Hedging, page-5

Winmore - large after-market trades seem to have become a feature of trading in RED shares lately but I'd be cautious about a "BOOM sometime in the near future".

If memory serves me correctly, the Smorgon holding increased quite significantly a few years ago by virtue of a few big trades. But these seemed to occur at the end of each Quarter. Still, more recent disclosures from them show they've been net buyers on a more regular basis. If Smorgons have been buying up a few more shares since their last Substantial Shareholder Notice on 2/3/23, then they'll have to lodge another Notice once their net holding has increased by about 34m over their 2/3/23 holding. We've seen nothing lodged since 2 March but I'm watching to see what may happen.

Alternatively, if a new player is building a holding, they can continue to do so without having to lodge a Notice until their holding exceeds about 173m shares.

If I were a betting man, and I guess by virtue of investing in smaller gold shares on the ASX I am that by definition, I wouldn't be at all surprised if an active investor/trader is buying up shares as cheaply as they can and then selling large slabs of the parcels they've been accumulating to someone with deep pockets and with a longer term investment horizon. I don't believe, if this is happening at all, that it would break any laws.

If this is the case, then it's clearly in the interests of both parties to ensure the RED shareprice stays as low as possible until such time as the longer term investor gains the number of shares it's seeking to buy. This may be a protracted process and therefore they'll want to try and keep the RED shareprice around where it is at the moment for a while yet.

Adding even a bit more spice to this "tall story" I've outlined, one could ask why a major local player with plenty of local resources and contacts would even bother to use an 'intermediary" to build a shareholding in RED for them. That question then possibly leads to a speculation that an overseas player might emerge as the end holder and that they've simply been using a talented local outfit to provide them with the local expertise and on-the-ground trading skills to achieve their aim.

But as far as such an investor is concerned, you'd have to think that they're only building a portfolio position for themselves. Unless the Smorgon group can be enticed to sell, a successful takeover of RED would be impossible. And Smorgon's won't be enticed to sell their holding at anywhere near the current RED share price.