CDU - Cudeco Limited
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JoshyJ said:
Shock?
Nobody who is long wants to acknowledge that Wayne and his spiv mates accidentally ramped the stock way beyond the $1 they needed to get the oppies in the money and now it looks like a massive (instead of a minor) scam.
Heck, a lot of punters still reckon Wayne deserves the $30m worth of in the money oppies.
- Joined
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The Cudeco thread went dead here which made me even more suspicious.
I would love to hear what the owners of this website know.
I have put up a few warnings on my forum.
I would love to hear what the owners of this website know.
I have put up a few warnings on my forum.
This seems to be the one.
how day traders fuelled a $1bn frenzy
Author: Neil Chenoweth
Date: 13/10/2006
Words: 3345
Publication: The Financial Review
Section: News
Page: 1
Some investors clocked up heavy losses the day copper hopeful Cudeco briefly became a billion-dollar enterprise. But Neil Chenoweth reveals how others made millions.
In the frenzied moments at the top of the Cudeco share spike, a hapless computer operator at Aequs Securities keyed in a buy order for 5000 shares "at market".
At 10.24am on July 5 this year, the Australian Stock Exchange SEATS computer system matched the Aequs buy order with four separate sellers, including two at $10 a share.
Bingo. In half an hour the market value of Cudeco - then known as Australian Mining Investments - had jumped $500 million. For several thousandths of a second on that day, Wayne McCrae's little copper hopeful was a billion-dollar enterprise. Then the fall began.
By the time the ASX suspended Cudeco at 10.58am, $51 million of stock had changed hands. It was the worst day for Australia's day traders since the tech crash. With Cudeco suspended, the traders at CommSec and E*Trade were forced to pay out between $8 million and $32 million for newly bought shares that they had planned to on-sell well before the three-day settlement deadline, only to see their new shares dive to $2.55 when trading resumed on July 17 before closing at $3.56.
Since then the stock has struggled to break $4.
Cudeco chairman McCrae was one of the winners. Seven minutes after Cudeco hit $10 on July 5, McCrae sold his first parcel of options for $56,000. He raised another $2 million selling more options after the suspension was lifted.
His remaining shares are worth $44 million, and next Monday shareholders will vote to ratify a further $35 million in options that he and the two executive directors awarded themselves for their good work.
Meanwhile, the day traders' chat sites and online forums in July were a world of pain. Who was responsible for this mess?
The wild price surge didn't happen by accident, McCrae announced. It was the product of short selling by "opportunistic traders and market makers to cover their positions", which he had reported to the ASX.
But investigations by The Australian Financial Review suggest the picture wasn't that simple. Fateful decisions by a much wider cast of players left Cudeco facing the perfect storm.
The most aggressive trading in the last days before the July 5 suspension was by Cudeco sponsoring broker Aequs Securities, previously known as Hudson Securities. Several Perth brokers were also supportive. However, it is also possible that the share squeeze may have been inadvertently produced by Cudeco's own actions.
A former chairman of Hudson Securities, David Sutton, is now executive chairman of corporate advisory group Martin Place Securities, which claims to hold 20 per cent of Cudeco stock and which produced a bullish draft report on the company, reported in a national newspaper, that valued the shares at $25.
Earlier this week, Barry Dawes, author of the Martin Place draft, told a trade journalist that he was about to release a revised version of his report that repeated the previous forecasts.
There are also questions over the role of several influential contributors to online investor forums, most notably HotCopper, who spruiked Cudeco stock and provided detailed information about the company and claimed to have been briefed by brokers.
An Australian Securities and Investments Commission inquiry into the Cudeco trading is continuing. A more immediate issue is how well the safeguards put in place to protect small investors are working.
The online forums had a critical importance because the Cudeco share price, like many in the small-stocks sector, was driven by day traders.
"There are 20,000 day traders out there, each with access to at least $50,000 credit," says a senior market figure. "The daily turnover makes a lot of money for the ASX."
It represents $1 billion of highly mobile capital. When it moves, the market takes notice. But how to get the day traders' notice?
An AFR study of 14,000 share and option trades between June 1 and July 5 - and 5000 postings on investment forums - shows that day traders at CommSec and E*Trade accounted for 40 per cent of the buying for the period. Day traders were buyers or sellers in two out of every three trades by number and by value.
What followed left everyone who invested up to July 3 very rich - and beggared almost everyone who bought in after that. E*Trade investors bought early and made a mint. CommSec clients lost their shirts.
But how did it start?
The saga began with a board meeting of Australian Mining Investments on May 29. McCrae and the two executive directors, Timothy Koitka and Peter Hutchison decided to change the company's name to Cudeco. As McCrae explained later, it was short for Copper discovery of the Decade Company.
Then the three directors awarded themselves 10 million options to be exercised at 50?. The current share price was 31?. It's these options that shareholders will vote on next Monday after the Australian Securities and Investments Commission forced Cudeco to defer an earlier vote, arguing that shareholders were not fully informed.
Cudeco was in a delicate position. In the previous year, the company's advisers, Martin Place Securities, Hudson Securities and State One Stockbroking Ltd, had raised $3.8 million for the company, in the course of issuing 60 million shares and options.
Martin Place is a boutique corporate advisory business. It is not listed by the ASX as a stockbroker and deals for clients via E*Trade.
It is run by former analyst Barry Dawes and executive chairman David Sutton. Six years ago, Sutton was chairman of the Hudson Investment group, which at the time controlled Hudson Securities.
In 2000, Sutton and other Hudson Investment directors and group companies signed an enforceable undertaking with ASIC to improve corporate governance after the Australian Stock Exchange referred allegations of suspect share trading by a related party.
Hudson Securities changed its name to Aequs Securities last year. Its website says that it is no longer connected with Hudson Investment.
By last May, almost half of Cudeco's equity was held by clients of Martin Place and Aequs, although the outdated Top 20 shareholders list didn't show this. In fact, no one outside the company or its advisers actually knew who owned AMI.
That's how Wayne McCrae seemed to like it. When the AFR applied to look at the AMI registry in July, access was denied, reportedly on the chairman's wishes.
The company said yesterday McCrae was on Cudeco's exploration prospect at Cloncurry and could not be contacted for comment.
McCrae last filed a substantial shareholder notice in 2003, when he held 50 per cent of the stock. The latest annual report says that he holds 15 per cent, down from 25 per cent last year.
Counting the options, McCrae has 11.3 per cent of the stock today. According to the annual report, the second-largest shareholding, worth more than $30 million, is the Campbell family in Perth, which owns 8.6 per cent of the shares and options through separate holdings by Greg, Dianne, Robert and Maria Campbell, and by Camsport Pty Ltd, the company they jointly own.
"We still own 20 per cent of Cudeco," Martin Place managing director Barry Dawes told the AFR in early September. He did not reply to queries from the AFR as to whether he was referring to separate clients of Martin Place or whether a substantial shareholder notice needed to be filed.
Back in May, despite the flood of placements, AMI was facing a funding crisis. At its current cash burn rate, McCrae's outfit would run out of money by early August - just when it believed it had a promising copper prospect.
Cudeco had a tranche of 7.3 million options that would expire on July 31, with another 35 million 20? options due in 2008.
The 2006 options had a $1 exercise price, which meant two things: firstly, with AMI's share price languishing at 31?, no one was going to exercise them; secondly, if by July 31 the share price was above $1, AMI's funding problems were over.
On Wednesday May 31, two days after the board meeting, AMI announced a new copper discovery based on two drill holes, with "surprising results" from another four drill holes still being processed.
Thus began one of the great Australian trading runs.
how day traders fuelled a $1bn frenzy
Author: Neil Chenoweth
Date: 13/10/2006
Words: 3345
Publication: The Financial Review
Section: News
Page: 1
Some investors clocked up heavy losses the day copper hopeful Cudeco briefly became a billion-dollar enterprise. But Neil Chenoweth reveals how others made millions.
In the frenzied moments at the top of the Cudeco share spike, a hapless computer operator at Aequs Securities keyed in a buy order for 5000 shares "at market".
At 10.24am on July 5 this year, the Australian Stock Exchange SEATS computer system matched the Aequs buy order with four separate sellers, including two at $10 a share.
Bingo. In half an hour the market value of Cudeco - then known as Australian Mining Investments - had jumped $500 million. For several thousandths of a second on that day, Wayne McCrae's little copper hopeful was a billion-dollar enterprise. Then the fall began.
By the time the ASX suspended Cudeco at 10.58am, $51 million of stock had changed hands. It was the worst day for Australia's day traders since the tech crash. With Cudeco suspended, the traders at CommSec and E*Trade were forced to pay out between $8 million and $32 million for newly bought shares that they had planned to on-sell well before the three-day settlement deadline, only to see their new shares dive to $2.55 when trading resumed on July 17 before closing at $3.56.
Since then the stock has struggled to break $4.
Cudeco chairman McCrae was one of the winners. Seven minutes after Cudeco hit $10 on July 5, McCrae sold his first parcel of options for $56,000. He raised another $2 million selling more options after the suspension was lifted.
His remaining shares are worth $44 million, and next Monday shareholders will vote to ratify a further $35 million in options that he and the two executive directors awarded themselves for their good work.
Meanwhile, the day traders' chat sites and online forums in July were a world of pain. Who was responsible for this mess?
The wild price surge didn't happen by accident, McCrae announced. It was the product of short selling by "opportunistic traders and market makers to cover their positions", which he had reported to the ASX.
But investigations by The Australian Financial Review suggest the picture wasn't that simple. Fateful decisions by a much wider cast of players left Cudeco facing the perfect storm.
The most aggressive trading in the last days before the July 5 suspension was by Cudeco sponsoring broker Aequs Securities, previously known as Hudson Securities. Several Perth brokers were also supportive. However, it is also possible that the share squeeze may have been inadvertently produced by Cudeco's own actions.
A former chairman of Hudson Securities, David Sutton, is now executive chairman of corporate advisory group Martin Place Securities, which claims to hold 20 per cent of Cudeco stock and which produced a bullish draft report on the company, reported in a national newspaper, that valued the shares at $25.
Earlier this week, Barry Dawes, author of the Martin Place draft, told a trade journalist that he was about to release a revised version of his report that repeated the previous forecasts.
There are also questions over the role of several influential contributors to online investor forums, most notably HotCopper, who spruiked Cudeco stock and provided detailed information about the company and claimed to have been briefed by brokers.
An Australian Securities and Investments Commission inquiry into the Cudeco trading is continuing. A more immediate issue is how well the safeguards put in place to protect small investors are working.
The online forums had a critical importance because the Cudeco share price, like many in the small-stocks sector, was driven by day traders.
"There are 20,000 day traders out there, each with access to at least $50,000 credit," says a senior market figure. "The daily turnover makes a lot of money for the ASX."
It represents $1 billion of highly mobile capital. When it moves, the market takes notice. But how to get the day traders' notice?
An AFR study of 14,000 share and option trades between June 1 and July 5 - and 5000 postings on investment forums - shows that day traders at CommSec and E*Trade accounted for 40 per cent of the buying for the period. Day traders were buyers or sellers in two out of every three trades by number and by value.
What followed left everyone who invested up to July 3 very rich - and beggared almost everyone who bought in after that. E*Trade investors bought early and made a mint. CommSec clients lost their shirts.
But how did it start?
The saga began with a board meeting of Australian Mining Investments on May 29. McCrae and the two executive directors, Timothy Koitka and Peter Hutchison decided to change the company's name to Cudeco. As McCrae explained later, it was short for Copper discovery of the Decade Company.
Then the three directors awarded themselves 10 million options to be exercised at 50?. The current share price was 31?. It's these options that shareholders will vote on next Monday after the Australian Securities and Investments Commission forced Cudeco to defer an earlier vote, arguing that shareholders were not fully informed.
Cudeco was in a delicate position. In the previous year, the company's advisers, Martin Place Securities, Hudson Securities and State One Stockbroking Ltd, had raised $3.8 million for the company, in the course of issuing 60 million shares and options.
Martin Place is a boutique corporate advisory business. It is not listed by the ASX as a stockbroker and deals for clients via E*Trade.
It is run by former analyst Barry Dawes and executive chairman David Sutton. Six years ago, Sutton was chairman of the Hudson Investment group, which at the time controlled Hudson Securities.
In 2000, Sutton and other Hudson Investment directors and group companies signed an enforceable undertaking with ASIC to improve corporate governance after the Australian Stock Exchange referred allegations of suspect share trading by a related party.
Hudson Securities changed its name to Aequs Securities last year. Its website says that it is no longer connected with Hudson Investment.
By last May, almost half of Cudeco's equity was held by clients of Martin Place and Aequs, although the outdated Top 20 shareholders list didn't show this. In fact, no one outside the company or its advisers actually knew who owned AMI.
That's how Wayne McCrae seemed to like it. When the AFR applied to look at the AMI registry in July, access was denied, reportedly on the chairman's wishes.
The company said yesterday McCrae was on Cudeco's exploration prospect at Cloncurry and could not be contacted for comment.
McCrae last filed a substantial shareholder notice in 2003, when he held 50 per cent of the stock. The latest annual report says that he holds 15 per cent, down from 25 per cent last year.
Counting the options, McCrae has 11.3 per cent of the stock today. According to the annual report, the second-largest shareholding, worth more than $30 million, is the Campbell family in Perth, which owns 8.6 per cent of the shares and options through separate holdings by Greg, Dianne, Robert and Maria Campbell, and by Camsport Pty Ltd, the company they jointly own.
"We still own 20 per cent of Cudeco," Martin Place managing director Barry Dawes told the AFR in early September. He did not reply to queries from the AFR as to whether he was referring to separate clients of Martin Place or whether a substantial shareholder notice needed to be filed.
Back in May, despite the flood of placements, AMI was facing a funding crisis. At its current cash burn rate, McCrae's outfit would run out of money by early August - just when it believed it had a promising copper prospect.
Cudeco had a tranche of 7.3 million options that would expire on July 31, with another 35 million 20? options due in 2008.
The 2006 options had a $1 exercise price, which meant two things: firstly, with AMI's share price languishing at 31?, no one was going to exercise them; secondly, if by July 31 the share price was above $1, AMI's funding problems were over.
On Wednesday May 31, two days after the board meeting, AMI announced a new copper discovery based on two drill holes, with "surprising results" from another four drill holes still being processed.
Thus began one of the great Australian trading runs.
At 3.40pm the next day, Thursday, McCrae started buying the July options through Shaw Stockbroking. He bought more on Friday, ending up with 729,500 options, accounting for 10 per cent of the July options.
The options were so far out of the money McCrae bought them for less than half a cent, most of them from day traders at CommSec. "For a punt, I'm prepared to risk another $3000," he later told the AFR. He said AMI's drilling contractor put in an order for 2 million options before changing his mind.
But McCrae wasn't the only one buying on June 1.
At 11.29 on the Thursday morning, even before McCrae had put his first order in, someone began buying large slabs of the July options through E*Trade. In six days, E*trade bought 1.6 million options.
It's not known how many shares the McCrae family controls. While Wayne has 11 million shares and options, other family members own at least another 1 million shares. This mystery punter, whoever it was, stood to make up to $15 million profit.
McCrae family members were also trading. The annual report shows that by September, McCrae's son Cameron had sold at least 141,000 of the shares he held a year before.
Cameron McCrae was distracted by his own burgeoning commercial activities. On the day of the May 29 board meeting, when the directors awarded themselves the options, Cameron registered a $200,000 loan he had taken out two weeks earlier from the National Australia Bank for his newly established C3 Trading Trust. Yesterday, Cudeco said Cameron was overseas and could not be contacted.
On June 7, AMI reported more upbeat news and again eight days later. Trading was minuscule, but the AMI share price ratcheted steadily up. On June 19, it rocketed from 97? to touch $1.41 before easing back. The July $1 options were now in the money.
In the closing trades, a day trader known in investor chat rooms as Trade4profit picked up 26,000 of the July options for 16?. Within days, these options would be worth more than $200,000.
Trade4profit had announced his arrival on the Cudeco share register two hours earlier on the HotCopper forum. He said he had been in and out of the stock for about a week. But Trade4profit was no ordinary investor.
The best window on the anonymous world of the day traders comes from the two big online forums: Share Scene, run out of Adelaide, and the somewhat wilder HotCopper, which is controlled by EBet chairman Michael Hale, who owns 43 per cent of the holding company ahead of parties associated with Brent Potts of Southern Cross Equities with 29 per cent and former Pancontinental chief Tony Grey with 14.9 per cent.
Potts would certainly understand the appeal of anonymity: he has maintained a Swiss share-trading account for close to two decades.
Joining HotCopper only requires an email address and a nickname. Members can operate multiple accounts simultaneously (known as "multi-nics"), which means that in theory not only can members talk up stocks endlessly without revealing their identity or their sources, it is also possible to fabricate entire exchanges or "threads" between different personas that they control.
HotCopper has tightened up on multi-nics and regularly suspends members, but warns that while some comments posted may be aimed at manipulating investors, "it is not possible for management to moderate posts, so many misleading and inaccurate posts may still appear on these forums".
A HotCopper exchange can be a brutal affair. With virtually everyone on the thread holding shares in a particular company, there are no words strong enough to refer to a poster who suggests that the share price might go down.
In four years of regular posting, Trade4profit has attracted a devoted following on HotCopper and elsewhere. He describes himself as Melbourne based. He has a distinctive writing style - one that several other regular posters seem to share.
One of these posters who shares similar IP addresses with Trade4profit is linked to a holiday home in eastern Victoria and uses "exbanker" as part of an email address.
While Trade4profit stresses that he has no geological background, he often posts analyses of mining reserves from which he draws extremely bullish predictions. Results have been mixed. He was a big supporter of Cazaly Resources last year before it lost its bid for a mining lease and recently led a disastrous plunge into Jupiter Energy options.
Trade4profit is a quick study. Four days after he began posting on AMI, he posted a detailed forecast that AMI's Cloncurry prospect had indicated reserves of 61 million tonnes of copper and concluded the shares were worth at least $10.
He would later boast that this was remarkably close to the 59 million tonnes of indicated reserves that AMI announced six days later. It also echoed the bullish optimism that would mark the Market Place Securities report.
Trade4profit followed this up with a stream of detailed charts and overlays with likely drilling plans and projections of the deposit. He had obtained them he said "through detailed investigative research".
He told the AFR yesterday that all his information came from public sources: "Absolutely none was obtained from the company or anyone related to the company."
In later postings, he referred to "a few chats" with McCrae as part of his due diligence.
At a time when press coverage had turned bad "behind closed doors in private briefings, a different story was being told!", he said. "I know . . . because I was privy to at least one of them!"
He advised simple tactics to defeat automated trading systems, which would help push up the price.
Most of all he warned investors that a big mining company, the "Accumulator", was secretly building a stake in the company.
This was shown both on the days when the share price rose from the secret buying and on the days when it fell - clear proof, he wrote, that the Accumulator was "down-ramping" in order to buy the stock cheaply. This was even more reason for day traders to buy, a point Trade4profit pushed relentlessly in post after post as the dominant figure on the thread.
As the price rose, HotCopper members who had bought on his advice were gushingly grateful. "You are indeed a stock god t4p," wrote one supporter. "I for one want to grovel at your feet."
Trade4profit told the AFR in an email he saw Cudeco as a classic case of a company being outside the control of the "suits", nameless figures who "have done everything in their power to bring it all undone".
This ranged from "the media misinformation campaign, to the bringing of pressure on the ASX and finally to some of the most manipulative trading practices I have ever seen in the days leading up to and immediately preceding the suspension and reinstatement of the stock to the boards".
While the share records show no sign of a secret accumulator, some trading was unusual. On June 16, Melbourne broker Opes Prime bought 49,950 AMI shares and sold the same number.
Over nine days, its buying matched its selling almost exactly on six days.
State One Securities in Perth matched its buying to its selling on nine days out of 11, culminating in June 29 when it bought and sold 346,111 shares while Opes bought and sold 111,214 shares.
The effect was that on a day when AMI had announced a huge extension of its indicated reserves to 59 million tonnes, up to 40 per cent of the trading was State One and Opes churning over stock.
There are many legitimate reasons for such trading, but it gave the inaccurate impression that the booming turnover in Cudeco shares reflected growing interest from investors.
This was accentuated because, for the past year, the ASX has blocked identification of brokers buying or selling shares on the SEATS trading schemes - everyone except ASX regulators are in the dark when stock starts to move.
As a result there was no reason to doubt that the booming turnover in AMI reflected growing interest from investors.
Day traders didn't know who they were talking to on investor forums, where the information they received came from, or who was doing the buying or selling. They saw only the price going up and wanted a piece of it.
In total, Opes bought and sold 2.24 million shares for $9 million and ended up losing $98,000. State One Securities cleared $272,000 after selling a net 272,000 shares in $7 million turnover.
IMC Pacific had begun trading options for its clients, selling AMI ordinary shares for $3.9 million while buying an equivalent amount of options that could be converted into ordinary shares to fulfil the selling order.
Allowing for conversion costs of the options, AIM ended up with a profit of $83,000 even after the shares collapsed.
It appears that Aequs hoped to do the same thing, taking advantage of the gyrating share price to buy options to cover shares it was selling. In the three days to Monday July 3, when AMI closed at $2.93, Aequs bought a net 82,000 shares at an average price of $2.40.
Aequs managing director Drew Metcalfe declined to comment on trading by clients or whether Aequs had received the Martin Place report, but said Aequs had not bought or sold any shares on its own account.
A copy of the Martin Place draft report had reached The Australian. The newspaper's story the next day quoted an unnamed broker referring to AMI's find as "one of the most important mineral discoveries of the past 20 years", valued at up to $US17.5 billion, with a $25 price target for the shares.
The story electrified the market. Aequs set the tone by taking 19 per cent of the opening trade on the Tuesday morning.
Buying at the opening bell took out many of the sellers, signalling intense interest in the stock while leaving reduced liquidity. As the share price passed $5, Aequs began selling heavily.
The options were so far out of the money McCrae bought them for less than half a cent, most of them from day traders at CommSec. "For a punt, I'm prepared to risk another $3000," he later told the AFR. He said AMI's drilling contractor put in an order for 2 million options before changing his mind.
But McCrae wasn't the only one buying on June 1.
At 11.29 on the Thursday morning, even before McCrae had put his first order in, someone began buying large slabs of the July options through E*Trade. In six days, E*trade bought 1.6 million options.
It's not known how many shares the McCrae family controls. While Wayne has 11 million shares and options, other family members own at least another 1 million shares. This mystery punter, whoever it was, stood to make up to $15 million profit.
McCrae family members were also trading. The annual report shows that by September, McCrae's son Cameron had sold at least 141,000 of the shares he held a year before.
Cameron McCrae was distracted by his own burgeoning commercial activities. On the day of the May 29 board meeting, when the directors awarded themselves the options, Cameron registered a $200,000 loan he had taken out two weeks earlier from the National Australia Bank for his newly established C3 Trading Trust. Yesterday, Cudeco said Cameron was overseas and could not be contacted.
On June 7, AMI reported more upbeat news and again eight days later. Trading was minuscule, but the AMI share price ratcheted steadily up. On June 19, it rocketed from 97? to touch $1.41 before easing back. The July $1 options were now in the money.
In the closing trades, a day trader known in investor chat rooms as Trade4profit picked up 26,000 of the July options for 16?. Within days, these options would be worth more than $200,000.
Trade4profit had announced his arrival on the Cudeco share register two hours earlier on the HotCopper forum. He said he had been in and out of the stock for about a week. But Trade4profit was no ordinary investor.
The best window on the anonymous world of the day traders comes from the two big online forums: Share Scene, run out of Adelaide, and the somewhat wilder HotCopper, which is controlled by EBet chairman Michael Hale, who owns 43 per cent of the holding company ahead of parties associated with Brent Potts of Southern Cross Equities with 29 per cent and former Pancontinental chief Tony Grey with 14.9 per cent.
Potts would certainly understand the appeal of anonymity: he has maintained a Swiss share-trading account for close to two decades.
Joining HotCopper only requires an email address and a nickname. Members can operate multiple accounts simultaneously (known as "multi-nics"), which means that in theory not only can members talk up stocks endlessly without revealing their identity or their sources, it is also possible to fabricate entire exchanges or "threads" between different personas that they control.
HotCopper has tightened up on multi-nics and regularly suspends members, but warns that while some comments posted may be aimed at manipulating investors, "it is not possible for management to moderate posts, so many misleading and inaccurate posts may still appear on these forums".
A HotCopper exchange can be a brutal affair. With virtually everyone on the thread holding shares in a particular company, there are no words strong enough to refer to a poster who suggests that the share price might go down.
In four years of regular posting, Trade4profit has attracted a devoted following on HotCopper and elsewhere. He describes himself as Melbourne based. He has a distinctive writing style - one that several other regular posters seem to share.
One of these posters who shares similar IP addresses with Trade4profit is linked to a holiday home in eastern Victoria and uses "exbanker" as part of an email address.
While Trade4profit stresses that he has no geological background, he often posts analyses of mining reserves from which he draws extremely bullish predictions. Results have been mixed. He was a big supporter of Cazaly Resources last year before it lost its bid for a mining lease and recently led a disastrous plunge into Jupiter Energy options.
Trade4profit is a quick study. Four days after he began posting on AMI, he posted a detailed forecast that AMI's Cloncurry prospect had indicated reserves of 61 million tonnes of copper and concluded the shares were worth at least $10.
He would later boast that this was remarkably close to the 59 million tonnes of indicated reserves that AMI announced six days later. It also echoed the bullish optimism that would mark the Market Place Securities report.
Trade4profit followed this up with a stream of detailed charts and overlays with likely drilling plans and projections of the deposit. He had obtained them he said "through detailed investigative research".
He told the AFR yesterday that all his information came from public sources: "Absolutely none was obtained from the company or anyone related to the company."
In later postings, he referred to "a few chats" with McCrae as part of his due diligence.
At a time when press coverage had turned bad "behind closed doors in private briefings, a different story was being told!", he said. "I know . . . because I was privy to at least one of them!"
He advised simple tactics to defeat automated trading systems, which would help push up the price.
Most of all he warned investors that a big mining company, the "Accumulator", was secretly building a stake in the company.
This was shown both on the days when the share price rose from the secret buying and on the days when it fell - clear proof, he wrote, that the Accumulator was "down-ramping" in order to buy the stock cheaply. This was even more reason for day traders to buy, a point Trade4profit pushed relentlessly in post after post as the dominant figure on the thread.
As the price rose, HotCopper members who had bought on his advice were gushingly grateful. "You are indeed a stock god t4p," wrote one supporter. "I for one want to grovel at your feet."
Trade4profit told the AFR in an email he saw Cudeco as a classic case of a company being outside the control of the "suits", nameless figures who "have done everything in their power to bring it all undone".
This ranged from "the media misinformation campaign, to the bringing of pressure on the ASX and finally to some of the most manipulative trading practices I have ever seen in the days leading up to and immediately preceding the suspension and reinstatement of the stock to the boards".
While the share records show no sign of a secret accumulator, some trading was unusual. On June 16, Melbourne broker Opes Prime bought 49,950 AMI shares and sold the same number.
Over nine days, its buying matched its selling almost exactly on six days.
State One Securities in Perth matched its buying to its selling on nine days out of 11, culminating in June 29 when it bought and sold 346,111 shares while Opes bought and sold 111,214 shares.
The effect was that on a day when AMI had announced a huge extension of its indicated reserves to 59 million tonnes, up to 40 per cent of the trading was State One and Opes churning over stock.
There are many legitimate reasons for such trading, but it gave the inaccurate impression that the booming turnover in Cudeco shares reflected growing interest from investors.
This was accentuated because, for the past year, the ASX has blocked identification of brokers buying or selling shares on the SEATS trading schemes - everyone except ASX regulators are in the dark when stock starts to move.
As a result there was no reason to doubt that the booming turnover in AMI reflected growing interest from investors.
Day traders didn't know who they were talking to on investor forums, where the information they received came from, or who was doing the buying or selling. They saw only the price going up and wanted a piece of it.
In total, Opes bought and sold 2.24 million shares for $9 million and ended up losing $98,000. State One Securities cleared $272,000 after selling a net 272,000 shares in $7 million turnover.
IMC Pacific had begun trading options for its clients, selling AMI ordinary shares for $3.9 million while buying an equivalent amount of options that could be converted into ordinary shares to fulfil the selling order.
Allowing for conversion costs of the options, AIM ended up with a profit of $83,000 even after the shares collapsed.
It appears that Aequs hoped to do the same thing, taking advantage of the gyrating share price to buy options to cover shares it was selling. In the three days to Monday July 3, when AMI closed at $2.93, Aequs bought a net 82,000 shares at an average price of $2.40.
Aequs managing director Drew Metcalfe declined to comment on trading by clients or whether Aequs had received the Martin Place report, but said Aequs had not bought or sold any shares on its own account.
A copy of the Martin Place draft report had reached The Australian. The newspaper's story the next day quoted an unnamed broker referring to AMI's find as "one of the most important mineral discoveries of the past 20 years", valued at up to $US17.5 billion, with a $25 price target for the shares.
The story electrified the market. Aequs set the tone by taking 19 per cent of the opening trade on the Tuesday morning.
Buying at the opening bell took out many of the sellers, signalling intense interest in the stock while leaving reduced liquidity. As the share price passed $5, Aequs began selling heavily.
By the close, Aequs had net sales of $3.2 million in the shares, but its options buying had fallen behind, leaving it 341,565 securities short of balancing, if this was its intention. If so, it needed to buy more stock to avoid being caught short.
Buying options to settle share sales requires slick timing to convert the options within the three-day settlement period. Any delay by the company in issuing the new stock can leave the trader short of stock. This would be a company-induced short squeeze.
It's not known whether either of these factors affected Aequs's clients.
For whatever reason, on Wednesday morning Aequs went out even more aggressively for stock, taking a massive 26 per cent of the strong opening trade, then dominated the buying in the opening minutes.
As sellers disappeared, the CommSec day traders swarmed for the stock. Aequs picked up 7000 shares at the top of the market 24 minutes after the opening, but by then it had virtually stopped buying.
When trading was suspended at 10.58, Aequs had recovered to be up 42,000 shares and options over the five days at a cost of $688,000. With the cost of converting options, its clients were down $1 million.
But the big shareholders were laughing. Even after the share price collapsed, the 60 million shares and options that Martin Place, Aequs and State One Stockbroking had placed with their clients for $3.8 million were worth $213 million.
AMI (now Cudeco) was forced to cut back the size of its indicated resource to 25 million tonnes. But the share price ensured that all of the 2006 options were exercised and CuDeco raised $11 million from converting options. Its future was now secure.
If not for the manipulative trading and bad press that forced the share price down when Cudeco resumed trading, it would have been a happy ending for everyone, Trade4profit told the AFR, showing that McCrae had shrewdly managed to lock out the "suits" and big miners "for the benefit of the little guy". Not just the little guy. When a HotCopper admirer asked if Trade4profit had made $1 million or was it $2 million, he replied that it was a rude question, "especially when many in fact have done so".
Life moves on. Two weeks later, Trade4profit was talking up tech stock Quickflix, which had just taken a big placement from a high-profile investor. Trade4profit was spruiking Lachlan Murdoch.
What they said
If you want to know what the definition of a d.ckhead is, these guys [the doubters] symbolise it. I don't know why we've been forced to defend ourselves.
Wayne McCrae, on those who doubted Cudeco was sitting on a copper resource worth many billions of dollars. July 7, 2006
Wayne has never bulls . . . ted me and he said it would be the biggest copper find in the Southern Hemisphere. Wayne is not a big noter - he is just a polite, ordinary bloke.
Cloncurry publican Jim Telford. July 2006
This is a very volatile stock that is particularly favoured among the day traders. It is very much beholden to rumour and innuendo.
Fatprophets analyst Gavin Wendt after Cudeco shares gained more than 50 per cent in a week and then sagged on news of an exploration delay. September 2006
This is a once in a lifetime opportunity. It will play out like no other story in recent times.
Trade4profit (t4p) on HotCopper
You are indeed a stock god t4p . . . I for one grovel at your feet.
Geogeaux, on HotCopper
The drilling reports go right over my head, that's why I follow the thread on HC to give me an insight as what the reports actually mean.
Simonne1, on HotCopper
I went for a ciggy, up 20G, came back logged in now up 5G and in a trading halt. What the . . .
Timzed on HotCopper
I paid $10, what happened, I went for a coffee and it was $7.
Scanbox on HotCopper
I paid $10 too. Noooo.
Aarogon, on HotCopper
I can't believe that anyone on here is stupid enough to question t4p given his track record.
Dannyf on HotCopper
They have testicles the size of ants.
Wayne McCrae, blaming brokers for talking the share price down.
People's arsxs are getting kicked and the stock exchange is under pressure.
McCrae on the pressure to buy Cudeco stock in July.
He was quite excited to speak with me when I revealed who I was, suggesting ". . . some of your earlier numbers on Las Min . . . they were like you were inside my head. It was amazing".
Trade4profit on his first conversation with McCrae. He stresses that no information came from the company or brokers.
There is definitely a lot of angst and feeling amongst shareholders, and whether or not there will be a case, we still have to find out.
Slater & Gordon partner Michael Magazanik on plans for a class action against Cudeco, citing an investor who lost $200,000 from his superannuation.
RISING FORTUNES
Cudeco Share price
May 29
Directors get 10 million options
May 31
Cudeco reports new discovery
Jun 1-2
Wayne McCrae buys 729,500 options
Jun 29
Cudeco reports 59 million tonnes resource
Jul 3
Martin Place report circulates
Jul 5
Aequs buys $4m shares
Aug 17
Cudeco extends copper strike
Sep 5
Cudeco misses drilling update
Sep 12
Cudeco reintroduces director options
Buying options to settle share sales requires slick timing to convert the options within the three-day settlement period. Any delay by the company in issuing the new stock can leave the trader short of stock. This would be a company-induced short squeeze.
It's not known whether either of these factors affected Aequs's clients.
For whatever reason, on Wednesday morning Aequs went out even more aggressively for stock, taking a massive 26 per cent of the strong opening trade, then dominated the buying in the opening minutes.
As sellers disappeared, the CommSec day traders swarmed for the stock. Aequs picked up 7000 shares at the top of the market 24 minutes after the opening, but by then it had virtually stopped buying.
When trading was suspended at 10.58, Aequs had recovered to be up 42,000 shares and options over the five days at a cost of $688,000. With the cost of converting options, its clients were down $1 million.
But the big shareholders were laughing. Even after the share price collapsed, the 60 million shares and options that Martin Place, Aequs and State One Stockbroking had placed with their clients for $3.8 million were worth $213 million.
AMI (now Cudeco) was forced to cut back the size of its indicated resource to 25 million tonnes. But the share price ensured that all of the 2006 options were exercised and CuDeco raised $11 million from converting options. Its future was now secure.
If not for the manipulative trading and bad press that forced the share price down when Cudeco resumed trading, it would have been a happy ending for everyone, Trade4profit told the AFR, showing that McCrae had shrewdly managed to lock out the "suits" and big miners "for the benefit of the little guy". Not just the little guy. When a HotCopper admirer asked if Trade4profit had made $1 million or was it $2 million, he replied that it was a rude question, "especially when many in fact have done so".
Life moves on. Two weeks later, Trade4profit was talking up tech stock Quickflix, which had just taken a big placement from a high-profile investor. Trade4profit was spruiking Lachlan Murdoch.
What they said
If you want to know what the definition of a d.ckhead is, these guys [the doubters] symbolise it. I don't know why we've been forced to defend ourselves.
Wayne McCrae, on those who doubted Cudeco was sitting on a copper resource worth many billions of dollars. July 7, 2006
Wayne has never bulls . . . ted me and he said it would be the biggest copper find in the Southern Hemisphere. Wayne is not a big noter - he is just a polite, ordinary bloke.
Cloncurry publican Jim Telford. July 2006
This is a very volatile stock that is particularly favoured among the day traders. It is very much beholden to rumour and innuendo.
Fatprophets analyst Gavin Wendt after Cudeco shares gained more than 50 per cent in a week and then sagged on news of an exploration delay. September 2006
This is a once in a lifetime opportunity. It will play out like no other story in recent times.
Trade4profit (t4p) on HotCopper
You are indeed a stock god t4p . . . I for one grovel at your feet.
Geogeaux, on HotCopper
The drilling reports go right over my head, that's why I follow the thread on HC to give me an insight as what the reports actually mean.
Simonne1, on HotCopper
I went for a ciggy, up 20G, came back logged in now up 5G and in a trading halt. What the . . .
Timzed on HotCopper
I paid $10, what happened, I went for a coffee and it was $7.
Scanbox on HotCopper
I paid $10 too. Noooo.
Aarogon, on HotCopper
I can't believe that anyone on here is stupid enough to question t4p given his track record.
Dannyf on HotCopper
They have testicles the size of ants.
Wayne McCrae, blaming brokers for talking the share price down.
People's arsxs are getting kicked and the stock exchange is under pressure.
McCrae on the pressure to buy Cudeco stock in July.
He was quite excited to speak with me when I revealed who I was, suggesting ". . . some of your earlier numbers on Las Min . . . they were like you were inside my head. It was amazing".
Trade4profit on his first conversation with McCrae. He stresses that no information came from the company or brokers.
There is definitely a lot of angst and feeling amongst shareholders, and whether or not there will be a case, we still have to find out.
Slater & Gordon partner Michael Magazanik on plans for a class action against Cudeco, citing an investor who lost $200,000 from his superannuation.
RISING FORTUNES
Cudeco Share price
May 29
Directors get 10 million options
May 31
Cudeco reports new discovery
Jun 1-2
Wayne McCrae buys 729,500 options
Jun 29
Cudeco reports 59 million tonnes resource
Jul 3
Martin Place report circulates
Jul 5
Aequs buys $4m shares
Aug 17
Cudeco extends copper strike
Sep 5
Cudeco misses drilling update
Sep 12
Cudeco reintroduces director options
- Joined
- 2 March 2006
- Posts
- 129
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- 0
Cheers for that... Interesting - just visited CDUs www site and it is pretty bare bones all things considered... Not that too much can be inferred from that but considering the "scale" of the deposit something more could be warranted... You play with fire you get burned... Sometimes greed needs to be checked...
Currently cdu shares are stuck below the $4 mark with very little traded today . The market is showing caution as there has not been a drilling announcement for some time. The last announcement stated new drilling would be to 500 metres depth rather than the earlier 375 metres on which the 59 million tonnes was estimated and the new rig having the capacity to drill to 1500 metres.
It was stated that there were two causes for drilling delays - servicing and late arrival of new rig and a backlog of samples at the laboratory to be examined.
There has been a rehashing of what happened months ago and I agree this is not beneficial to the share price and that the company should have had better PR but things have moved on since with reports showing a target area 3 times larger and with drilling to now go deeper one would anticipate tonnages to increase.I eagerly await the next drilling results which should not be far off.
Two further comments: 1- the appointment of Coffey&co , a very competent and reputable firm to do the ore estimates was a definite plus.
2-Wayne McCrae would be going full bore to prove his critics wrong by way of an accelerated drilling programme
It was stated that there were two causes for drilling delays - servicing and late arrival of new rig and a backlog of samples at the laboratory to be examined.
There has been a rehashing of what happened months ago and I agree this is not beneficial to the share price and that the company should have had better PR but things have moved on since with reports showing a target area 3 times larger and with drilling to now go deeper one would anticipate tonnages to increase.I eagerly await the next drilling results which should not be far off.
Two further comments: 1- the appointment of Coffey&co , a very competent and reputable firm to do the ore estimates was a definite plus.
2-Wayne McCrae would be going full bore to prove his critics wrong by way of an accelerated drilling programme
Knobby22
Mmmmmm 2nd breakfast
- Joined
- 13 October 2004
- Posts
- 9,684
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- 6,539
I see the management has been rewarded for its behaviour by the shareholders (sarcasm) and has issued itself options diluting shareholders by 10%!
Confirms my view that this company is a good one to avoid.
Confirms my view that this company is a good one to avoid.
- Joined
- 14 September 2006
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The directors only hold 10 to 15% of the company's shares, so how did they get the votes for the options?
hey an announcement came out around 8pm on the ASX website.."New Copper/Gold Mineralisation discovered southern end.."
"LHRC 154 intersected Cu/Au over 25m @ 0.42% Cu from 10 to 35m and a high of 0.33g/t Au from 10 to 35m"
doesn't seem too impressive but then again im not geologist or mining expert..
what do you guys think of this discovery?
"LHRC 154 intersected Cu/Au over 25m @ 0.42% Cu from 10 to 35m and a high of 0.33g/t Au from 10 to 35m"
doesn't seem too impressive but then again im not geologist or mining expert..
what do you guys think of this discovery?
- Joined
- 15 March 2006
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- 0
sleeper88 said:
Not impressive, but one hole is not a comprehensive dampener on the entire anomoly.
It does however show why people extrapolating the good grade holes across kms of strike and 100mtrs of depth are misinformed/rampers/crims
Wayne has plenty of drilling to do and CDU will not dig a mine this decade
Now he has bagged $30m from his rube shareholders - I reckon Tedder Avenue may become more interesting than drilling holes in Cloncurry
well, i grabbed these at 4c 1.5yrs ago, after consolidation, 40c, i dont mind how far up it goes 
, fingers crossed they'll find a world class deposit, $20 in 5 yrs time , i'll leave these at the bottom of my draw and keep faith it'll live up to all the hype
, fingers crossed they'll find a world class deposit, $20 in 5 yrs time , i'll leave these at the bottom of my draw and keep faith it'll live up to all the hypeKen said:
well actually, this has been the best investment comeback for me, i bought them at 4c seeing them plummet to 2c in no time, then down to a low of 1.6c, if i remember correctly,at that time it was my worst performing investment ever. Somehow i kept my nerves decided to ride it out
I came across this stock while doing some research on copper producers. Back then, it mined the high grade copper oxide deposit Mt Norma, to produce high purity copper sulphate pentahydrate. At one stage i was hoping for a chinese pharmaceutical company to buy it out. Well i guess the recent acquistion of the rocklands project was a major turnaround for the company (and my investment) All i reget now is that i didn't buy 20c options when the company offered them last yr
..but then i shouldn't complain too much either.
