News at the close of play (and, interestingly or coincidentally, a size bidder of over 1m shares in the auction – see screenshot below and perhaps one for the FCA?) from Metro Bank relaying the departure at the years end of CEO Craig Donaldson looks to us as the final clearing of the top guard ahead of a sale of the bank.

With founder and former Chairman Vernon Hill departing a couple of months ago and now Donaldson, our experience of such top brass departures from a major Plc is usually a precursor to a takeover. There is a material amount of credence to this view too with stories again emanating this evening of Lloyds Bank interest aswell as Virgin and CYBG and Vernon Hill supposedly lining up a pop at the bank too. With the short position in the stock decreasing in recent weeks with Odey Asset Management in the vanguard (see below) aswell as the arrival of a few new size holders of the stock on the register including banking specialist and Colombian billionaire Glinksi Bacal there has been decent turnover in the stock in recent weeks with the transfer from the non believers to those who see the real value and opportunity here. There has even been talk of Elliot Advisers the activist investors looking to get involved. In short, the status quo that has pressed the stock back down to less than 30% of TANGIBLE book value is likely to change imminently

We have noticed in recent days that at the close of play the volume on the day has picked up materially with the price firming aswell as size buyers in the opening and closing auctions that we have highlighted on our twitter feed. Sadly, the City is not a level playing field and the keeping a lid on inside info is more a pipe dream than reality. We suspect that this trading activity is linked to today’s news and that the shorts realise that RNS risk rises by the day re either a confirmed bid or resolution of the FCA investigation in the loans misclassification earlier this year.

Even the arch bears at Goodbody stockbrokers have realised in the last week that being short/negative here in the face of such latent value is fraught with risk. We are long in the mid 200’s and in the last 3 weeks have had daily egg put on our face ref advocating the bull tack. However, the management sweep, oversold status, shorts closing, massive discount to book, takeover rumours (none of which have been denied) and trading activity as highlighted here in the last few days leads us to believe that the long awaited re-rate is now upon us. Buy.

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