Running discussion on SP, page-14487

Based on the saying "buy them when you hate them and sell them when you love them" it seems it is about time to buy some AVZ stock.

Clearly this is currently a "traders paradise" and the SP has lost all connection with its fair value. Under "normal" (whatever is normal on the ASX) conditions getting stocks with a 20% discount on the VWAP should make you some money. But the stock market does not exist to make us retailers money. So what can the pro's do to make sure we do not make money despite the 20% discount?

Well possible the scenario I see:
1) Scare the hell out of the retailers so that they sell their stock and leave AVZ (SP goes down)
2) Scare the retailers to make sure they do not participate in the CR
3) Bring down the SP before the CR well below the CR price, i.e. below the 20% discounted price. At that point they start buying like crazy. As soon as the VWAP is determined they dump all the shares they have been buying on the market for something around the VWAP price (note that I am assuming they have been able to buy them for less then 80% of VWAP and of course participated in the raising at 80% of VWAP). Most of the retailers will want to do this as well (to cover a bit of their losses). So pretty soon the SP will be at the 80% of the VWAP. Below that the retailers start making a loss (even on this 20% discounted CR). And we will again see some nice "scaremongering" to get the retailers out of this stock.

Anyway, bottom line is that we may be close to the bottom and at a lower price then the CR may have. Keep in mind that if Patterson and co can manage to buy about $15m worth of AVZ shares at this low level they have all the incentive to push the SP up and then give those share to those participating in the CR for a (much) higher price. And if they got (much) more then $15m worth they will dump those to get the SP down again by about 20% and buy them back. Pretty easy 2x20% win for Patterson and co. If they do that with about $15m that is an easy $6m of profit.

At some point the "fun" will be over and the SP will move to whatever its fair value is Will depend on how many new shares will be issued now and the general lithium market sentiment. I still believe fair value should be around 20 to 30c. But not in the coming months.