Working model v 0.2 for GKP

Short Hare vs Tullow Tortoise

Well that's a bit contrived but we are in a race; it's the shorts against the longs. The shorts want the Tullow price to go to 1p or less and the longs 100p or more. Where are we at the moment? Somewhere in the middle at 45p. There are actually at least 5 hares in this particular race; Odey, Pictet, Varde, Whitebox and Key Group. Key Group are flagging a bit and have dropped to 0.49% or less which means that they don't have to report anymore. Odey and Pictet seem convinced of victory and have raised their stake in the last week of February. Varde has decided they're too far ahead and have repaid 0.32% of the company value on 19 Feb. I expect they're very pleased with themselves as that cost just £1.54m on 19 Feb and would cost £2.06m in todays money 11 days later. So why do investment managers short stock? Broadly speaking it's for two reasons, the first is that they've gone through a discounted cash flow based valuation and looked at any other factors such ...

Metro Bank comparing new share price with old price - post 75m new shares

I wasn't actively tracking Metro Bank, but had been aware of the story these past few weeks. Over the weekend I started reading up about them. The close on Thursday was 536p trading up on Friday to close at 669p up 24.8%. As I write today they're up about 10% at 772p (It also was at 782p whilst working out some of the numbers below) The cash raise was priced at 500p a 36p discount to closing price on Thursday They wanted to raise £350m but actually raised £375m issuing 75m new shares. The BBC wrote about the crisis on 19th March '19 when the share price was 850p, it had dropped from 3396p on 27 July '18 (75% drop) Metro has debt of £249m Here's some high level analysis to translate old money into new money (partly as Google haven't updated the total voting rights (TVR) yet). 27th July '18 company valuation was Marcap £3,308,398,753 2nd May '19 TVR was 97,420,458 and Share price 650p Marcap £633,232,977 Share price at 500p Marcap £487,102...

Tullow Oil vs Brent spot price

Further to my blog post looking into some of Tullow's high level financials as an introduction, I thought I'd take a quick look at Tullow vs the Brent spot price. Rolling the clock back a year or three Tullow tended to track Brent as many other oil companies do. I know it's a bit simplistic to say, but if the oil price (OP) went up 10%, a company whose main product is the production of oil would naturally go up 10% too; even if the rise in the OP was to then reverse a few months later (you'd expect the share price of the oil company to reverse at the same rate). Exploring for and producing oil is an expensive business; this is often financed by debt and when the OP is high the number of projects started increases. Again - that's obvious. Some oil fields in the OPEC+ group, such as those in Saudi get slowed down by 1m barrels of oil per day (BOPD) so that as a country they produce 11m BOPD instead of 12m for example. This reduction in supply helps to balance the s...

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