SPP effect on SP, page-135

An adjusted re-post from mine last week....
1. Yes it is the SPP selling which pushed down PLS earlier this week. Its probably about 80% absorbed. IMHO. Though there is always a rush on the last Date...May 17...to be in Pilbara's account by the morning of May 18. May be some PLS weakness later next week for T+2 then last BPAY...though not too much.

2. Recall the SPP is $15m or 40m shares issued at 38c and we could expect about only 1/3 of those would come onto the market after May 18.

3. Using same logic...lets assume 1/3 of all SPP participants (out of 3750 participating shareholders (75%), that is 1250 shareholders sell at 63c to buy at 38c.

4. If 1250 shareholders sell before SPP to cover their $15k allocation, then that is 24,000 shares each sold. ($15k/$0.63) or 30m total shares coming on as Short term overhang .....or another way to look at it...a weeks traded volume in PLS. - This has been absorbed by more than 70% I estimate.


4. After 60% scaled (each then receiving 40% or approx 2.5x oversubscrobed in $ terms) $15k will buy 16000 shares at 38c and most that sold may lock in profit from their cheque that is the capital returned from non allocation...I think less than 10% will sell their new 38c shares when the stock is worth well over $1.50 and with more upgrades over $2.00

AND

I think more than 50% of those that get scaled back will buy back $9k worth of shares after SPP (that is using their refund cheque to repurchase or buy back in PLS on market.

That means after SPP there will be no overhang of profit taking, rather possibly up to 17m worth of new share purchase demand or 3 or 4 days NEW buying volume of earlier sellers buying back in HIGHER than what they sold at. Still averaging up is always a smart strategy. Buying more of a winning investment is sound thinking...as opposed to Averaging Down...Never, ever a good idea.

See you over 75c shortly....
T2 selling will be discussed later....sadly there will be a bit of that. Instos can never ever be trusted. The retail base is always more stable.
Best.

GG