Regal’s Phil King was right on Polynovo ... eventually

Myriam RobinColumnist

As Bobby Axelrod and many others have said, being early is the same as being wrong. Especially if you’re using leverage.

Still, given we did highlight the fact that Polynovo had soared to new heights shortly after being named as Phil King’s top short idea at the 2019 Sohn Hearts & Minds conference, suppose we can do Regal Funds Management the courtesy of noting the hedge fund has enjoyed some vindication of late.

Polynovo has fallen 48.9 per cent since January 12 when it revealed sales in the United States were “challenging” as hospitals filled with coronavirus cases (who were unlikely to utilise Polynovo’s skin regeneration medications).

Shares took another leg lower in light of long-serving CEO Paul Brennan’s resignation this month (apparently the board had had “increasing differences” with him over his management style).

Neither appear disastrous for the company’s prospects. Still, as King said in November 2019, with companies on these kinds of multiples “there’s no room for disappointment”.

Someone’s making money off its latest falls, given short interest is at an all-time high with 7.1 per cent of the register lent out.