Fact is every bond conversion is like any rights issue. Dilution. Everything else is just noise. Therefore, kicking myself for not selling earlier in the week. I see the shares going down to 70p before recovery over the next couple of months.
I actually think that I've gone in early, but I believe in the longer term view on this share. My overall view is that there is a lot of upside coming. My weekly chart (PrRT charts/data) shows a breach of a very important level at 99.5/100 or so. I have this as a third touch and break, with some moving averages crossing up over each other. To me this is a pattern which is more likely to lead to a continuation than not. However, I sensed some dithering on oil and the US markets. US markets which was translating oil shares. The confusion around PMO's bond conversion seemed to play into this. I think we are likely to see between 78-82 on PMO, but it could also be the 73-74 (rising tl on daily). Trouble is that with the longer term view being so positive I've made a 'folo' trade here by re-entering. I think I'll be punished for that in the short term. As I write this I see US30 is wobbling again and WTI is flirting with that H&S neckline (if indeed that's what it is). I think much of the wise money is currently on the sidelines waiting for a buy signal. Depending upon which MA's you look at, you could argue that all commonly used eMA's are bullish at 24h, 4h and 2h so a 1433 stoch cross up (particularly from below 20) on those time frames could be argued to be a buy signal. There is none yet, but 4pm GMT may throw something up on the 2 h chart (doubt we'll see a 4h signal today). At one hour I see risk of MA crosses down so a stoch cross up may not be a useable buy signal at that timeframe. In short these shares are really interesting to trade just at the moment. Longer term, as long as POO stays high enough for PMO to make good profits after debt repayment, then it looks like a leveraged play on oil with a very good chance of giving a return. Same for TLW.
if it closes above 92ish then I think it can be considered a Hammer and has odds in its favour for the signal (on its own to be a reversal ) As always its could to have more signals than just one , but the bounce of the trend line should also be considered one I reckon .
Note how Polygon is now reducing the hedge ? FCA reports starting to show the fall. As expected .
So at this stage it does not look like it and given the chart is showing a bearish engulfing candle with RSI coming down and still over bought in theory, my guess would be that it is going to retrace . It may lose a few pennies. Nothing major I think but the odds I would argue are for a retrace on Rock .
Personally am waiting for 27/29 to break out to head to 40 , the issue is that its not always text book . Its about odds .
So I'd expect to see the share retrace a bit more from current levels.
If the price drops below 87.75, it would seem to open up a series of gaps up that may close. That could take us to 79/80 on the daily chart. There is also a rising tl support on the daily which I have as currently being 73-74p. Wasn't that around Bifadogs (I apologise if I have the wrong poster on that) dilution possibility?
A business has an enterprise value ie value of the equity (shares) plus the debt in the company.
Pre bond conversion, there were 527m shares valued at £1 and £2bn of debt ($2.6/7bn)
So Premier had an enterprise value of £2.527bn ie the value of all of the assets, future cashflow, goodwill etc.
231m new shares have been issued for 'giving up' about £160m or so of debt. In other words, new equity has been issued at about 70p.
This means that the now 758m shares are still valued by the market around £1 and the debt is now about £1.84bn. So the enterprise value has increased marginally to £2.598bn - or pretty much the same at 95p per share.
The debt will continue to fall from the free cashflow and , maybe, further asset sales.
Logically, the equity should rise as the debt falls by a similar amount but things don't always work that way.
I doubt that there is any need now for a further equity raise with Catcher getting up to speed and throwing off cash. There are also some warrants to be exercised and which will impact on the above.
What is the correct level of debt for PMO? With the assets owned and the cash being generated then we probably need to get down to under £1.5bn. The debt has been properly structured in last year's financing which is good.
When the debt is below £1.5bn then PMO will be in a position to raise some properly structured debt - maybe about £300/400k - and with a farm in partner for Sea Lion development.
One can guess at what all of that does to the enterprise value but could reasonably see £5bn. So with £1.8bn of debt that leaves the equity at £3.2bn or about £4per share.
Personally, I like what the above happenings at PMO do to Rockhopper since I think that there is greater potential for more than a 4 times rise in their share price - which gets them to an enterprise value of £500m.
Easy to play with numbers! And I think that the PMO board have done a first class job on the recovery and stabilisation of the company.
I just rushed through it quickly . I noted how back then the term Market neutral was not used in the paper ;-)
So the overall net effect of closing the shorts and the dilution should cancel each other out , or thereabout. The paper confirms what I have been posting , ie as the convertibles were being bought the amount of stocks on loan was obviously going up. As i said several times . Pure hedging and not a Long/Short portfolio short . ( I have written about Polygon Highbridge etc and their multi strat fund.
Throughout 2017 I did spend a few posts on the topics but realise that some may have missed them so the paper will be a useful link indeed .
I did post an Amazon link the other day on hedge fund strategies, its useful as investing and trading in equities is not just a 'simple' matter of knowing fundamental or technical analysis , but about the various strategies and players out there and how it all fits together. Takes a long time to learn . But worth learning . IMO
Jeez Monte go get a beer and relax a bit! Ffs if you're so concerned sell up and get back in once your are comfortable with the situation. It seems to me you daren't be out but also daren't be in. It's your decision fella , it's no good posting stuff for your own justification. Grow a pair and live with your decision , yourself!
last weeks API = over 16 million barrels of oil gone from stock! By any measure that is huge. Thus I will look at breny crude and..... it's at $69.42 having gone up since the API announcement but it's a late announcement today so thin trading. This at minuimum underpins why Brent is North of $65. Maybe we will be over $70 by close of play tomorrow. DOW up 1.2% as well. Quite a large gain it must be said.
All in all this evenings news bodes well for PMO share price tomorrow IMHO.
Will be interesting.
The upshot is that the increased short selling activity both leading up to the anticipation, and making, of a call invitation and up to the issue of new shares will to a large extent (average in the study is 21.8% of the new issue but in PMO's case probably 70% plus of the new issue) be offset by conversion. I think this may lead to little volatility in the first few days after conversion but greater volatility thereafter when "new" buyers pile in for the longer term.
Dow's up yet again. 1.2% up as I type this.
FTSE was down 0.4% today.
Earlier I noticed the DOW was up 0.5% and at the same time the FTSE was down 0.4%. Can't say I often compare them but I think it's a bit unusual for them to be going in opposite directions so much. Maybe wrong.
Brent nearing day highs all over again ( $69.5 now ) and Dow and S&P flying all over again !
Now we had the PMO dip , a logical one due to volatility due to current convertibles , I suspect that tomorrow FTSE will open up and markets will follow this evenings US strength
As for Brent , lets see what the API data shows but if its not too bearish PMO should find that the reversal is losing steam , I say this looking at short term 1 hour chart now very close to oversold levels . Lets see . The Energy SPDR is up 1.2% as I type . Bullish move !
Disorder - good post and I hope you are right. If the price does shoot up do not be surprised if PMO accelerate debt reduction via a rights issue with over 700m shares in issue and a strong share price this would make a quick large dent in debt. Something like this will be needed to progress Sea Lion more rapidly.
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