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SGH

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54.5¢ slater & gordon limited

I go with the opt 2, lender/lenders is hedging to secure their...

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mvstar

102 Posts.

20/11/16

14:20

Post #: 20746388
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Originally posted by nzgeo ↑

Thank you Doc for putting forward this theory as I believe that the 6.7% short interest is a very intriguing part of this story and I would like to see more discussion around it. We may never know who holds this short interest, but all LT holders can rest assured, that the only risk to them is selling before the short interest buys back. Be patient. Not too much longer. This short interest is our leading indicator of the turnaround.

I am not sure I support the rinse and repeat theory. It does not explain the constant selling pressure on the share price. i.e. close the short and reopen on the same trading day = no net effect on SP. I feel that rinse and repeat would show up as minor volatility in the short interest data. The short interest has not changed for 6 months. Very, very odd. No new shorts. No shorts closed.

I believe that there is some algorithmic trading separate to the shares sold short, by the same entity, to drive the SP lower (increasing the on paper profit of the short position). The short position is in the money from anywhere over a dollar all the way down. Why would they close now with the inexorable decline of the share price.

The missing piece in this puzzle is the details of a profitable trade involving driving down the share price by on-market trades i.e. not short selling, which I guess must result in a loss. This loss is more than offset by the huge, in the money, open short position. When they buy back they will need to be ahead of the herd to book this profit. If their short position was opened at 3, 4, 5 dollars, then they have plenty of breathing space to close the trade with a nice profit.

Theory 2 is that the short interest is simply a hedge, perhaps from a member of the lending syndicate.

Well done to them, whoever they are.

Thoughts everybody?

P.S. Members/shareholders are entitled to view the share register. This can be done by visiting Computershare office in Melbourne. If someone who is in Melbourne would be willing to do this...particularly to note the top 20 holders and see how that has changed since it appeared in the Annual Report. This would possibly give us a clue as to the situation. If no takers then I will ask Dear Melinda to obtain it for me (where I would have to pay a fee).

Cheers

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I go with the opt 2, lender/lenders is hedging to secure their capital. Find where these shares come from (if possible. It's a hudge number technically should be easy to find.) would give us answer.

SGH Price at posting: 30.5¢ Sentiment: Hold Disclosure: Held
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