Contrary to what may have been suggested this announcement is VERY POSITIVE & VERY SIGNIFICANT!
For you to get a better picture lets look at the facts we all have in front of us.
- Malcolm had 5,000,000 options to be exercised before 31 December 2019 at an exercise price of 4.5c.
- Malcolm only exercised 1,000,000 options while the share price is 7.6c
- In recent weeks the share price reached 13c yet he did not exercise then
- There were numerous liquidity events above 10c yet Malcolm didn't exercise then either.
- Malcolm is one of 4 directors of AGY and safe to say he would know a little more than most punters on HC
So lets get this straight.
Malcolm has watched numerous liquidity events where he could have flogged the whole 5 million above 10c yet he waited till the sp hit 7.6c to exercise only 1 million??
Yep, that sounds like he just wants to flog them off in the next trading session at 7.4 and 7.5c... Hahahaha
You guys have to be kidding me right?
You don't have to have studied economics at Uni to figure out that doesn't sound like the best way to profit from his investment.
Ok, so why now and why only a portion?
When you see a director unlock a portion of his options its a good sign we are coming into a run.
Most will have accounts set up with some sort of collateral or margin offset available.
Usually their broker will offer a collateral type arrangement which will enable them to exercise the remaining options with no extra capital outlay required.
To give you an example you can have a read here from what commsec offer
https://www.commsecadviserservices.com.au/media/112332/cas2107_exercise-your-company-options.pdfNote the paragraph
'When exercising company options it is possible that no additional funds will be required. This type of situation arises where the options are significantly in the money or where additional shares or managed funds are lodged as security.'Hence why the $45k was put down for just 1 million shares. Malcolm just turned $45k into $76k and can now use this to unlock the rest of his options soon.
If he wanted to sell straight away then he would have flogged the lot with the high liquidity events above 10c and then he wouldn't have to pay any interest on any cash loaned and would have made a bucket load more than our current situation offers.
Which brings me to the next point.
Why did he exercise now and not when we were trading much higher weeks ago?
As a director I'd want to hope Mal knows a little more about our companies progression than most on HC and I'm assuming he wouldn't want to pay interest on any margin until he has to.
No point using margin if your shares are going to sit idle (or depreciate) for any period of time that you don't have to.
Why not just wait until we are just about to start running till you have to pay any margin costs?
That sounds way smarter...
Remember these options have a locked price of 4.5c so its not like he's using 'inside knowledge' to buy them cheap (if anything he could potentially sell them cheap now and thats certainly not using inside knowledge for advantage, lol)Why even get a margin loan in the first place?
Why not just exercise and sell on market instantly at a higher price and take quick profits?
Only one reason you'd pay interest on any margin loan -
because you believe the sp will go much higher!So rather than make a quick buck you can hold a higher number than you'd want to fork out cash for. With minimal down payment and minimal interest payments. Then sell at many multiples on the current sp down the track.
Simples...
Potentially picking up 5 million shares for only $45k.
Not a bad way to invest $45k if you ask me and one very good indication that we are just about to see some serious share price appreciation
*NOTE - Seeing as Mal watched 13c fly by and didn't flinch I'm going to assume that the sp is going well past 13c and if he hates paying interest as much as me I'd say it will be in the not too distant future...
AIMHO
DYOR
(20min delay)