Ann: Acquisition of South Australian medical distributor business, page-19

Has no-one connected the dots - The ceasing to be a substantial holder by PIE funds. As far As I can see they accumulated 5.9 million shares over a period of 4 months and became a substantial holder on 8 August 2017. They continued to increase their holding so that at its peak on 10 October 2017 they held 10.8 million shares in PGC. Given trying to get a handle on it they must have ended up with an average around 80c or maybe a little north of that.

PIE placed PGC investment into its emerging fund and Paragon became one of its top 5 holdings. The fund had previously to 2017 beaten the benchmark by a large margin and in 2017 it was its first year that it ended the year 9.9% below the benchmark for the year. Personally, I don't think that in 2017 April PGC was an emerging company more a growth story in my mind.

So Ia m not surprised that just after topping the 10.8 million MS decides to transition - They started selling and got below the 5% on 16 January 2018 with just a bit over 8 million still to offload.

I who would normally be a buyer of PGC am sitting like a lot of people I know on the sidelines waiting to see the impact of this transition. That coupled with the anticipated very weak first half. The investment in Midas and the cost of the acquisitions and cost of hiring a new CEO all lead me to believe that we are going to have a very weak first half. So I think the normal audience that soaks up volume isn't soaking it up and I am sure that the market for shares is much lower than in the past. I actually sold a few in the 80's as I wanted a bit of dry powder given the uncertainty.

So once I picked up that PIE looks like it wants out I realised that that was going to be a very hard ask if they would want to clear the investment before the half-year result. Personally, if I wanted out I would want to clear my stake out before the half year.

So from my point of view, I am not surprised it's weak - I am somewhat surprised its held up this well.

I do think it's going to be a bad 1st half - The slide suggested that EBITDA was going to be 33 to 67 which is the lowest ratio ever. So given that that was put out there at the AGM, I think we have all just got a bit more nervous as now it's arriving at that level and we have to trust the second half.

They have never let us down but there is always a risk...

I am glad I sold a few so that I do have cash on the sidelines to buy back opportunistically if it drops more. Around 70c I think its a steal. No, I am not down ramping 70c would make me cry for what I already hold. So it's a double-edged sword.

Personally, I think its suffering from a substantial shareholder overhang and Insto's are not going to buy into this until the full year proves the management comments about seasonality are correct.