Traders puzzled by rally in stocks linked to 2013 penny crash
A number of penny stocks linked to the 2013 penny stock
crash saw their share prices jump on Monday amid heavy volumes, leaving traders
mystified about who was doing the buying.
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Kenneth Lim
17 May 2016
A number of penny stocks linked to the 2013 penny stock crash saw their share prices jump on Monday amid heavy volumes, leaving traders mystified about who was doing the buying.
Attilan Group, the investment company formerly known as Asiasons Capital, trebled in value to 1.5 Singapore cents from 0.5 Singapore cent with 193.4 million shares traded.
Shares of mining and resources company Blumont Group rose 200 per cent to 0.3 Singapore cent from 0.1 Singapore cent on a volume of 54.7 million traded shares.
Magnus Energy, an energy equipment and production company, saw its shares jump 50 per cent to 0.3 Singapore cent from 0.2 Singapore cent after 122.4 million shares changed hands.
Investment firm ISR Capital's stock rose 42.7 per cent to 11.7 Singapore cents with 43.5 million shares traded. ISR's shares were trading at 0.6 Singapore cent on May 10, giving the counter a 19-fold increase in just one week.
Annica Holdings, an oil and gas equipment supplier, was unchanged at 0.1 Singapore cent with 556.7 million shares traded, making it the most active counter on Monday by volume.
The second most active counter was gold mining group LionGold Corp, which also stayed unchanged, at 0.4 Singapore cent after 260 million shares traded.
IPCO International remained at 0.5 Singapore cent after 30.1 million shares changed hands.
All of those companies have been linked to the 2013 penny stock rout, in which the collapse of Attilan (then called Asiasons), Blumont and LionGold shares triggered massive selling in small counters. Investigators from the Monetary Authority of Singapore and the Commercial Affairs Department of the Singapore Police have obtained documents from and interviewed officers of all of those companies except Attilan.
That many of those stocks were trading near the minimum tick size of 0.1 Singapore cent helped to explain the huge percentage gains. For example, at just 0.1 Singapore cent at the previous close, Blumont's two-tick upward move on Monday translated to a 200 per cent gain.
"They're coming from a very low base," one trader said.
The trader said the market was puzzled about who was buying these stocks.
"The whole stable of associated stocks from the penny crash. And many of them don't even have much value. This is very confusing," the trader said.
Annica, Blumont and LionGold drew trading queries from the Singapore Exchange.
Blumont said it was not aware of any unannounced information that could explain the trading activity in its stock.
The conversion of some highly dilutive convertible bonds that have been issued by Annica, LionGold and ISR may have helped to partly explain the volume of trading in those counters.
Annica said after the market closed that it had issued 500 million conversion shares, or about 9.1 per cent of pre-issue shares, at a discounted 0.08 Singapore cent apiece to convertible bond holder a fund of Value Capital Asset Management.
LionGold said it had issued 68.2 million conversion shares, or about 3.1 per cent of pre-issue shares, at a discounted 0.22 Singapore cent apiece to the Value Capital's fund as well.
ISR announced that substantial shareholder David Rigoll had raised his stake in the company to 28.45 per cent after buying 137.5 million shares from Value Capital at a discounted 0.5 Singapore cent apiece on May 9. Mr Rigoll has been appointed as non-executive director and has volunteered an 18-month moratorium on his shares.
But it is debatable whether those conversion shares, all of which were issued at sharp discounts to prevailing prices, could have accounted for the share price increases.
ISR's Mr Rigoll, with his stake close to the 30 per cent threshold that would trigger a mandatory general offer, may have come to closest to fuelling the outsized rally in the stock.