so far, and when someone lets me know about it, then I will stop tinkering.

Meanwhile... forza!!!

ProphetWarning: "Anyone else getting the feeling that this share is getting tighter and tighter like a rubber band ?"

Hello. Well I would certainly like to think so. But perhaps we should apply scientific method to the question. Hopefully we will be able to see the rubber tightening if we look at some diagrams. I have put on google drive a plot of THR bids and asks at the time of trades over the past week at https://tinyurl.com/thr-2018-07-27-png

(note: the first time I tried this, the x-axis was time, and the result looked most unsatisfactory because of the long overnight periods when there were no trades; in this version, actual trades are evenly spread along the x-axis)

Is this kind of diagram readily available? If it's readily available, please someone let me know and I'll stop trying to improve the script (but it was fun).

Anyway, ideally one would be able to see the trades in two bands, snaking between the bid and the ask. The upper band would tend to be buys and the lower band would tend to be sells.

One can see that pretty well here, and also that the actual spread is much less than the nominal spread.

P.S. for comparison here is the last hour and a half of SXX on Friday, also (according to some) a rubber band candidate, https://tinyurl.com/sxx-2018-07-27-png

Apols, already too long for one post, here is the remainder:

5) that leaves the following companies on the list ahead of SXX: VED, RHIM, SPD, IHP

VED (Vedanta Resources plc) might be a special case, or at least not comparable to SXX in this context, as it appears to be at least in part a vehicle for wealthy Indian shareholders to invest in London. RHIM is a complex Dutch/Brazilian company, I haven't looked in detail but it seems quite likely there could be a structural explanation for why it has low institutional percentage reported.

I think this really only leaves SPD (Sports Direct) and IHP (IntegraFin Holdings) ahead of SXX on the list and comparable in terms of being hotbeds of PI exuberance or whatever. IHP is interesting, it IPO'ed in February with a market cap of 650 million gbp and has since doubled.

The things one gets up to when curiosity takes hold. In this case, an experimental script to test the hypothesis that institutional holding in SXX is remarkably low, in comparison with other industrial companies of similar size.

Starting with the FTSE 350 table at shares.telegraph.co.uk/indices/fundamentals/index/NMX it sorts by market cap, extracts the line containing SXX and 50 lines before and 50 lines after, resulting a list of 101 companies of comparable market cap. It feeds the ticker symbol from each line into the Reuters website at uk.reuters.com/business/stocks/financial-highlights/[ticker] and reads the data field under "Institutional Holders" captioned "% Shares Owned:" and finally sorts again, on that percentage.

I'll put the script in another post for people to ignore as they see fit, and proceed here to the result, which is (omitting linefeeds in order to avoid this post being too long):

BCA 0.00% ULE 0.00% WTAN 5.60% VED 15.52% CTY 15.60% CLDN 16.71% RHIM 16.71% UKCM 20.95% SPD 21.36% MNKS 21.80% IHP 22.11% SXX 25.10% HSTG 26.19% EDIN 28.91% MLC 31.84% TIFS 34.01% PCT 38.21% CCC 44.11% TRIG 45.49% PFC 48.06% TRY 48.09% INPP 48.54% ASL 48.58% ERM 52.00% 3IN 52.80% FGT 53.48% SDRY 53.72% PTEC 53.88% WWH 55.36% JDW 55.47% MYI 56.74% TALK 57.34% RDW 57.38% TEM 62.36% CEY 63.00% WKP 63.06% SOPH 63.56% ETO 64.05% TCG 64.93% HILS 65.54% NEX 66.42% BVIC 67.08% DPLM 67.16% SVS 70.41% GNS 71.03% GRI 71.12% GNC 71.37% JLG 72.58% RAT 73.67% SMWH 73.89% FCSS 75.73% JLIF 76.34% ESNT 77.95% BVS 78.16% HTG 78.68% PAGE 78.82% BOY 79.09% SAFE 80.20% IBST 80.63% GNK 80.81% PFG 81.11% CWK 81.74% BTG 81.78% JUP 82.18% BYG 82.88% DOM 84.20% UTG 84.85% FDSA 86.32% SNR 87.83% ELM 88.00% GPOR 88.62% IPO 90.46% VSVS 91.86% DRX 92.70% ASCL 92.95% CNE 93.13% MONY 97.20% GLO 97.33% LRE 98.75%

Some comments:

1) what started with 101 companies (50 smaller than SXX plus SXX itself plus 50 larger) gave only 79 results. It turns out the reason is that Reuters sometimes uses a nonstandard ticker (eg CBRO for Close Brothers Group which is normally CBG). When the script asks Reuters for a ticker it doesn't recognize, it comes back with a "not found" which is discarded.

2) it is very noticeable that the overwhelming majority of these companies have institutional ownership above 50%

3) the first two entries (BCA 0.00% and ULE 0.00%) are errors on the part of Reuters' reporting software. BCA actually has 797m shares in issue, with institutional holdings at 799m (more than the number of shares in issue, presumably as a result of shorting). Instead of saying "more than 100%" as it should, Reuters says "0%". Likewise, ULE has 74m shares in issue with institutional holdings at 81m (Note that according to the FCA, ULE is currently being shorted by at least 8%)

4) several of the next few entries on the list are investment trusts (WTAN, CTY, CLDN, UKCM, MNKS)

5) that leaves the following companies on the list ahead of SXX: VED, RHIM, SPD, IHP

VED