Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>The theory is that stocks which are down hard FY-to-date by end-April end up being good sells because Australians will harvest their losses into end-June. </li>
<li>The idea is then to buy those oversold names and hold them for 30-40 trading days. That has worked 10 out of the last 12 years hedged vs ASX200.</li>
<li>This year, the "sold-down" list is very heavily weighted to miners. They have continued to fall since end-June so it's down. But hedged vs a basket of miners? It's up.</li>
</ul>


The theory is that stocks which are down hard FY-to-date by end-April end up being good sells because Australians will harvest their losses into end-June. 
The idea is then to buy those oversold names and hold them for 30-40 trading days. That has worked 10 out of the last 12 years hedged vs ASX200.
This year, the "sold-down" list is very heavily weighted to miners. They have continued to fall since end-June so it's down. But hedged vs a basket of miners? It's up.


Tax-Loss Selling In Australia 2024: Trade Reversed Is Tale of Two Hedges, Time To Unwind

<ul>
<li>The original trade was discussed at end-April in <a href="https://www.smartkarma.com/insights/tax-loss-selling-in-australia-2024-historical-analysis-and-a-trade-basket" target="_blank" data-smartkarma-citation="insights:139337" rel="noopener">Tax-Loss Selling in Australia 2024 - Historical Analysis and A Trade Basket</a> then updated <a href="https://www.smartkarma.com/insights/tax-loss-selling-in-australia-2024-a-trade-basket-updated" target="_blank" rel="noopener">here</a> and <a href="https://www.smartkarma.com/insights/tax-loss-selling-in-australia-2024-the-may-basket-april-basket-2-3-to-6-3-rtn" target="_blank" rel="noopener">here</a>. </li>
<li>That has done OK. The LIQUID basket has delta neutral performance of +8.4% over 2mos; LIQUID+LESSLIQUID +7.2%; If one did a mixed basket (3x L+LL + 1x Illiquids) it's +8.6%.</li>
<li>Now it is time to reverse the trade, buying the basket you were short, and running it against index for the next 6-8 weeks.</li>
</ul>


The original trade was discussed at end-April in Tax-Loss Selling in Australia 2024 - Historical Analysis and A Trade Basket then updated here and here. 
That has done OK. The LIQUID basket has delta neutral performance of +8.4% over 2mos; LIQUID+LESSLIQUID +7.2%; If one did a mixed basket (3x L+LL + 1x Illiquids) it's +8.6%.
Now it is time to reverse the trade, buying the basket you were short, and running it against index for the next 6-8 weeks.


Tax-Loss Selling In Australia 2024 - Time To Reverse The Trade (7.2-8.6% Rtn in Two Months So Far)

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>Solactive has announced the constituent changes for the Global Lithium Index. There are 3 adds and 3 deletes with implementation at the close on 31 October.</li>
<li>Estimated one-way turnover is 13.8% and will result in a one-way trade of US$174m. There are a few stocks with over 1x ADV to trade.</li>
<li>The index is not very widely tracked and there could be big moves in some stocks over the next few days - especially where there is multiple days ADV.</li>
</ul>


Solactive has announced the constituent changes for the Global Lithium Index. There are 3 adds and 3 deletes with implementation at the close on 31 October.
Estimated one-way turnover is 13.8% and will result in a one-way trade of US$174m. There are a few stocks with over 1x ADV to trade.
The index is not very widely tracked and there could be big moves in some stocks over the next few days - especially where there is multiple days ADV.


Solactive Global Lithium Index Rebalance: 28% Turnover & US$350m Trade

David Blennerhassett

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto Ltd (RIO AU)</a> has reached an agreement to buy <a href="https://www.smartkarma.com/entities/arcadium-lithium-plc" target="_blank" data-smartkarma-citation="entities:40438:1" rel="noopener">Arcadium Lithium (LTM AU)</a>/<a href="https://www.smartkarma.com/entities/arcadium-lithium-plc-2f9bfa3a-65a7-41f9-a157-e59603846420" target="_blank" data-smartkarma-citation="entities:40439:1" rel="noopener">(ALTM US)</a> for US$5.85/share (~A$8.70/share), a ~90% premium to the October 4th closing price of $US3.08/share.</li>
<li>Terms remain below where Arcadium was trading back in January of this year. But it is perhaps disingenuous to call the Offer Price opportunistic. More a counter-cyclical move.</li>
<li>The Scheme Offer is subject to a 75% shareholder vote and minimal regulatory approvals. The transaction is expected to close in mid-2025. The long stop is the 9th October 2025.</li>
</ul>



Rio Tinto Ltd (RIO AU) has reached an agreement to buy Arcadium Lithium (LTM AU)/(ALTM US) for US$5.85/share (~A$8.70/share), a ~90% premium to the October 4th closing price of $US3.08/share.
Terms remain below where Arcadium was trading back in January of this year. But it is perhaps disingenuous to call the Offer Price opportunistic. More a counter-cyclical move.
The Scheme Offer is subject to a 75% shareholder vote and minimal regulatory approvals. The transaction is expected to close in mid-2025. The long stop is the 9th October 2025.


Rio Tinto/Arcadium: More Brine To Compliment Rocks

<ul>
<li>
<a href="https://www.smartkarma.com/entities/rio-tinto-ltd" target="_blank" data-smartkarma-citation="entities:13:1" rel="noopener">Rio Tinto Ltd (RIO AU)</a> has <a href="https://announcements.asx.com.au/asxpdf/20241007/pdf/068tbs6fnf3fnj.pdf" target="_blank" rel="noopener">confirmed</a> it has approached <a href="https://www.smartkarma.com/entities/arcadium-lithium-plc" target="_blank" data-smartkarma-citation="entities:40438:1" rel="noopener">Arcadium Lithium (LTM AU)/</a><a href="https://www.smartkarma.com/entities/arcadium-lithium-plc-2f9bfa3a-65a7-41f9-a157-e59603846420" target="_blank" data-smartkarma-citation="entities:40439:1" rel="noopener">(ALTM US)</a> regarding a potential acquisition. </li>
<li>No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week's 11% bounce, has been rumoured. That implies a price of ~$6/share.</li>
<li>Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable. </li>
</ul>



Rio Tinto Ltd (RIO AU) has confirmed it has approached Arcadium Lithium (LTM AU)/(ALTM US) regarding a potential acquisition. 
No Offer Price has been announced; however a proposed bid with a 30%+ premium, on top of last week's 11% bounce, has been rumoured. That implies a price of ~$6/share.
Given shares were trading ~A$10/share in January this year, one Aussie-based fund reckons such an Offer would be highly opportunistic; and that a bid 2.5-3x higher is reasonable. 


Rio Tinto Taps Arcadium As Lithium Prices Sag

Australia

Core Lithium Ltd operates as a mineral exploration company. The Company explores and mines finniss lithium resources. Core Lithium serves customers in Australia.

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Core Lithium Ltd (CXO AU)

Tax-Loss Selling In Australia 2024: Trade Reversed Is Tale of Two Hedges, Time To Unwind

This trade worked very well in May and June. As a pure basket against ASX200, it has worked badly (-4.5%) since end-June. Hedged partially with a...

Travis Lundy

Tax-Loss Selling In Australia 2024 - Time To Reverse The Trade (7.2-8.6% Rtn in Two Months So Far)

Many of the stocks in the most beaten-down list are Australia-listed lithium producers. Some down today. Others in Asia are down today too. If one...

Travis Lundy

Solactive Global Lithium Index Rebalance: 28% Turnover & US$350m Trade

There are 3 adds/3 deletes for the Solactive Global Lithium Index resulting in an estimated one-way turnover of 13.8% and in a one-way trade of...

Brian Freitas

Rio Tinto/Arcadium: More Brine To Compliment Rocks

This looks done.Trading at a 6.1%/8.6% gross/annualised return using mid 2025 completion. That's okay. Not super attractive. Additionally, run a...

David Blennerhassett

Rio Tinto Taps Arcadium As Lithium Prices Sag

Arcadium IS in play. And the share price has recently rebounded from a multi-year low. I'd be getting involved around here, and on any weakness.

David Blennerhassett

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