Some share purchaser with uncanny timing made $500 grand on the PNG Resettlement Arrangement
Monday, 22 July 2013
I'll give you a summary up front and all the working out down the bottom so you can pull me up if you reckon my logic's gone astray.
From June 2012 to June 2013 the share price for Decmil Group Limited halved from about $3.00 to under $1.50. The company's business has traditionally been in building and construction for the mining and exploration industries. The market for those services appears to be shrinking with many commentators reporting the end of the end of the mining infrastructure build boom.
On 11 April, 2013 Decmil announced a $70M contract to build rail and port facilities for The Roy Hill mining project. The share market did not react well, the shares dropped significantly in value showing to some extent how the market is valuing down the future cash flows likely to be generated from that sort of work (see price chart below for indicative price movements).
Decmil Group shares are up 41% since the start of June. There has been no announcement from the company during that period to explain the price movement shown in the DCG chart below.
There was a relatively high volume of trade in Decmil Group shares during June - but one transaction in particular stands out.
Argonaut is a Perth Based stock broker. At 1.56PM on 13 June, 2013, someone acting for Argonaut entered the first BUY order for DCG shares at $1.46. The buyer paid up at the sellers price chasing shares and was active in the matching period in the opening and happy to pay up at the closing matching period each day. Argonaut clearly had an order to buy 2 million shares and that is exactly what they did. Argonaut bought constantly to fill the order from 1.56PM 13 JUN until close of business on 20 June, 2013. Argonaut did not normally trade in the security DCG as it sold zero, none, zip during that period, just bought 2,000,000 shares.
Argonaut's buyer got in at an average price of $1.59 with 2,000,000 shares bought between 13 June and 20 June, 2013.
The Department of Immigration records show a start date for the contract awarded to Decmil for Manus Island as 18 June, 2013 - which is highly suggestive that people in government (at least) knew that Decmil had the deal when Argonaut took instructions to BUY 2,000,000 DCG shares (this information wasn't published until 19 July, but the fact of the department acknowledging the start date at 18 June is the important piece of data from the report below).
When the Decmil announcement was made to the ASX on 2 July, 2013, that it had won the Manus Island contract, the share price hit around $2.00. That's a profit of about half a million dollars for whoever bought the 2,000,000 parcel of DCG - in a fortnight for some lucky fully informed market watcher.
I have a confidential source who tells me that people within the Department of Immigration were talking about Decmil as the successful tenderer 3 weeks before the 2 July announcement to the exchange. One further piece of information that a fully informed market for Decmil shares might consider is the further announcement by Kevin Rudd that the Manus Island Detention Centre capacity will increase from the 600 bed facility that will be built under the current $150M+ contract with Decmil to a 3,000 bed facility. It will be interesting to see who and whose broker knew that decision was coming.
When a contractor moves people and infrastructure into a remote location for a government contract, that contractor is generally held to be in a good position to grow the value of its contract through contract variations - historically that's been the case. It's particularly so where a government makes an announcement like Rudd did to increase the Manus facility from 600 beds to 3,000 beds.
This chart was prepared by reader DG comparing how well Decmil Group's stock price has performed - DG says:
I thought that the comparison below of Decmil to the All Ords (XAO in dark blue) and various other companies that have operations that are in mining services may be of interest to the extent that it highlights how strong the stock has been relative to others in the industry since mid-June.
Here's Decmil over the past few years
This group of numbers as raw data shows us all of the trades so far in the stock DCG for the month of July.
And here's the data for the month of June added to the month of July above (it's the way the stock reporting system I'm using works) If you look at July, you'll see Argonaut bought 17,266 shares, deduct that from the the June/July figure below and you'll see the nice round 2,000,000 shares purchase and none sold by stand-out Argonaut.
The records for the Argonaut purchase of DCG stock setting out the timings look like this, these are screen grabs only as I am not publishing data directly from spread sheets and what have you in this case where metadata information might be of forensic value to investigators.
Summary information -Argonaut BUY DCG
And just for completeness, here's the start of the BUY orders with date stamp.