Trading Analysis - 12th July 2018


13 July 2018

The rapid drop of share price on thursday the 12th July around 11:30 AM immediately reminded me of the situation, covered at length, on the 18th August 2017 when BMN shares experienced a quite clear shorting attack. From the shorters perspective whilst there is little negative news to capitalise upon there is the simple fact that the BMN share price reached historical highs only a week earlier -- surely they could expect some people to take profit ?

You can see the strong start to trading, with multiple significant buys before 9am pushing the nett trading figure to an excess of more than 300,000 Buys more than Sells. Whilst there was no evidence in the Bid or Ask this excess was quickly absorbed, and probably led to, the dropping of a 500K Sell in at 9:15am. It would appear reasonable to assume that this 500K may have come from the selling down of some of the Wogen warrants recently granted.

Little happened until around 11:25am when a sell of 84,963 shares (precisely £20K) appeared to trigger the first reduction in Bid and Ask. Obviously £20K is also the exact value of a complete yearly ISA investment so it might turn out that this was actually an opportune buy. The situation remained fairly stable for around 15 minutes, with the impact on Bid and Ask limited to -0.5p. 

Between 11:41 and 11:44 there were some small sells -  noteworthy for being round number sized : 25K, 25K, 30K (then reversed) which acted as a pre-amble to the much larger sells at 11:47 of 227,463 and at 11:56 of 201,659 (highlighted in green). Together with another round number sell of 100K at 11:58  these pushed the nett trading position to minus 815K. There was then strong buying at the 22.2 and then 22.80p level which by 1pm had returned the nett trading position positive (i.e. more Buys than Sells.)

This buying continued again at the 23.50p level pushing the nett trade position over the plus 500K at 2:30pm - at which point there was another pair of large sells 207,808 and 221,670 - both at 23.00p, below the advertised Bid at the time, and within 30 seconds of one another. At this point it might be reasonable for the observer to consider that these two trades were connected.

It is interesting to note that the sum of the total of the first pair of trades is 429,122 and the second pair 429,478 - a curiously coincidental number - potentially one might think that this might indicate that the first pair were a pair of SP damaging short sells and the second pair the shorter having to buy back the shares they needed when they realised the short had not panned out as they had hoped. If so then the second pair would be Buys and that then begs the question of how on earth did they get such an amazing Buy price of 23.00p when everyone else at the time was having to pay over 23.40p ?

Might each pair be part Buy and part Sell - eg a T20 rollover - this also does not seem to make sense as the first pair clearly impacted the SP whilst the second pair, with an apparent spread of zero, also had zero effect on the share price.

My favoured explanation is that the second pair of trades is some sort of inter-MM transfer of shares that was associated with the first pair of Sells, and that the first pair we short sells designed to try and loosen shares from profit takers. Thus someone would appear to be short of almost exactly £100,000 worth of shares - these will have to be bought back at some time, and they are hoping at prices of less than 22.25p.

This article only conveys the personal opinion of the author. Whilst every effort is made to ensure the content is accurate, we cannot guarantee the accuracy of the data shown. This article does not constitute professional, financial or investment advice and must not be used as a basis for making investment decisions.

Site content is not authorised by the FCA and you are not safeguarded by the Investor Protection measures of the Financial Services and Markets Act 2000. See our full disclaimer