bamboo
Convertibles are uncommon, but you are correct where they do form part of a company's share capital. |
Re the debate on shorts.
Depending on the particular company, and situation, shorts don't always have to buy back. For example, a holder of convertible bonds can use these to repay a stock lender once the bonds are converted to ordinary stock.
It's worth googling this, and naked shorting, for more info. gla |
Interesting debate.
Thanks. 👍 |
 The evil shorters are out to get you! ;-)
Shorting is swings and roundabouts. Alot of people will think of it as illogical and working absolutely terribly in causing huge shareholder value destruction, or at least risk causing this. On the other side though, you have seen the likes of OCDO and PLUS where shorts have been absolutely obliterated and shows just how risky it is being short, particularly crowded shorts.
I'm not saying those are special companies that provide value, but ultimately if the fundamentals stack up, the stock will take out the shorts and rally to where it should be. It won't seem like that alot of the time when you have such a contentious issue floating about, but it is what it is, and we have to adapt accordingly.
As for AMS, the strength in the price continues. There was a little panic type lurch to 320 yesterday - a 5p jump in one go. It's difficult to know where this spike is going to go and the actions of those who are short now, but as I said it's really risky shorting illiquid stocks.
I do short and when I get it wrong, I cover straight away because I prefer to keep losses contained and I'm shorting in small size so no issue covering. The problem with shorting 1%+ of a company with a illiquid stocks like this is, when the market does move against you and the stock keeps climbing, other shorts start blinking and covering and forcing the stock higher, normal buyers then buy more and it all can become a very vicious circle.
I'm watching with interest, but I'm a seller into this spike regardless. Only ever trading this and never hang about when spikes get extended. US is looking abit wobbly and overbought too so another reason to sell into these spikes. I might pop back on at some point in the future if it peeks the curiosity for another trade.
Hope it keeps going up! |
So you lend somebody 1 million shares when they are quoted at £2.50 = £2.5m
They short, and the price falls to £2.00 =£2m
On paper you are losing £0.5m
You get a fee of .0025% = £2,500.
When you report your results, your P&L A/ac has Income of £2,500
Your Balance Sheet is down £500,000
Hey ho.... |
 Yes wetdream it is likely that selling by shorters would influence prices when they sold. But
The shorter has to buy the shares again to complete the trade, which will send the price back up. (Think about why the opposite strategy doesn’t work i.e. I’ll buy loads of shares to drive the price up and then sell them again at a higher price to make a profit. Easy money! No - if buying can drive the price up then selling will equivalently drive it down...)
Also, if you have a genuinely long term perspective you shouldn’t really care about short term price movements anyway. In practice shorting may create a drag on the price if the shorter is successful in adversely affecting sentiment, though over the longer term this will unwind. If you have confidence in your investment it makes total sense to lend your shares to short term speculators for a bit of extra cash. The odds are on your side that the shorting does not imply something wrong with the business over the long term. Most shorting is unprofitable and a lot of it comes from hedging strategies etc. |
More news on its way? |
It all sounds like a crazy game these shorters are playing. My question is what makes AMS stock attractive to them? |
And the institutions, who are supposedly looking after your money, are throwing it down the toilet and polling the chain. |
Trigger16,
You make some fair technical points, but imho they don't apply in the real world.
An individual buyer or seller (of sufficient volume) may surely influence an sp's direction-usually up for the former and down for the latter. Or, as sphere25 suggests, limit the 'natural' direction of an share price by counteracting the way 'the market' is moving it.
Thus if successful, a shorter(who has a negative view of the co./share's prospects) will maximise his profit only when the target share price has fallen as much as possible and he's able to buy back at a much lower price. Out of that 'gain' he then pays back the fee to the holder-who must be considerably worse off? |
wet
On your side. |
The role of a shorter is not to drive down the share price, any more than the role of a buyer is to drive it up. The market sets the price, while individual buyers and sellers can only speculate about where it will go. The holder may not agree with the shorter about the prospects for the share price.
The holder also has a different time horizon to the shorter. By loaning out the shares the holder is committing not to sell them until after the shorter gives them back. Over this longer time period there is no net impact from shorting. The shorter has to buy back the shares to give them back to the holder, in principle reversing any negative impact the initial sale of the shares might have had on the price. |
Sphere25,
Very interesting, thanks.
Personally, I find it puzzling that a holder would lend out a chunk of his holding (ok, for a fee) to a shorter whose role is to drive the value of the share ( and hence his holding) downwards.
How does that make sense? Assuming the fee is below the value drop in share price |
Cheers for the explanation `Sphere`. |
It's illiquid. When stock is held tightly, it only takes small volume to shift stocks like this. That's the problem TT International have at the moment. They will only be able to cover in small amounts each day. Different ball game when it's a BP or Vodafone, easy to cover in size.
The other two shorts will need to significantly increase their short exposure to try and stem the bulls. That's very risky now because they need a profit warning in the very short term (unlikely) or a big market sell off (could get a correction of course) to help them not get squeezed into covering their shorts.
At this rate the stock could trend its way back to 350 and then the highs whilst they sit around watching their losses accumulate.
It's soooooo risky being short illiquid stocks like this. I've already commented on Merian Global on the GYM board. They're giving their stock away cheap there (on a value play) and shorting and getting hammered here in trying to fight the market. They don't know what they're doing.
They'll probably capitulate here just like they have done on GYM. Very poor! |
All very interesting but why does the share price move so much om small volumes. |
TT International have further reduced their short position on AMS today. (Only by a smidgen though). :) |
The breakout continues!
A little insight into the price action here.
The shorts come in and try and knock the stock back (preventing the continued breakout) in the morning by placing a barrage of orders including some larger ones on the book under the offer.
That isn't normal price behaviour for a stock which has no short interest that has broken out (they will make a move higher instantly with the bid exceeding the previoud days close). These guys are purposefully trying to keep a lid on the stock. The problem they have is that one fund is covering and the market is so bullish right now, they are getting bought through.
These guys are in trouble. Look at the spike. These spikes can go anywhere now, especially if the market forces these shorts to cover. Swimming against the tide is brutally dangerous.
I'm long and watching with interest. I'd like a really nice squeeze to close my position into now. |
long term holder replying to APAD
Fair points you make, but do you trust the management on the acquisition?
Is you back their judgment, hold .
I continue to hold as ;
1 - this is one of my best performing share-holds ever (now my largest holding )and I back the management to use the funds wisely
2 - chart action is encouraging with bear-raid pushing the price below 300p appears to have failed
I guess the argument for a top-slice is that if you well in the money then it is never a stupid move, but do you have a better place to put the money? If you fear a sustained bear-market then cash will be King, but if this is just a correction then AMS looks as good a longer-term hold as anything else on the AIM market
My other big AIM winner , which you may wish to consider if you haven't already, is ADT - Adept telecom
I am no market guru, to be sure, and I know you make up your own mind. ;) |
Perhaps the anticipated '2nd target' has been confirmed? |
I see that one of the three disclosed short sellers of AMS has reduced their holding by 19%. Good sign IMO. |
I'm a long-term holder and am thinking about top-slicing.
The acquisition looks interesting, but they are talking about first products in 2021 and such forward looking statements are generally overly optimistic.
I have been looking for stronger organic growth signals and, if one uses the interims to predict the full year, then revenue looks to be rolling over, say a little over 100million. Although it might benefit from those famous currency tailwinds.
Sure it's cash rich, but spending it on a company that has no products in the market does not excite me.
A couple of comments from back in June:
"Sales of our non-antimicrobial foams were down 16% at reportedcurrency to £7.4 million (2016: £8.8 million) and by 20% at constant currency. Sales were impacted by the pipeline fill of our atraumatic foam launches in 2016, which we estimate to have been around £1 million. We also had some issues caused by a change of raw material from one of our suppliers which interrupted our ability to promote part of our more established range of products. These issues are now resolved. Sales of our other technologies, which include alginates and gels, increased 7% at reported currency to £11.8 million (2016: £11.0 million) and by 5% at constant currency.”
"In the latter part of 2017, we noted that a number of our partners have reported a slowdown in the European advanced woundcare market. We continue, however, to believe in our medium and long term prospects in this market.”
And, from December:
"The Group continues to make good progress and the Board expects results to be in line with current market expectations."
Personally I don't think market expectations are that high. Hold 320p, with nothing very recent.
I'd welcome opposing arguments.
apad🤔 |
Someone on LSE's expecting big things:
'...that was one of the two targets. Purely R&D / innovation play.
Second one is still in process and that one will revalue the company altogether. But first, they need to announce something about the enlarged credit facility, and of course the prelims after that.' |
Acquisition of Sealantis commented upon in The Jerusalem Post - worth reading:
Part:
Sealantis develops medical-device products for a variety of applications in surgical adhesion, mimicking the mechanism of adhesion of algae to rocks in water. The company was established under the leadership of Technion’s Prof. Havazelet Bianco-Peled, an expert in biomedical polymers.
“The journey of Sealantis is underway. The merger into AMS is an important milestone in the realization of our vision – to enable medical teams around the world to prevent serious surgical complications thanks to Sealantis’s products,” said CEO Tomer Fuchs.
“Following the merger, AMS will enjoy our scientific and engineering capabilities as an Israeli start-up company in the field of biotechnology, which includes innovation and the ability to bring simple and original solutions to complex challenges. AMS plans to expand operations in Israel, enabling it to expand into new, significant directions.”
Sealantis’s current focus is on surgical seals designed for a variety of applications such as stopping bleeding, preventing leakage of digestive tract contents into the abdominal cavity and preventing leakage of spinal fluid. |
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