Carillion Share Discussion Threads

[m4rtinu] 13/1/2017 12:09

Taken from Thorpematt's post 3145. I can't pretend to have read in detail the paper linked to but it may help. Neither do I fully understand it!



An extract:

What is Convertible Arbitrage?


Convertible arbitrage seeks to generate returns from a convertible security’s equity, bond and embedded equity call option features. A typical trade involves being long Company A’s convertible security (e.g., a bond or preferred share), and short Company A’s stock. There are various approaches to a convertible arbitrage strategy; some managers focus on generating positive cash flow, while others trade the short stock position to optimize the hedge ratio (delta). Some managers
“reverse hedge” the trade if the convertible security is overvalued (i.e.,
sell the convertible bond short and buy the stock), which can be costly
if there is negative carry.

[kcsham] 13/1/2017 11:52

.......in wrong place.......

[kcsham] 13/1/2017 11:52

Sorry posted in place. However, same applies to Carillion shares.

[kcsham] 13/1/2017 11:47

There is no guarantee to make money in stock dealing or investment for anybody, including institutions or fund manager or........If someone shorts the share of a company, if price goes up that someone will lose money, as simple as that.As the share price of MRW continually rising in the past 6 months or so, the shorters are burnt and have to sell out to cut their loss.

[cw2000] 13/1/2017 11:13

No mention of the £2.00.
Does someone have access to the whole prospectus?

[8w] 13/1/2017 11:10

I can't understand the situation you are outlining poacher45. Have you got a source or reference we can look at ?

[cw2000] 13/1/2017 11:08

Carillion Convertible Bonds Offering
RNS Number : 6467Z
Carillion PLC
12 December 2014

Stick the RNS number into the news section and click on the Carillion info that pops up

[lord gnome] 13/1/2017 10:48

If an institution is daft enough to lend someone stock for shorting they'd have to be doubly daft to excuse them from paying any dividends as they fall due. I'dont think you've got this quite right poacher45, although I am intrigued by your idea of shares for £2.00 if the shorters (who must also own the convertible?) can get the price down below that. That's a new one on me. Where did that come from?

[edmundshaw] 13/1/2017 10:47

If they do not own the shares, how are they shorting? Do they have other holdings they are selling down in order to change the option price? Also you say "they were also given a put option that if the price dropped to lets say £2 they were then allowed to buy all these shares for £2 each". A put option is something you buy so you can guarantee to sell the shares at a fixed price, I am quite confused to be honest.

[poacher45] 13/1/2017 10:26

The shorters do not have to pay a dividend because they do not own the shares. They only get the shares at the end of the loan period after the market price decides the put option price. Also remember they could decide not to exchange there loan stock for them. It is not a normal put option. It has been agreed by the company and the 16 institutions. However I dont think the company realised how these institutions could manipulate the price by perhaps reducing holdings etc. I must stress at this point that this is only my opinion.

[edmundshaw] 13/1/2017 09:57

The final dividend is not XD for some time yet. FY results are 1st March and went XD last year on 12th May.

BTW, I find that explanation about the short selling unfathomable. Can anyone explain it to me in more detail - or better yet give a link to an original source for it? And why wouldn't the shorters have to pay that dividend? That is normal practice.

[m4rtinu] 13/1/2017 09:35

Poacher - that is the best explanation I have seen posted on the situation concerning the loan stock. I wasn't aware of the low "put" option.

As far as paying the dividend on borrowed shares, the cost hasn't put anyone off so far, so they must be covering this cost "and some".

Cheers MU

[poacher45] 13/1/2017 09:24

The shorters are not going to have to pay a dividend. The way I understand it is that this is down to 16 institutions who bought the loan stock of £170,000,000 at a very low interest rate. In exchange for for the low rate of interest they were given the right to exchange the loan when it matures for shares at a maximum price of £3.95. They were also given a put option that if the price dropped to lets say £2 they were then allowed to buy all these shares for £2 each. So the problem we have is that these big institutions in my opinion are forcing the share price down in order to buy cheap shares and make a killing. It is time the directors did something to stop this happening or the company could be the target of a cheap take over bid.

[kcsham] 13/1/2017 08:40

Shorters position is now down to 20.8%. Support level of 233 is still holding well.

[spoole5] 13/1/2017 08:13

The shorters are very soon going to have to pay a 13p per share dividend on this.

[spoole5] 12/1/2017 10:18

It's morning, that means carillion share price must be down!!

[kcsham] 11/1/2017 11:03

Carillion have been shorted for years and the short accelerated since early 2015 and the share price was coming down from 350 to 236.5 to date over the same period of time.When a company like Carillion has a solid fundamentals (in my opinion) and its share price is suppressed by shorters to its years low, I believe it is an opportunity to buy. Don't everybody agree buy it low and sell it high? Of course, it takes time and courage to take such an action to grow the profit of ones investment.

[jaf1948] 11/1/2017 10:35

A lot of people are put off by the shorting, even though the shorters know no more about the future than the rest of is.

[rcturner2] 11/1/2017 09:04

The FTSE last year was up 15% and CLLN was down, what 20%?

Now the FTSE is at an all time high, CLLN is pushing a 5 year low.

I would hate to see what happens here if the FTSE goes back to 6000.

[kcsham] 10/1/2017 18:17

The support of 233 was proved difficult to break today. Hopefully, it will settle down in the next few days before going up to 245 - 250 soon.

[kcsham] 08/1/2017 18:19

At least it works for Morrison.

[rcturner2] 08/1/2017 09:42

I sold mine quite a while back.

Your success with Morrisons has no bearing on Carillion.

Carillion is either very cheap or something is not quite right. You pays your money and makes your choice.

[kcsham] 06/1/2017 16:50

RC - I bought and hold Morrison more than two and a half years. MRW share has been shorted for a long time, the short peaked at 19.5% last August and gradually reduced to 15.9% to date.The price rises from £1.80 to £2.36 in the same period of time (dividends paid out is another bonus).Will Carillion follow the similar track is everybody's guess. However, I won't mind to be optimistic. All in my IMHO.

[kcsham] 06/1/2017 16:19

RC - I believe you should sell your shares, if you have any, since you are so worry!