Sunday, July 1, 2007

The Extreme Narrow Float of SWC

I have emphasised that SWC float shares available to retail investors are extremely narrow, and outstanding short shares too high, and cited it as one of the bullish reasons for SWC. Let's do a very careful analysis of the numbers.

According to SWC Q1,07 quarterly report, bottom of page 7, Total outstanding shares are 91,514,668 as of Mar.31, 2007. (Email from SWC says on May 1st, 91,686,297 shares)

Most of the SWC shares are owned by Norilsk after the Norilsk palladium transcation in 2003. How many shares? From SWC 2003 Annual Report page 5 we know Norilsk initially acquired 45.5M newly issued shares, paid with $100M cash and 877,169 ounces of palladium. Then Norilsk made a tender offer and acquired from open market an additional 4.35M shares at average cost of $7.50 per share. So Norilsk should own a total of 49.85M shares of SWC. (Email from SWC says 49,813,222 shares)

Other insiders are the managements: My tally is the management personels own a total of 1,180,337 shares as the latest known at the time of writting. Once subtracted Norilsk and insider owned share, the remaining float of SWC is 40,484,331 shares. That's the float available to institution and retail investors. (Accurate number is 40,692,738. Bloomberg says 40.204M)

The latest known institution ownership is 37,348,005 shares. (July 10,07: now 36,354,783) (July 15: 37,144,283)(July 21: 37,429,043)(July 26: Now 37,736,888).

So, after subtracting institution ownership, the float left owned by retail investors is 3,136,326 shares. Barely over 3 million shares. (2.775M if you use Bloomberg float and NASDAQ institution holdership number.)

The outstanding short shares, as of June 15,07, is 5,284,169 shares (July 13: now 6.0125M). That's even much higher than retail long positions. That mean even if ALL retail investors sell their long positions, there are not enough shares available to allow shorts to buy and cover.

A fierce short squeeze will happen, it is only a matter of time. During the short squeeze some retail longs might be eager to sell to lock in profit, but it will be far from enough to allow shorts to cover. This looks very bullish for SWC.


JJ2000426 said...

Let me summarize the numbers so they are more readable:
1.Outstanding shares of SWC: 91,514,668
2.SWC shares owned by Norilsk: 49,850,000
3.SWC shares owned by insiders: 1,180,337
4.Shares owned by institutions:37,348,005
5.Floats owned by retail longs: 3,136,326
6.SWC Outstanding short shares: 5,284,169


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