I am only half smart vs the three quarters ignorant side dawgfather but - to chip in - it strikes me that blaming shorters of LTR, or those wanting to short might be less than half the story.
I know they are a perennially popular ‘culprit’ ( I know that finger-pointing well after a long stage where I was sure ‘my’ company was being directly persecuted by them) but the thing is, shares that are loaned to short sellers need to be held tight by owners who are making money on the side with by way of loaning them out.
The chart below shows that shorts did fall, from around 12.40% of total shares down to 10.77%c then climbed back up to 12.76% by Monday May 19 following Friday’s massive dump.
... Anyways, I think the whole thing was engineered so BEOT and likely quite a few market-savvy retail could reduce their positions.
The reasons are simple;
1) Sector is in the trash heap with market analysts like BMI stating they don’t think things will properly turn until the end of this decade.
2) LTR isn’t in a great cash position and has big expenses due to be booked in line with ramping up underground mining with Tony potentially giving a hint it’s all going over budget at the AFR Mining Summit last Wednesday May 21 (see @hindmarsh post today [ref]
… “Tony Ottaviano, managing director of Liontown Resources (ASX: LTR), pointed to the dramatic increase in time and labour required for large-scale mining infrastructure.
“Ten years ago, building a one-million-tonne gold plant required 9,000 labour hours for electrical work. Today, it’s over 20,000,” Ottaviano said. “Skill shortages and bureaucratic delays are making projects harder to deliver.”
3) Since March 10 at least Tony’s also been flagging he and the board are ‘ready to do business’ with another entity in order to diversify.
- Very clearly in that interview with Andrea Hotter of Fastmarkets on Match 10 [read it here].
Plus a capital raise has already been flagged by at lease one analyst since November last year [ref].
Anyway I think it was a large scale exit strategy by real holders - including those who may have been lending their shares to shorters up till now.
Time will tell?
cheers
LTR Price at posting:
63.5¢ Sentiment: None Disclosure: Not Held
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