potential corporate activity

As I have the luxury of a Bloomberg terminal on my desk I have been looking at the volume price history of MWN so far this year.

Basically in January we were very quiet sometimes going for a whole week with no trades at all and then seeing an occasional order go through but in quite decent size given the illiquid nature of MWN’s recent trading history.

The first half of February was much the same with the price trending downwards from around 12c to 10c but still seeing 50k – 75k trades happening every now and then. Certainly not enough to inspire a new investor that by holding that they would have a bid side to sell into should they decide to sell.

In retrospect it is cleat to see that all this changed on the 21st February.

We have seen consistent buying in quite impressive size for MWM. What is unusual is that the majority of this buying has been in the opening auction or just after it at ever higher prices. On many days the opening auction trades were the only trades for the day. If one looks at it laid out below a definite trend becomes apparent.

Date Volume Closing price Amount bought at open

21.02 205 000 0.105 50k
22.02 250 000 0.115 150k
23.02 250 000 0.125 104k
27.02 241 080 0.135 86k
28.02 431 113 0.15 300k
29.02 406 500 0.16 342k
01.03 170 000 0.155 170k *intra-day high after buying at open 0.165
02.03 236 532 0.16 170k

Amount of shares bought in the opening auction in total over the last 2 weeks is thus 1 372 000 shares.

During this 2 week period the stock price has risen from 0.10 to 0.16 a gain of 60%.

Buying in the opening auction each day is nothing new but it would normally be followed by some useful action in the open trading session during the rest of the day.

In the case of MWN this in general has not happened.

1 372 000 shares doesn’t sound like a lot but we have only 30mn shares in total. So it means that someone has bought 4.57% of this company in the opening auctions alone over the past 2 weeks.

Now why would someone do that?

Given South Africa’s national plan to further develop the indigenous steel industry and the enormous landholdings that MWN sit on with their known but as yet not completely proven iron ore reserves (wrong word I know given the lack of JORC) could it be that a predator is circling picking up the stock from loose hands?

Or of course I could be wrong and an HC reader with deep pockets will put up their hand and say no … it was me – I bought almost 5% of MWN in the opening auctions over the past 2 weeks.

Looking at the trading statistics over the past 2 weeks I would hazard a guess that we have “game on” and we are on the verge of some interesting and extremely profitable corporate action. Extremely profitable for holders of MWN that is.

Anyone else got any ideas or suggestions about what is going on?

I am changing my sentiment to ST Buy.


EB