The latest Investing Matters Podcast with Jean Roche, Co-Manager of Schroder UK Mid Cap Investment Trust has just been released. Listen here.
mike, I'm no so certain that it will become that difficult to buy. Unless ther is some earth shattering news, I think you will find there will be an ample supply, albeit at rising prices. I would think there are more shares to come back into the market from last year's placing, in addition to further loan conversions. Finally, there will be those punters that will take their profits on any rise. I would love a cornerstone investor to come in, and maybe, just maybe this stakebuilding could be that(more likely an over imaginitive mind). It takes time to build trust, and I'm sure there are those on the periphary that will take the plunge on the sign of progress, but it may take some time. I was a seedcorn backer of the shell that ASOS reversed into, and it seemed like an eternity before the share price moved. Inevitably, when it did move, I sold too early(miles too early...lol...)
lol...I can see I'm struggling to get the message through... For Peel to buy stock, somebody must have sold it to them. Most likely a bore PI, who is too impatient to wait for news. If a MM does get short, and struggles to buy them back, he might just have to put his price up until he finds a level where he can buy them back, but be aware they are a hardy bunch, and will play a few games to try and panic punters either way!
Graham, I hadnt realised quite how naive you were on investing, so I will take it easy with you from now on. If you buy or sell shares, you have to trade with another counterparty, almost certainly a market-maker if you deal online. The market maker is there do as the name says on the can i.e make a market in the shares. He will make a bid and an offer price, and will deal on those prices up to a certain amount of shares. He buys and sells shares at risk, unless of course he has business the other way and can make a profit from the two-way trade. It really is as simple as supply and demand for the majority of the time, but other influences will take hold, especially around results time, and other important announcements. The market-maker will look to keep his books balanced much of the time, and hope that for every buy he makes, he can find a corresponding seller. That is why this situation is most unusual, and intriguing. If you were to buy shares now, the market-maker you bought them from (there are 5 MM's in PEG) might already have them on his book, or he might go short to you, hoping to buy them back later at a lower price. That is the risk the MM takes.
Someone has to sell, for Peel to be able to buy stock. They tried the price a bit lower at the bell, and they have walked the bid back up subsequently. Trades in the shares are immaterial in the short-term, and we shouldn't get to pre-fixed with them. What really matters is that they really deliver on the numbers, which will be the catalyst for a re-rating. Punters with a historical knowledge of Screen/Petards and/or Abdullah will remain sceptical, and will need some convincing that fortunes have turned for the good permanently. If they can prove the doubters wrong, I think we can see them quite a bit higher from here. Only time will tell.
I dont actually have an opinion on why Peels are accumulating, but have looked at various possible scenarios, and the the likeliest IMO is that they have a buyer who they are accumulating for. In times where MM's are generally running flat books, or running positions on the weight of business they see in a stock, I find it surprising, and intriguing to see what they are up to.