By Gary Newman | Wednesday 28 June 2017
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
A few weeks ago I penned a piece on Blenheim Natural Resources (BNR) in which I was highly skeptical of the recent holdings RNSs from a certain Pershing Nominees/Valbury Capital.
So I must admit that I wasn’t too surprised to return to a trip into the Russian wilderness – with no internet access – and find that there had been further developments since then.
In fact the only thing that really surprises me is how blatantly things were manipulated there, to the extent that some must think that they can get away with anything, and it just shows how little regard many in the market today seem to have for the FCA and the prospect of any action being taken against them.
At the time of writing my previous piece an RNS had just been released stating that Pershing Nominees had increased its stake to 19% - quite possibly via the exercise of some warrants – but subsequently on June 15 two replacement holdings RNSs were issued stating that the TR1 notifications of both the 18% and 19% thresholds being crossed (on May 26 and June 7 respectively) actually related to a certain Matthew West.
Later the same day a further RNS followed announcing that Matthew West had now crossed the 20% threshold, with that transaction having taken place on June 9.
But what was strange was that in the background to all of this the share price was actually dropping fast and was down over 30% from recent levels, so something certainly didn’t add up. The increased holding to over 20% though was enough to ease the concerns of many of the smaller private investors that hold shares in this company though.
It must have come as a bit of a shock when the next day, on June 16, a further RNS came stating that Matthew West had sold 92 million shares and had reduced his holding to 5.57% of the company, and even more so given that 77 million of them had been sold on June 13 and a further 14.5 million on June 15.
Now I know that major shareholders have some leeway when it comes to reporting changes in holdings, but surely issuing a TR1 of an increased holding whilst you are actually selling could be viewed as market manipulation as it tends to encourage others to buy – especially if these RNSs helped create liquidity (in the case of the 14.5 million sale for sure).
What is also interesting is where the original 112.25 million (18.08%) of Blenheim shares came from in the first place given that prior to that this individual had held zero shares in the company. They can’t have been from the placing, as those shares were admitted to trading on May 3, and the 18% declaration wasn’t made until June 6.
I did wonder if maybe a group of larger holders had got together to act as a concert party with Matthew West fronting it, as the large holdings announcement also seemed to be accompanied by rumours on Twitter and elsewhere of the Chinese taking a stake, with Pershing - which is just a nominee entity of the sort which holds de-certified shares for thousands of folks - as the front for that.
Whatever the truth, if it ever fully comes out, something certainly stinks here and it is hard not to believe that some degree of share price manipulation has taken place, based upon the facts in the public domain.
I’m also still waiting on the TR1 notifications from David Lenigas and Thomas Short, given that both held 12 million shares in the company for 3.01% each at the time, yet that now constitutes 1.9% of the company and no TR1 has been issued to state that either has dropped below 3% or that the number of shares they hold has changed.
With the Dieba option due to expire at the end of this week, along with potential further unrest in Mali despite the July 9 referendum having been postponed, there is a possibility of further downwards pressure on the share price in the very near term, so I wouldn’t be rushing to put any money in at the moment. Although the flipside of that is that if news comes of the Dieba option being taken up, then I can see the potential for a big spike in the share price off the back of that.
Longer term, this isn’t in a worse situation than many of its peers, and in fact is cheaper than a lot of them, with very reasonable levels of cash burn – just £242,000 admin expenses for the whole of the year up to March 31 2017.
I won’t be holding my breath waiting for an investigation by the FCA, but the use of TR1 notifications to help pump the share price and create additional liquidity seems to be coming an increasingly common practice on tiny AIM companies these days, to the detriment of your average PI in many cases.
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