Disclosure: I own shares in one or more of the stocks mentioned. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Fastjet – No “material trading” reason for share price tanking, so who knew about the director sale?

By Nigel Somerville & Ben Turney

31 July 2015 02:17

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On Wednesday, following (roughly) a steep share price drop of 10% in the first two hours of trading, Fastjet (FJET) issued a know-of-no-reason RNS. Or that was what it looked like – the actual statement read “The Company knows of no material trading reason for the movement.” It went on to reassure that trading was in line with expectations. With the RNS released at about midday, it looked to have the desired effect as the shares recovered and even closed up on the day.

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Comments

DUCK AND DIVE

31 July 2015, 03:53

1. It looks like the Hexham/Golling sale was forced on them by the closure of the fund in which the shares were held.

2. Hexham had bought the shares in Fastjet’s March fundraising at £1 each so, far from gaining, they lost £700k on the deal.

3. Fastjet’s other IIs were prepared to buy them at a discount and since the transactions were done on the open market, the market maker took the SP down to the discounted price.

4. The RNS stating that Fastjet knew of “no material trading reason” for the SP movement was true. They obviously did know that Hexham/Gollings were in the process of selling otherwise the wording would have been different. But the disclosure of the Hexham disposal had to come from Hexham after the transaction had been completed. Fastjet couldn’t say anything about it until then.

5. The Fastjet RNS reassured other shareholders that the business was on track so anyone who wanted to buy at the same 80p price as the IIs could do so – thus making it an almost level playing field. There wasn’t a lot of trading in either direction but I have read of some PIs who happily took advantage and then sold later for a quick 10% profit.

DISCLOSURE: I own Fastjet shares. I bought more at yesterday’s lows since the oil price is a big boon for airlines which haven’t hedged. I haven’t sold any.