“Oh Sh*t," I thought….
So I quickly got my head around the story that OPAY CEO Joel Leonoff has been involved in a similar convoluted Share Buy / Sell / Loan or whatever it is with Equity First Holdings (EFH) like Rob Terry had done at QPP, which caused the enormous collapse in QPP share price this week.
Anyway, it livened up what was looking like a dull Friday……..
My thoughts on it are as follows:
- It is only Joel Leonoff who appears to have sold a load of shares, despite saying it was a small buy of shares back on 1st April when the RNS was issued. If this had been concerted selling by several directors then I might have been worried. Joel Leonoff seems to still have a fair few shares left - looks like an interest worth about £2m.
- I have no idea why Joel Leonoff has sold the shares - it clearly was not as a precursor to Bad Trading as we have had lots of Updates since then and acquisitions and stuff and the Company seems in fine fettle operationally. I suspect the most likely explanation is that he needed cash fast and it was during the ‘Closed Period’ around Results Announcements where Directors are prohibited from Selling or Buying stock. So he did this complicated arrangement to get round the Closed Period.
- The shares didn’t react much this morning and were only down a tad - but mid afternoon they really tanked and went down as much as 18% at one point. At the time of scribbling this (3pm ish) they are down 14% as Bulls see opportunity.
- I expect a Clarification News Announcement from the Company very soon - probably on Monday. Hopefully this will clear things up.
- It is obvious that some are tarring OPAY with the QPP brush. This is silly, OPAY is a proper decent business generating piles of cash and on a good valuation (as per my previous Blog) - whereas QPP will be lucky to survive the year without going bust as it is not a serious business.
- Tom Winnifrith and crew at Shareprophets.com often trigger these Bear Raids where the likes of Evil Knieval and Lucien Myers etc. get onboard - good luck to them I say, but in this case I think they will struggle - OPAY is just too good a business and it looks like just a silly move by the CEO after bad advice, probably from his dumb ass NOMAD (Nominated Adviser under AIM rules) Cannacord. They did a Raid at PLUS recently which I hold - not a nice situation and I squirmed a bit, but the shares are right back up where they were. OPAY will do the same I reckon. I have no beef with Tom, Evil or any of these guys - they do a helpful role in helping clear out AIM sh*te like QPP and other frauds.
- I saw an interesting comment on the ADVFN Bulletin Board where some chap said he could not short on igindex - this implies that there is a shortage of stock to borrow in the underlying market - so igindex could not arrange a Short Trade. This shows Fund Managers and Big Holders are not prepared to lend the stock.
- I can understand why Joel Leonoff would do this undercover type deal. If he needed the money urgently, it would give a very bad signal to the market if he was selling huge chunks of stock at exactly the same time as he was touring the CNBC, Bloomberg et al studios saying how great his company was. I think it is a great company but this has really not been his best decision ever !!
- Yet again my Position Sizing Rules have saved me - for more details read my recent Blog on Position Sizing Part 2. Because OPAY is sort of small and an AIM company, I only have about 1.5% of my Portfolio Total Value in it - so the impact is minimal.
- It just goes to show what a silly old game it is that we partake in. A few days back I was convinced I had unearthed something of very high quality that looked a great opportunity. Today I feel a little bit less happy with my recent buy………It is an important lesson that we need to manage Risk carefully in our Portfolios and we need resilience in our thinking and psychology to remain calm and make good decisions.
Have a great weekend - and forget about all this silliness…wd