Ann: Becoming a substantial holder, page-2

Cryosite seems to be attracting the serious attention of the institutional sector.

Today's substantial shareholder announcement reveals that Sydney-based DMX Asset Management has assembled a stake of 5.91%.

The group becomes the second-ranking shareholder after director Andrew Kroger who controls some 40%.

Third-ranker would appear to be BNP Paribas Nominees with 4.45%.

Given DMZ conducts focussed research and due diligence before investing, it seems likely the group would have had conversations with Kroger, with CTE chairman Bryan Dulhunty and with new CEO, John Hogg.

What is DMX's investment approach?

The group's website puts it this way:

We are focused on owning under-the-radar, inefficiently priced companies with low market capitalisations that have genuine potential to become larger companies.

Larger cap companies generally have greater profiles, more liquidity and attract higher multiples than smaller companies.

In our experience, small companies that are growing their profits, and particularly those that are growing their profits consistently, and rapidly, are well placed to become larger companies over time, as a higher earnings multiple is applied to a higher earnings base.

Accordingly, the half and full year profit reports are very important for us to benchmark how our portfolio companies are executing on their medium to long term growth plans.

DMX's on-market buying - apparently through Bell Potter - follows release of CTE's interim report.

With signs that DMX's buying operation may now be paused, the questions arises as to whether other instos will join the group and BNP Paribas as CTE backers.

Much will depend on how comfortable they are with terms of the proposed 10% shares buy-back to be launched by CTE on April 16.

Will CTE's brokers step into the market at 25c, 30c, 40c or 50c? We have a month to ponder possibilities.