5% of a companies shares on the short can actually be a small amount or a significant amount of shares depending on turnover and amount of shares available to be freely traded on a daily basis. It also depends on daily average turnover and whether or not a stock is tightly held or not.
Buru have just over 298 million shares on issue. The top 20 as per the last annual report shows that they hold 49% of issued stock which is roughly 146 million shares.
Directors interest is 33.5 million shares and they are tightly held for now. There has been no director sales for some time.
Now some of the shares in that top 20 are definately available for shorters to control. Macquaries holdings are a prime example as we recently saw a change of substantial holder notice released to the market and the information provided in the announcement clearly showed that they were lending their stock out for sale. Macquaries holdings as per the 2013 annual report released on the 16 Sept 2013 was a total of 19,509,078 shares.
If a large number or sellers all of a sudden flooded the market with additional shares and that stock generally didn't see large turnover then its going to create some serious weakness in SP. I can guarantee you that if the shorters have to purchase back these 15.3 million shares at market they are in big trouble. They can continue to sell or short positions with Macquaries stock or whoever else is allowing their holdings to be sold..but the fact of the matter is that I believe genuine buyers are preparing for some positive news this year and picking up available stock. If we get positive news they are in big trouble. Who is going to sell them back the shares? Not management? Not me. Not many other longterm holders. Maybe a number of holders will sell them back stock that they will need but I'm sure they will only sell if the price is higher than what it is atm.
From the beginning of December short positions have continued to rise. An additional 1.4 million shares have been added to the short positions and the share price has increased from a low of 1.30 to where we are today. I would love to know what negatives they are anticipating this time around. I have thought about the negatives..
Are they betting on Ungani3 being a failure? Jee thats a long shot.
Maybe they are betting on some negative news with upcoming fracking program? Or possibly negative news with native title? Who really knows what they are anticipating this time around. I think the odds are against them.
BRU Price at posting:
$1.96 Sentiment: LT Buy Disclosure: Held
