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Varde borrows 2.5% of Tullow and starts well.

 It seems that the changing tides of the oil market have caught our borrowers in their burrows. Looking at the reported borrowings of Varde Partners these Swedish vikings look like they have been caught and are surrounded. (apparently Varde means value in Swedish). Anyway, Värdeförlust Partners Europe Ltd seem to have had a fun time early in 2020.

The story begins as they borrowed 2.5% of Tullow's shares and reported this on 11 March 2020. In the couple of weeks before, the share price was between 34p and 11p. I'm going to be generous and assume that they averaged their position in (or out) at 25p. As such they were credited with a whopping £8.8m of  your money.

They then wisely bought back nearly half of this position (1.22%) for just £1.5m. Rolig !

Now the difficulties start. They continued to extend their borrowings all the way up to 2.85% of the company. This was done in the 20-30p range and even finally at 34p back in June '20. They're now in for a cool £12.4m of their investors money. (well actually it's an unlimited downside)

So we see...the penny seemed to drop last month as it cost them £1.5m to buy back just 11% of their borrowings. Remember; just 11 months earlier they had been able to masterfully buy back 3.8 times this number of shares for less money!! Skit

Let's look at the data in more detail. I've added a line in at the bottom which assumes that they could buy back all of their remaining borrowings at 55p. I doubt that somehow. 


And here's the graph. Looking a bit eye watering.. I wonder if their investors know that they've got potential losses of £8.6m and counting on this "can't lose" position?



Please do your own research. I own shares in Tullow Oil, as I think they will go up in price. Generally speaking that's what happens when the oil price behaves as it is. If you find yourself in a burrow still with a debt based on 33.5m Tullow Oil shares that you owe make sure that you do your own research into a sturdy pair of kalsonger as the roller coaster is just beginning. The first rule of investing; never borrow to invest as you've got to pay it back. 

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