Sanctuary Group: Sink or Swim?

Call me a cynic, but I feel that the EGM was more or less designed to make shorters feel a bit uncertain as to what is going on. I had a fear before the meeting that something like this might happen, given the description of the motion to be passed.

Like I said, I think Hbos are the ones who hold the cards. I think more debt for this business is a bad thing, as they are already struggling to pay their interest charge. Unless there is a real turnaround in trading next year. There is still no clarity on the nature of writedowns etc., and any possible cash effects of the change in accounting (as in, confusion over working capital and mis-estimation of requirements going forwards).

However, I did just close a few of my shorts as I am uncertain of what comes next, and what precisely occurred in the EGM in terms of presenting a scenario in which the company could continue to trade in the medium term despite higher levels of debt. But I still remain with a short position.

Clearly what is going on is well understood by major financial institutions. Therefore, the market understands what is going on, and the shares have not surged on the EGM news. Precisely why they have chosen to take up such large positions remains a mystery ...


By going through the RNS's, one can see that institutions own more than 43% of SGP shares:


Banks own:

MS 8.8%
GS 11.3%
UBS 6.2%
Lehmann 6.9%
Fidelity 9.8%

Total 43.0%



Regards,

Beta