Overnight US-based Albermarle threw in the towel and sold its 4% stake in LTR after having three bids at $2.20, $2.35, and $2.50, respectively, all failing with their latest effort being blocked by Gina Rinehart. The ~$120mn sell-down at $1.26 is likely to see the stock test its recent low, where we see value emerging after the stock’s savage sell-off where it even underperformed much of the beleaguered Lithium Sector. The NYSE-listed company yanked its $6.6bn bid in October, forcing LTR to raise $400mn at $1.80, another poor outcome for shareholders after a failed takeover.
- We like the risk/reward if we see a washout sell-off in LTR below $1.20.
LTR has a substantial 8.35% short position, some of which may well have covered into the block, however at some point, the tide will turn and a higher short position simply creates more buying, especially if Gina considers averaging her 18.14% position, much of which was accumulated around $3 as a blocking stake. We are pondering whether this sell down might represent the beginning of the end for the lithium bear market.
MM is bullish LTR into weakness
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