RE: £35m UT?17 Sep 2022 10:56
CR
It was certainly a very unusual event. Average volumes are round about 3.2 million trades a day, on Friday there was almost 12 million.
Most of those trades came after market closing. Under normal circumstances, when shares are traded market makers are bound to match every sell with a buy. According to this website all those after hour trades were buys, which suggests short covering.
See - with shorts the stock is borrowed so there’s no need to match sells and buys. It’s what the king of the game refers to as parallel trading.
If this is the case, I’d find it very disturbing to know the market would allow blatant manipulation on this scale. It indicates mass-shorting by several players in collaboration with each other. Which is fraud for want of a better word, because they are conspiring to determine price movement.
Who knows - they may open up millions of more shorts on Tuesday and attempt to pull off the same trick.
As far as what it means to the shareprice on Tuesday, I don’t believe it will have much impact, because there’re no trade imbalances.
Darktrace faces numerous challenges from hyena hedge funds. Firstly it’s a tech share - and it’s been shown that tech firms get slaughtered on the London market. It has no idea how to value them, and being one of a tiny handful of tech shares on the market exacerbates the issue by putting it under the spotlight. Secondly, because of the opaque nature of the business, it is difficult to value - hyena hedge funds exploit the lack of tangible assets and knowledge to their own means, by creating false narratives and issuing ambiguous statements (that can’t be proven or disproven) basically they are inventing negative stories to support their short positions.
If what I’ve described is the reason for Friday’s trading volume anomaly it would be down to DT to file an official complaint to the FCA. But unlike American regulators, I wouldn’t expect any censure. The FCA has shown us time and again it’s a toothless fairy, unfit for purpose.
Heavily shorted companies suffer as a consequence. Being heavily shorted brands a company a risky investment and weighs on its shareprice. And that applies to companies in rude health. But that’s all intentional, that’s how hyena packs manipulate markets.