The fact that the M.D. purchased almost 900,000 shares on market is significant. It shows he has faith in the direction of the company. I also think it helped stem the hemorrhaging of the share price immediately after last friday's announcement confirming the Vitol transaction.
But the company needs to do a lot more to turn this thing around. At present the no brokers are advising clients to invest in Rialto. This is in part due to the mess left by the previous Board but also due to to the brokers not understanding that the Vitol deal is good for Rialto. As well, the brokers remember the algo trader smashing the share price in the middle of the year and are concerned that the same may happen again. Hence they are reluctant to advise clients to invest in the company only to see the price collapse once again.
The solution is for the company to be more strategic in the information it releases and how it then sells that message. For a start it needs to brief the analysts on the deal and then release favorable reports at the same time that good news is being released. (Assuming that RFC Ambrian are not doing this)This information should be unambiguous and summarised in a format of less than one page so that busy brokers can see that the company truly has been turned around.
The company also needs to release an explanation that its loan arrangement with Vitol is standard for this industry. Some recent examples would be helpful.
RFC also needs to take a strategic approach as well. There were some quite large purchases on AIM after the announcement but the share price seemed to be knocked back down by very small parcels being sold at the lower prices. It would have been good if some of those larger purchases were broken up and used to soak up the small sellers. The reverse of how the algo trader smashed the price in may june.
RIA Price at posting:
4.0¢ Sentiment: Buy Disclosure: Held
