Chart based progressive global trading strategies, Chart Partners

Thomas Schroeder

Chart based progressive global trading strategies

Chart Partners

Chart Partners objective is to discover medium-term cycle turns and profit opportunities before they unfold, within structural trends while preserving capital with clear degrees of risk. We have real return ideas. 

Markets are dynamic and trading systems must reflect this. It is crucial to determine underlying correlations and lead-lag relationships within global markets and the impact on linked instruments. Our weekly Chartonics product gives you short-term trading strategies that can be applied within the medium and longer term macro trends that are mapped out in our strategy updates. 

Our methodology fuses global market variables and isolates drivers in trends. We specialize in FX, index trade in NY and Asia with a focus on Asian stocks. 

Technical Analysis

BHP unification has punished the share price with near support at 41-42 to participate in a bounce trade. Intermediate cycle calls for selling a tactical rise to 48 with key resistance at 51.Sell volumes expected to dissipate setting up a tactical rally.MACD mouth is too wide and needs to narrow (supports a tactical low and bounce).ST oversold readings call for a rally. Intermediate bias: A fair amount of technical damage has been done and it will take some mending in the form of short term low, reaction rise and support re test to build a base and higher conviction low.

BHP unification has punished the share price with near support at 41-42 to participate in a bounce trade. Intermediate cycle calls for selling a tactical rise to 48 with key resistance at 51.Sell volumes expected to dissipate setting up a tactical rally.MACD mouth is too wide and needs to narrow (supports a tactical low and bounce).ST oversold readings call for a rally. Intermediate bias: A fair amount of technical damage has been done and it will take some mending in the form of short term low, reaction rise and support re test to build a base and higher conviction low.

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

The Marvelous Milton Merger which is the proposed joining of two of Australia's longest-lived Listed Investment Companies - <a href="https://www.smartkarma.com/entities/milton-corp-ltd" target="_blank" data-smartkarma-citation="entities:29090:1" rel="noopener">Milton Corp Ltd (MLT AU)</a> to be absorbed in a share swap by <a href="https://www.smartkarma.com/entities/washington-h-soul-pattinson-and-co-ltd" target="_blank" data-smartkarma-citation="entities:6054:1" rel="noopener">Washington H. Soul Pattinson and Co. Ltd (SOL AU)</a> ("WHSP") - is coming closer to its do-or-die date.There is one week until the Reference Date which will decide the share swap ratio and there are 12 trading days until the Scheme Meeting. I have not been shy in writing about this situation. <table class="table table-striped">
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<col>
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</colgroup>
<tbody>
<tr><td colspan="2" style="text-align: left; width: 539pt;"><h2>History of Insights on the Situation</h2></td></tr>
<tr>
<td>Date</td>
<td>Title</td>
</tr>
<tr>
<td>22-Jun-21</td>
<td><a href="https://www.smartkarma.com/insights/milton-merger-is-a-most-marvelous-arb" target="_blank" rel="noopener">Milton Merger Is A Most Marvelous Arb</a></td>
</tr>
<tr>
<td>24-Jun-21</td>
<td><a href="https://www.smartkarma.com/insights/milton-whsp-merger-index-implications-and-the-marvelous-arb" target="_blank" rel="noopener">Milton-WHSP Merger Index Implications and the Marvelous Arb</a></td>
</tr>
<tr>
<td>21-Jul-21</td>
<td><a href="https://www.smartkarma.com/insights/milton-s-marvelous-arm-meanders-along-marvelously" target="_blank" rel="noopener">Milton’s Marvelous Arb Meanders Along... Marvelously</a></td>
</tr>
<tr>
<td>5-Aug-21</td>
<td><a href="https://www.smartkarma.com/insights/the-still-marvelous-milton-arb-confirms-its-schedule-much-marvelousness-to-come" target="_blank" rel="noopener">The STILL MARVELOUS Milton Arb Confirms Its Schedule - Much Marvelousness to Come</a></td>
</tr>
<tr>
<td>12-Aug-21</td>
<td><a href="https://www.smartkarma.com/insights/the-magnality-of-the-marvelous-milton-merger-makes-a-moribund-march-to-metaphysis-it-s-mirific" target="_blank" rel="noopener">The Magnality of the Marvelous Milton Merger Makes a Moribund March To Metaphysis (It’s Mirific!)</a></td>
</tr>
</tbody>
</table>As time has passed, and the situation has looked more and more attractive, my mafficking and multitarian mysteriosophy (and occasional mussitation) has led to longer titles with more and more Ms.This time, I note that with both Milton and WHSP hitting new 30-year highs today, despite the merger arb spread remaining reasonably wide, there are signs that the situation has started "accruing value."While I am far from being a martinet (I am indeed more a mobilist), my mathemancy suggests Milton is maturing. More on how to Mind the Movement below the fold.

The Marvelous Milton Merger which is the proposed joining of two of Australia's longest-lived Listed Investment Companies - Milton Corp Ltd (MLT AU) to be absorbed in a share swap by Washington H. Soul Pattinson and Co. Ltd (SOL AU) ("WHSP") - is coming closer to its do-or-die date.There is one week until the Reference Date which will decide the share swap ratio and there are 12 trading days until the Scheme Meeting. I have not been shy in writing about this situation. 





History of Insights on the Situation

Date
Title


22-Jun-21
Milton Merger Is A Most Marvelous Arb


24-Jun-21
Milton-WHSP Merger Index Implications and the Marvelous Arb


21-Jul-21
Milton’s Marvelous Arb Meanders Along... Marvelously


5-Aug-21
The STILL MARVELOUS Milton Arb Confirms Its Schedule - Much Marvelousness to Come


12-Aug-21
The Magnality of the Marvelous Milton Merger Makes a Moribund March To Metaphysis (It’s Mirific!)


As time has passed, and the situation has looked more and more attractive, my mafficking and multitarian mysteriosophy (and occasional mussitation) has led to longer titles with more and more Ms.This time, I note that with both Milton and WHSP hitting new 30-year highs today, despite the merger arb spread remaining reasonably wide, there are signs that the situation has started "accruing value."While I am far from being a martinet (I am indeed more a mobilist), my mathemancy suggests Milton is maturing. More on how to Mind the Movement below the fold. 

Marvelous Milton Making Its Move - New 30yr Highs On Both Stocks

David Blennerhassett

Last Week in Event SPACE: BHP, WH Group, Beijing Capital Land, China Life, Macau Gaming Concessions

European Event-Driven Analyst

Jesus Rodriguez Aguilar

<div class="content-highlight">
Corrigenda: There is an error in this Insight. Please note the correction.
Correction: [Under the section “Collapsing of BHP’s DLC”, subsection “Conditions and approvals”, the Ltd leg does not need a headcount test for approval, while the UK leg does.]
</div>
BHP has decided to streamline its market listings <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> and <a href="https://www.smartkarma.com/entities/bhp-billiton-plc" target="_blank" data-smartkarma-citation="entities:21840:1" rel="noopener">BHP Billiton (BLT LN)</a> after the company confirmed plans to dispose of its oil and gas business in an all-share merger with <a href="https://www.smartkarma.com/entities/woodside-petroleum-ltd" target="_blank" data-smartkarma-citation="entities:177:1" rel="noopener">Woodside Petroleum (WPL AU)</a> (52% Woodside, 48% BHP, completion expected Q1 2022). The disposal will help BHP focus on mining iron ore, copper and nickel. 
The DLC collapse, which has not yet been agreed, will result in a "simpler and more efficient" structure, with greater flexibility to shape its portfolio. The main listing will be in Sydney, with a standard listing on London Stock Exchange and a secondary one on the Johannesburg Stock Exchange. This will need approval from the Board and others. One-off costs are c. USD400-500 mn, with completion expected in H1 CY22. It will be carried out as a scheme of arrangement, thus requiring 75% approval by Ltd and Plc shareholders. 
The Sydney listed BHP Billiton has, since its debut in March 2001, traded at a premium to the London listing. As of my last insight on European DLCs and HoldCos, the premium of <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> vs.  <a href="https://www.smartkarma.com/entities/bhp-billiton-plc" target="_blank" data-smartkarma-citation="entities:21840:1" rel="noopener">Bhp Billiton (BLT LN)</a> at close of June was 23.8% (vs. 21.8% at the end of April), against a 10-year average of 14.7%. My recommendation then was "rather be long the UK plc and short the Aussie Ltd through the US listings".
This on-going discount on the London market is due to the majority of shareholders in BHP Billiton being ex BHP Ltd shareholders, and the index weighting of BHP AU versus BHP LN, in my view. I believe that the main factor influencing the recent widening of the discount between BHP AU and BLT LN is the commodity price cycle. Australian fund managers cannot be heavily underweight in the mining sector, which represents c. 20% of the ASX. Because of asset allocation constraints, an Australian fund manager may not be able to invest in the UK line of a DLC even if it is at a discount to the Australian line.
BHP Billiton will leave the FTSE 100 index and shift its primary listing to Sydney, with a secondary listing on London Stock Exchange and Johannesburg Stock Exchange. This will force index tracker funds to sell their shares.
The unification of BHP will be similar to that of Brambles. On 29 November 2005, the Brambles Board announced its intention to streamline the Brambles Group by selling Cleanaway, Brambles Industrial Services and Regional Businesses and focusing on CHEP and Recall, its businesses with premium growth potential. This was followed by the unification of the DLC Structure under a single Australian holding company with a primary listing on the ASX and a secondary listing on the LSE. Brambles filed on September 13th, 2006 an Information Memorandum relating to the abolition of DLC structure. The abolition was structured as two parallel Schemes of Arrangement. The unification of the DLC was approved by the EGMs and Brambles delivered a conversion to a single equity. The c. 3% discount at the time of announcement was eliminated.
The economic logic for collapsing the DLC is compelling, and I believe it will be carried out. The premium of BHP AU to BLT LN is shrinking fast, from 21% prior to announcement. However, it is still 6.1%, which is still an interesting level.
Recommendation is long BLT LN/Short BHP AU. It can also be done through the US listings.


Corrigenda: There is an error in this Insight. Please note the correction.
Correction: [Under the section “Collapsing of BHP’s DLC”, subsection “Conditions and approvals”, the Ltd leg does not need a headcount test for approval, while the UK leg does.]

BHP has decided to streamline its market listings BHP Group (BHP AU) and BHP Billiton (BLT LN) after the company confirmed plans to dispose of its oil and gas business in an all-share merger with Woodside Petroleum (WPL AU) (52% Woodside, 48% BHP, completion expected Q1 2022). The disposal will help BHP focus on mining iron ore, copper and nickel. 
The DLC collapse, which has not yet been agreed, will result in a "simpler and more efficient" structure, with greater flexibility to shape its portfolio. The main listing will be in Sydney, with a standard listing on London Stock Exchange and a secondary one on the Johannesburg Stock Exchange. This will need approval from the Board and others. One-off costs are c. USD400-500 mn, with completion expected in H1 CY22. It will be carried out as a scheme of arrangement, thus requiring 75% approval by Ltd and Plc shareholders. 
The Sydney listed BHP Billiton has, since its debut in March 2001, traded at a premium to the London listing. As of my last insight on European DLCs and HoldCos, the premium of BHP Group (BHP AU) vs.  Bhp Billiton (BLT LN) at close of June was 23.8% (vs. 21.8% at the end of April), against a 10-year average of 14.7%. My recommendation then was "rather be long the UK plc and short the Aussie Ltd through the US listings".
This on-going discount on the London market is due to the majority of shareholders in BHP Billiton being ex BHP Ltd shareholders, and the index weighting of BHP AU versus BHP LN, in my view. I believe that the main factor influencing the recent widening of the discount between BHP AU and BLT LN is the commodity price cycle. Australian fund managers cannot be heavily underweight in the mining sector, which represents c. 20% of the ASX. Because of asset allocation constraints, an Australian fund manager may not be able to invest in the UK line of a DLC even if it is at a discount to the Australian line.
BHP Billiton will leave the FTSE 100 index and shift its primary listing to Sydney, with a secondary listing on London Stock Exchange and Johannesburg Stock Exchange. This will force index tracker funds to sell their shares.
The unification of BHP will be similar to that of Brambles. On 29 November 2005, the Brambles Board announced its intention to streamline the Brambles Group by selling Cleanaway, Brambles Industrial Services and Regional Businesses and focusing on CHEP and Recall, its businesses with premium growth potential. This was followed by the unification of the DLC Structure under a single Australian holding company with a primary listing on the ASX and a secondary listing on the LSE. Brambles filed on September 13th, 2006 an Information Memorandum relating to the abolition of DLC structure. The abolition was structured as two parallel Schemes of Arrangement. The unification of the DLC was approved by the EGMs and Brambles delivered a conversion to a single equity. The c. 3% discount at the time of announcement was eliminated.
The economic logic for collapsing the DLC is compelling, and I believe it will be carried out. The premium of BHP AU to BLT LN is shrinking fast, from 21% prior to announcement. However, it is still 6.1%, which is still an interesting level.
Recommendation is long BLT LN/Short BHP AU. It can also be done through the US listings.

BHP's DLC Unwinding, Following Brambles' Trail

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

Our latest Flash Webinar looks at the <a href="https://www.smartkarma.com/entities/bhp-group-ltd" target="_blank" data-smartkarma-citation="entities:147:1" rel="noopener">BHP Group (BHP AU)</a> reunification, after the recent announcement by the Group about unifying its corporate structure in order to make BHP "simpler and more agile". To help us explore the implications for investors, we welcome Insight Providers <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> and <a href="https://www.smartkarma.com/profiles/travis-lundy" target="_blank" data-smartkarma-citation="accounts:25" rel="noopener">Travis Lundy</a> of Quiddity Advisors. 
<h3>The flash webinar will be hosted on Thursday, 19 August 2021, 2.00pm SGT/HKT.</h3>
<div class="content-highlight">
<h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=89001347179" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
</div>
David Blennerhassett is a highly experienced sell-side analyst with in excess of 20 years of covering Asia Pacific equities, the past 13 years immersed in event strategies encompassing M&amp;A risk arbitrage, directional long/short, stub trades, and restructuring.
Travis Lundy has 20+ years of experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies, with most of that time spent managing money.

Our latest Flash Webinar looks at the BHP Group (BHP AU) reunification, after the recent announcement by the Group about unifying its corporate structure in order to make BHP "simpler and more agile". To help us explore the implications for investors, we welcome Insight Providers David Blennerhassett and Travis Lundy of Quiddity Advisors. 
The flash webinar will be hosted on Thursday, 19 August 2021, 2.00pm SGT/HKT.

Register for the Webinar here

David Blennerhassett is a highly experienced sell-side analyst with in excess of 20 years of covering Asia Pacific equities, the past 13 years immersed in event strategies encompassing M&amp;A risk arbitrage, directional long/short, stub trades, and restructuring.
Travis Lundy has 20+ years of experience in Asia doing alternative strategies (i.e. non-delta1 non long-only) in fixed income, equity derivatives, and activist/catalyst/event-driven and long-short equity strategies, with most of that time spent managing money.

Smartkarma Flash Webinar | BHP DLC Reunification

Australia

BHP Group Ltd operates as an international resources company. The Company offers mineral exploration and production, including coal, iron ore, gold, titanium, ferroalloys, nickel, and copper concentrate, as well as petroleum exploration, production, and refining. BHP Group serves customers worldwide.

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BHP Group Ltd (BHP AU)

BHP Long Support

BHP unification has punished the share price with near support at 41-42 to participate in a bounce trade. Intermediate cycle calls for selling a...

Thomas Schroeder

Marvelous Milton Making Its Move - New 30yr Highs On Both Stocks

Marvelous Milton and Superb SOL have just hit 30yr highs today. A magnality to be sure. 7 trading days left. Watch excess volume and the WHSP...

Travis Lundy

Last Week in Event SPACE: BHP, WH Group, Beijing Capital Land, China Life, Macau Gaming Concessions

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

BHP's DLC Unwinding, Following Brambles' Trail

Unification of BHP will be akin to Brambles. The Ltd premium is shrinking fast, from 21% to 6.1%, still an interesting level. Long BLT LN/Short BHP...

Jesus Rodriguez Aguilar

Smartkarma Flash Webinar | BHP DLC Reunification

Join our Flash Webinar on 19 August, 2pm SGT/HKT with David Blennerhassett, where we go over the BHP Group reunification, discuss the implications...

Smartkarma Research

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