charts and darts: January 2023

Tuesday, January 31, 2023

Monday, January 30, 2023

walking the plank

insiders heading for the exit with abandon

mc 15.3 339 x

mc 474 60x

mc 11

mc 71 57x tsunami dump

chips and dips

denial and related bedfellows despite management opinion that the future portends shrinkage

mc 116 44x

mc 458 81x

mc 123 guidance to loss

soxs the inverse floater. seats available

carnage, perdition, and a hope that springs eternal

mc 332 sf 45 one more run through the bankruptcy jungle

mc 1.58 sf 58 insiders refusing to go quietly into the night

Sunday, January 29, 2023

Transmission

Under the hood.

The short seller says the shares are 85% overvalued.

For the lead company 3 million shares trade a day with a free float of less than 25% of the equity. Earnings were 10 a share for the trailing year valued at 253 times earnings at Fridays close. Think of the number for a moment which implies it would take two and a half centuries to recover the investment. 14 million shares traded 20% lower. 85% lower is 30 times trailing earnings. Value is in the stamina to reach the horizon.

The short seller casts suspicion on 8 stocks included in the MSCI Emerging markets index. The country has a 14% weight in the index with 108 companies. The 8 in question account over 5% of the index. The index has a reputation to protect and holds 1300 companies globally. The weight of the eight might be an inconvenience for the index to defend.

Then there is the matter of a follow on public offering that was priced 20% higher on 27 January and is now more expensive than the stock price trading on the exchange. There were no willing retail buyers at that price. ICICI Bank which as an underwriter technically buys the shares for resale to the public traded lower by 4% in US capital markets where it is has a dual listing. Pension funds and insurance companies were 20% less well off but still up eight times from entry on paper, if the paper holds.

The transmission.

Credit default swaps let bond buyers insure against default risks by issuers.

The 6.25% 500 million USD bond trades at seventy five cents on the dollar, 25% lower than issue price. The default swaps, which presumably the short seller holds, increase by multiples as the bond price declines. Think the Lehman moment in mortgage backed securities 2008. These swaps trade over the counter meaning the buyer contracts directly with a seller, financial institution, which in turn has to hedge the risk on or offshore. Holders of onshore equity are just along for the ride.

The question not yet posed is whether the risk is restricted to the eight or is an indictment of the system and might be found in the 413 pages issued in defence and the short sellers response to the defence.

Friday, January 27, 2023

saudis pump the sector

lcid 21 saudis size at 11

mc 1.35 detritus

mc 17.77

mc 3.99

mc 388

mc 21 china not to be left out

mc 9.09

fully priced

mc 90 insiders bailing

mc 12.1 23x

mc 59 31x

mc 3.37 72x

bits and bytes

mc 2.39 sf 33

mc 719 sf 17

mc 304 insiders loading

mc 524 a quad ai

Thursday, January 26, 2023

wedges and weights

maybank securities is the adani enterprises anchor investor with 34% of the offering. the balance spreads through the gulf and the local public sector. offshore shorts transmit risk to onshore dealers who have to hedge the risk sold. the hedge can not be in the illiquid underlying but the liquid index.

in theory if this becomes a matter of sovereign pride then the public sector institutions are directed to intervene and buy at any price. examples. japanese denial, majority ownership of public securities, and quantitative infinity. the challenge is that the economy imports capital to pay the energy bill and fund subsidies for over one sixth of the globe's population. the central banks printing press is sovereign. over fifty percent of the equity index float is held by foreign funds subject to redemptions.

one suggestion is to just clean up the act. bring the capital flown onshore. the optics and the confidence would be rewarded.

babies and bathwater

wedges and weights