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Invesco Doubles Stake In Aston Martin – Is This The AML Bottom?

Tim Worstall
Tim Worstall trader
Updated 4 Feb 2022

Trade Aston Martin Shares Your Capital Is At Risk

Key points:

  • Invesco seems to have doubled its stake in Aston Martin
  • Does this market the bottom for AML shares?
  • Invesco is, after all, a sophisticated investor
  • How to Buy Aston Martin Shares

Aston Martin Lagonda Global Holdings (LON: AML) shares don’t seem to have reacted much to the news that a major investor – Invesco – has doubled its holding in the company. For us as traders though we might want to think about this. A sophisticated investor like the Invesco funds taking an up to 10% stake might mark something like the bottom of the AML trading range.

After all, if Invesco thinks Aston Martin is valid at this price level, then perhaps we should be thinking so too?

The news about Invesco and Aston Martin is in this release. That’s telling us that Invesco used to own some 5% (-ish) of the outstanding Aston shares and now owns 10%. Large shareholders do of course have to report their positions.

Aston martin car

Also Read: What Is a Stock Split?

One way to look at this is that it’s a very brave move. As we’ve noted before about Aston Martin the operating business – although not AML the current company – has gone bust many a time. It’s also true that there are operational problems with the Valkyrie hypercar delivery schedule. But perhaps most importantly the usual assumption is that Aston Martin’s future depends upon the sales record of the DBX SUV and in more detail, on the success of the DBX in China.

We’re expecting news on the DBX and China situations soon enough. Full-year results for 2021 are due on Feb 24th and while objectively they’re expected to be awful that’s not the point. The current Aston share price already discounts awful results, what matters is whether those 2021 results are worse than, or better than, the market is currently assuming. So, there’s a piece of information arriving soon enough which could be a trigger for the Aston share price to break either way.

The news about the Invesco stake building though is interesting. Invesco is known as a canny investor and they have been in the past in Aston Martin too. Some time back they were carrying a significant short position in AML. At that time that was the right thing to be doing too, given the dismal performance of the Aston Martin share price since flotation.

But it’s exactly that which should be triggering our attention here. Invesco used to be short in a large position, now they’re long in a large position. At least they think that this is the bottom for AML shares. Of course, any specific investor can be wrong – and sometimes will be wrong – on any particular call they make. But we might want to at least take note here – Invesco seems to have changed their mind. Or, the AML price has fallen enough to change it for them.

This sets AML up as an interesting trade leading into those 2021 results. The question becomes, well, which side of the trade to be? Are they going to be worse than currently expected, or better?

Tim Worstall
Tim Worstall is a freelance writer specialising in economics and the financial markets.