Update on Short Position

In my last posting I mentioned the shorters were covering and started doing so near the end of December 2016.

Since then they have covered around 9 million shares of their 28 mill short doing 42% of the market volume over 35 trading days. The share price rose 20 cents per share on this activity. It did not seem unreasonable for this action to take place given the progress being made at EWC and the fact that I believe the shorters are well informed having correlated the short position with announcements etc.

Just recently they started shorting again and it appears to coincide with the point to point document posted here on Hot Copper found on the ERC website. As Hot Copperites have noticed this meeting was cancelled and it was on that day that the shorters started their work again.

Since then they have increased their short by almost 1 mill shares up to the reported period 5 days ago. However it is clear they have increased by much more than this from studying the daily Gross Shorts which I have correlated with the total net short over long periods of time. I expect that the short reported soon will indicate approximately a further 1 mill short.

You will also note that the share price on the last few days of the month was particularly hard hit. I have correlated this with shorter activity and this movement provides a high correlation with shorter activity i.e. they push the price down to get a better month end.

Does this change in activity make sense?

It is possible the shorters know much more about the state of affairs than the recent announcements, however the ERC document and other official websites provide a great deal of information on the Philippines project status.

The cancellation of the ERC meeting in my view does not hinder financing. In addition the half yearly report gives some good clues as to confidence we all should have in the company. In particular the EWI loan has been extended as noted in this chat room, I believe, indicating that EWI is giving full support to EWC and not as some have suggested using the “debt hammer”. Also the re-engagement of SKK Migas on the PSC is welcome. All the data I glean from the official websites in the Philippines whether from the ERC, PSALM or DOE etc. indicates that this project is well supported and very well advanced. Value is not dissipating while we wait.

Once again the commentary is currently getting quite negative as the share price falls. It is always interesting to watch how a couple of shorters, who over the past year have probably had their pants ripped off, can influence the share price so easily and then quickly influence sentiment.

It will be interested to see what the share price does when the shorters finally capitulate, (which will likely be in anticipation or after an announcement). We certainly have a blue print, a 60% share price rise, but this only covered 9 out of total 28 mill short.

Good luck competing with long only buyers when this turns. I estimate that over 80% of this company is now in long only hands leaving 20% free float. The current short is 1% of the company or 5% of the free float. The last time the shorters covered the share price moved 2 cents for each 1 million covered (possibly because of margin calls?).

In my view value is becoming extreme again in a world where gas and not coal assets and infrastructure assets are becoming more highly sought after. EWC is an integrated gas and generation business.