After 35 years of stockbroking for some of the biggest houses and investors in Australia and the UK, the Secret Broker is regaling Stockhead readers with his colourful war stories — from the trading floor to the dealer’s desk.

I saw a tweet pop up this week from one of the accounts I follow. 

It said that they will soon release a report on an ASX listed stock which they have shorted and this report will give their reasons why.

Now, a tweet like that gets me to lean in a bit, as I know it’s not your usual clickbait BS that pops up far too often these days and this is very worthy of a click from my mouse.

Actually, this headline made me lean in more than just a bit.  I think my forehead did actually touch my screen before I could sit back.

As I have pointed out before, short sellers are there to, and I quote (what only an Australian politician could say)  ‘keep the bastards honest’.

A quote like that would never come from the lips of a British MP, though to me, it sums up a short seller’s job perfectly. The same could be said for ICAC.

Though the format of an ICAC hearing is very formalised, as our Gladys is finding out, the rules around short selling is a often less so. 

ASIC have had a go at trying to pull the shorters in but their bite was the equivalent of being slapped across the face with a wet lettuce leaf.

https://asic.gov.au/regulatory-resources/markets/short-selling/activist-short-selling-campaigns-in-australia/ 

So my tweeting short seller had found a stock with a valuation of A$1.8bn and priced above A$15.00 a share, having been 43c back in July 2020. The stock has risen to where it is today, mainly because it’s wardrobe contains all the latest fashionable frocks to wear to investor meetings. 

It can choose to go out in the latest designer labels like Lithium, Zero Carbon , Zinc and Copper, to turn heads and attract the attention of many a ‘red hot blooded’ fund manager and investor.

Infact, their trips down the catwalk were so successful, that the leader of ‘fashion in the field’ Gina, got involved as did her estranged son, John.

Both became top 20 shareholders, with Gina just pipping her son at 6.66%, though she may want to now adjust that % by a pip or two, as the devil truly has turned up.

Now there is another thing about this stock which may get you to prick your ears up or even point up.

The company’s name is the same as the fictional race of extraterrestrial humanoid species who feature in Star Trek, the Vulcans.

Maybe Gina and her son can dress up as characters from the TV show at the AGM and later sign autographs for cash at the nearest Supanova Comic Con, though somehow I don’t think they will be sitting near each other, as they are still family fighting over a couple of billion or two.

Whilst shareholders who are now caught up in the middle of this shorter vs company battle, may now wish that Scotty can beam their shares up at their last trading price of $14.99, it feels like this is going to become a long and drawn out battle.

After the shorter released their report, the company fired back a few missiles to counteract the reports findings and instructed their crew to immediately deploy the ‘force field shields’.

However, the ASX starship enterprise engines were also fired up and a trading halt beam was electronically deployed. 

The Motley Crew on the bridge of the ASX starship enterprise were not happy with the company’s reply, as it was not in depth enough.

The company came back with a more detailed after hours reply yesterday and they must be hoping that this move will have the same effect as the famous ‘Vulcan nerve pinch’ did in the TV show.

History shows us that a short seller will always have a more detailed follow up report ready to go, as they like to show a bit of ankle first, before exposing a bit more.

What I do find really interesting, is who is the holder that has allowed their shares to be lent out to the short seller?

I think if Gina finds out who it is, then that person may well end up boldly going where no man has gone before, namely her luxury Donga at Roy Hill, for a right royal dressing down.

Vulcan’s first ASX reply was three pages long and yesterdays was eleven pages long, so I will be popcorn watching and waiting for the next episodes of responses and how the shares will react, when they come back on.

Who needs netflix when you’ve got the ASX streamed live to your trading screen five days a week?

 

The Secret Broker can be found on Twitter here @SecretBrokerAU or on email at [email protected]

Feel free to contact him with your best stock tips and ideas.