Yesterday, Amigo (AMGO) announced that the High Court had approved its revised business scheme. Since the FCA had withdrawn its opposition, that was no surprise at all. Seeing the shares fly to 9p was also no great shock, given the utterly insane ramping by Bulletin Board Morons. But the shares are now back at 7.5p, and are a fabulous short.
Lucian Miers’ (the bear raider) top three UK short positions are:
The FCA has today indicated that it will not object to the proposed recapitalization and customer redress package proposed by loan shark Amigo (AMGO) but there are a few horrid caveats and a doubling of the share price to 6p is quite literally insane making this a slam dunk short. Here’s why.
Amigo (AMGO) has today given us an update on the scheme of arrangement which will, almost certainly bit not certainly, eventually see nineteen new shares issued for every one now in issue. Whatever happens, at 3.58p the shares are monstrously overvalued.
When Covid arrived I penned a piece here about the possible impacts on sub-prime lenders, given that the industry was already having issues even prior to that, and have also commented extensively on this on Twitter over the past couple of years.
Normally companies will do anything they can to stop auditors or anyone else saying that there is any uncertainty at all as to its ability to continue as a going concern, that is to say not to go bust causing investors to lose all their money. But today, loan shark Amigo (AMGO) stresses most clearly that there is a material uncertainty and still its shares are bid higher. Crazy stuff.
Another day and another statement from the loan sharks at Amigo (AMGO), folks who – as a judge pointed out the other day - are A grade bullshitters in the league of Julie Meyer. Yet again, Amigo threatens folks, quite unnecessarily, with the spectre of insolvency. The company’s market update today is just plain disingenuous.
Being a bear over the past year has, as I have noted many times before, been painful. You expose a company for being a fraud and its shares go up. You reveal that it has lied to investors and...its shares go up. You demonstrate that it is trading poorly and is running out of cash, its shares dip but then, post an oversubscribed placing, start to roof it again. It is unnatural. But it is the way of life in the last blow off stages of a bull market.
So much for the spike in Amigo (AMGO) shares yesterday in the belief that the Court would agree to its plans to pay customers it had ripped off only very partial compensation. The FCA opposed the scheme since it sees those ripped off getting only partial redress while equity holders keep the rest of the cash stolen by Amigo. And the Court, it emerged this morning, agrees with the FCA and myself and Justice Mills slates Amigo. As for foul mouthed bear raider Evil Knievil...
This all looks a bit of a mess. Loan shark Amigo (AMGO) needs Court approval for a scheme whereby customers it screwed get only partial compensation. Those customers have been bullied into voting for it by directors making the threat that if the plan is not accepted the. Amigo will put itself into administration meaning shareholders and screwed customers get nothing. The FCA has objected as the directors are lying, there is a fairer way.
Everyone knows that loan shark Amigo (AMGO) screwed tens of thousands of customers. Even the company admits to it. Shareholders benefited from that screw. Amigo wants to pay out just a portion of that screw in compensation, leaving shareholders taking no pain as they get to keep some of the ill-gotten gains. Quite rightly those folks at the FCA have taken a few minutes from wanking off on ESG porn to put a stop to this.
