I found an Interesting older article, explaining ASX rebalancing.
The interesting part of this article, is it mentions PLS, when they exited the 200 in June 2020.
We may suffer the same fate.......
Now I am the first to admit we are no PLS, not yet anyway, but it highlights a very similar journey and a very similar trajectory we have and will be subjected to, on the ASX.
The behaviour, manipulation and suppression is very reminiscent, to what we see with Sayona today...
PLS also had the disadvantage of COVID and rock bottom lithium prices, which rebounded quickly early to mid 2021 onwards.
As we have previously seen, PLS's journey has been a bell weather for our own.
In many respects we must follow this journey, '
our very own right of passage on the ASX', to even have a chance of emulating their heights.
So, please have a quick read of the rebalance process, and then look below to how PLS's SP/MC was affected when they were unceremoniously ejected from the 200........ which may indicate what we are about to experience.
Of course its not the only factor, there were many, but it was definitely a factor.
It is very compelling, and once again, it is irrefutable fact....it is history.
Published July 2020...
link-
https://rivkin.com.au/analysis-education/what-does-the-asx-quarterly-rebalance-mean/#:~:text=The%20rebalancing%20occurs%20after%20the,case%20of%20the%20September%20change.
The ASX200 is a market-cap weighted and float-adjusted stock market index. Market-cap weighted means that stocks are firstly included in the Index based on their market capitalization, which is simply the overall value of the company, determined by the number of shares on issue multiplied by the share price. For inclusion in the ASX200, he stocks market capitalization is assessed over the prior 6-month period. More so, the contribution of a stocks performance to the overall Index performance is weighted based on their market capitalization, meaning that the performance of the larger stocks have a larger impact on the performance of the Index.Float-adjusted is important, as this can affect the liquidity of a stock. The free float is the percentage of shares that are freely tradable on the ASX. Often, companies can have a portion of their shares that are not freely tradable. As a example, Crown (CWN) only has a free float of approximately 63% of the company’s market capitalization, as the other 37% is held off market by James Packer.
The list of ASX200 stocks is thus determined by a companies market capitalisation, adjusted for the free float.Over time, share prices move up and down, new companies emerge, and some go out of business, meaning that the constituents of the ASX200 need to be adjusted on an ongoing basis. To provide an example, since the early 1990’s there have been over 850 companies who at some stage have been a member of the ASX200. This responsibility lies with Standard and Poors (S&P), and is conducted on a quarterly basis, thus the term ‘quarterly rebalancing’. The rebalancing occurs after the market closes on the third Friday of March, June, September and December, and the market is informed of the upcoming changes one week in advance, or two weeks in the case of the September change. The most recent rebalance occurred in June 2020, and resulted in six stocks being removed from the ASX200, which were Estia Health (EHE), HUB24 (HUB), Jumbo Interactive (JIN), Mayne Pharma Group (MYX), Pilbara Minerals (PLS), and Pinnacle Investment Management (PNI). These stocks were replaced with the following five stocks; Centuria Industrial Reit (CIP), megaport (MP1), Mesoblast (MSB), Omni Bridgeway (OBL), and Perseus Mining (PRU).
It is important to stay abreast of Index changes, as the quarterly rebalancing process can have a significant impact of a companies share price. Is a company is included into the ASX200, generally speaking, it will lead to an increase in buying demand for the companies shares. There are many passive funds and ETFs which will hold a stock based on whether or not it is included in a particular index, On the other hand, if a stock is removed from the ASX200, many passive funds will no longer be required to hold the stock, and thus will sell, leading to an increase in selling pressure.
A VIEW INTO OUR FUTURE?
PLS's chart around that June 2020 period.
TIMELINE 2020
.May 4th to June the 5th- PLS SP pumps, as instos try and keep it in the 200 ( 31 days before rebalance announcement)
June 5th 2020 after hours- PLS notified it is exit the 200
June 8th- First day of trading, ETF's start to sell down and exit
June 8th-22nd- Sales wash through as ETF sales and shorters buying/closing wash through and find a median
June 22nd- SP bottoms at 24c, but is still above levels before the rebalance at 19c
June 29th- SP starts to appreciate
July- SP starts its massive run from 25c to nearly $4 late 2021
Current SP $5...ATH $5.66 mc up to $16B+
So, there is a very good argument to make here, that PLS's ejection was one of the best things to happen to them on their journey to the behemoth that they are today.
It shook off the subversive attentions of the more sinister side of the ASX, at a time when they were yet to turn a profit and the lithium price was depressed.
This gave the SP time to breath, time to re-centre and time to recoup some positivity.
It gave the company time to regroup, improve and eventually come back into the 200 with a renewed confidence and some solid runs on the board.
They were admitted later on, in March 2021, but the tide had already started turning.
Their production processes' had been improving, production up, costs were coming down, Altura was on the books, and lithium price had been resurrected to the point that it had a pulse, and progressed to the robust position we saw in 2022.
To draw a comparison to Sayona-
- We too have been vilified by the subversive forces of the ASX. Shorted and manipulated with coordinated attacks both in the market and on social media. One such attack was carried out recently for all on HC to see. Relentless...disgusting....
- Our production is in its infancy with profits yet to be correlated in a quarterly.
- Lithium prices are at a local bottom but forecast to bounce in the not to distant future
- We too, have had our SP degrade to the point where our MC and our float will probably not keep us in the 200.
So where are we now?
Around 28 days until they announce the rebalance.
If they wanted to keep us in, the pump, or rise in SP should start next week. Nothing drastic to begin with, just a slow steady rise over the month with a decent spike up in the lead up week.
Some of the players will try it...some won't....lets see who wins.
Maybe its already too late?
The SYA horse has been flogged....our volumes these days are usually very, very low, unless a catalyst is announced which is always almost immediately sold down. The volume and SP increases for a day or 2 then retreats.
They can't make money from shorting or churning this stock if there's no volume.....no liquidity.
They rely on sucker retail to fall for their false signals, mind games, share market gas-lighting, traps and tricks.
That's why they target high retail stocks....inexperience, impatient, emotionally charged retail....the gift that keeps on giving.
And that's how they make their money.
Sayona is around 65% retail.
But with us, low volumes, retail not buying with volume, and the LTH's not falling for the tricks or budging their positions, they are flogging a dead horse, and because they are not making money, may let us slip out.
Personally, these BOD conspiracy theories shaking out retail is a total crock...they do it to PLS and any other high retail stock....retail is the target.
And PLS with all its revenue, expansion plans and profits, still manage to be shorted over 7%...nearly double what we are.
Same crap at CXO....except their shorted 11.25%...number 1 for shorting on the ASX !!! CXO's current weakness certainly has not helped them...
It's not the BOD....its the big boys trying to shake us out, to fake us out....trying to fleece us.
If we see a some positivity back in the SP in the lead up to the 1st of September, they may try and keep us in. We have spent basically the whole quarter between position 227 and 240, so they will need to start trying soon, and try hard....
But they may just let us slip out.
If we see no change in the SP and trading patterns over the next 2-3 weeks, we are done. A late pump will not be enough do it.
However, with what we now know with PLS, and the long term benefit they saw in their SP after they were ejected, I put it to you, would it be such a bad thing?
Probably not...
Good luck everyone...
(20min delay)