Hi Pata, sorry to hear about your negative experience with this...

Hi Pata, sorry to hear about your negative experience with this company.

When I read your post a few days ago it brought to mind a contentious debate on one of the forums on this site some years back.

It was a while ago, back in 2014, and the forum in question was that of a small company that was then called 'Carbon Conscious'.The catalyst for the argument was a 'Change of directors interest' notice announcement that had appeared on the ASX, which advised that one of the directors of the company had purchased around $2500 worth of shares in the stock.

The notice spurred some lively debate, with holders arguing amongst themselves as to whether such a measly purchase could be held to be of any significance. Interestingly, more than seven years later, the company is still listed on the ASX, though now trading under a new name, Alterra.

The share price today sits at around the same levels as it was in the middle of last decade, but all the same, I found it intriguing to discover that the stock is still alive and kicking all those years after that miniscule purchase of shares by the director.

This example does accord with my own observations as an investor. A purchase of shares by the management doesn't always prove to be a panacea for a falling share price, and sometimes, the share price of a company even declines in the wake of a purchase by directors.

However, when a director purchases shares in a company, even a lousy $2,500 as in the example noted above, it is a pretty strong indicator that a company is probably going to be around for a while. I can only recall one example of a director purchasing shares in a company which subsequently ended up collapsing (Quintus was the exception, with the CEO purchasing shares not long before it went belly-up.  But I am not reading too much into this, in part because the problems at Quintis were industry specific, and partly because the MD of the company seemed to be much more interested in sport than in the company he was in charge of). I am sure you could find other examples if you dug deeply enough, but I think it would be fair to say such examples are the exceptions, rather than the rule.

So, while the purchases by Krasnostein appear miserly and underwhelming, even a modest purchase by a director tends to reflect confidence in the company continuing as a going concern. If the directors have 'skin in the game', as they say, they have a pretty strong incentive to do their best to keep the ship afloat.

That said, I have a suspicion that there could be some strategy behind these seemingly modest purchases of Krasnostein.

Krasnostein has purchased on three occasions, starting on the 30th of September, at around 0.055 c. The second and third purchase were on the 14th and the 24th of this month, both at around 0.045c.

My take is that Krasnostein is engaging in 'dollar cost averaging', which if correct, would seem to make sense.

No-one really knows where the Phoslock share price will wind up in the month ahead, and so it makes sense for the directors to 'keep their powder dry', in case of further share-price declines.

A large director purchase at a lower price is more supportive for the share price of a stock, simply because at the lower price, the director can soak up more shares. So, I suspect that might be the logic behind these bite-sized purchases by Krasnostein.

One thing that has surprised me over recent days is the sheer volume of shares that have changed hands. Over a million on Tuesday and Wednesday, and well then over the million-mark on Friday.

Might this indicate that an institutional investor has started buying into the stock? Given the sheer size of the purchases I think that is certainly a possibility.

I have to confess that I didn't expect the share price to attract as much buying support so soon after the end of the suspension, even factoring for the massive share price fall that we have seen since the stock came back from the twilight zone (and, indeed, in the months prior to the suspension).

Watching from the sidelines over the past few years, it is striking how the extreme views about this stock, from both sides of the fence, have proven wide of the mark.

I recall one poster, in the lead up to the trading-halt in 2020, defending the management for the massive share disposal in 2019, arguing that there was nothing untoward about it and hectoring other shareholders for not taking the hint and doing likewise. The subsequent two-year suspension endured by shareholders should have served as a purgative for that particular delusion.

Two years is an awfully long time for a stock to be in limbo, and some shareholders, quite literally, might have 'died waiting': there certainly were a lot of bullets to dodge in the interim.

On the other side of side of the equation, the doomsayers on this forum haven't exactly covered themsleves in glory, either.

The commentary on this forum in the months leading up to the September relisting had a curious 'Stadler and Waldorf' quality, with a stream of hollered boos and hurled popcorn eminating from the commentary box as the critics excitedly watched what seemed to be a train-wreck in motion play out before them on the stage below.

Alas for them, the much-anticipated schadenfreude-show was cancelled at the last minute, and a different act, one much less to their liking, took to the stage. But rather than quietly moving on, the critics instead opted to linger on around the front of the theatre to form some manner of ad-hoc protest, loudly demanding restitution (or something) and hurling abuse at random passers-bys.

Noise and fury aside, it would be reasonable to assume that the unpredjudiced observer, watching from the sidelines, would probably judge that 'the case for Phoslock' has improved somewhat since four weeks ago, which was about when I last posted here.

Since Prosser bought in on the 26th of September, we've also seen purchases from McKinnon and Krasnostein, as mentioned above. And the share price is now sitting at a lower level as well.
I was also intrigued by that piece published on the 25th from that New Zealand business site that was posted by Mickem earlier.

I recall asking Schuitema one time about chasing work in New Zealand, and interestingly, at the time (this was in early 2019) he did state that Phoslock had been in discussion with several parties in New Zealand in relation to possible water projects.

Unfortunately, Schuitema was only really interested in chasing eye-grabbing multi-million dollar projects in the last years he was at the company, and so I don't think he would have really put much effort into following these up.

As well as New Zealand, I also wouldn't overlook the potential of the local market.

There was a possibly relevant article published on the ABC site earlier this week, which reported on concerns from environmental agencies that there could be widespread  blue-green algae outbreaks across the Murray-Darling Basin as a result of the huge amounts of water in the river system, following on from the recent heavy rainfall in the eastern states.

So, I think both Australia and New Zealand could offer promise at the moment. The projects in this region probably wouldn't be huge, but at the moment, the company should be focused on smaller (sub 500K) projects anyway, which are the easiest to bag. Across the four major regons (ANZ, North America, South America, and Europe) there would surely be enough of these smaller projects in any given year to at least cover the running costs of the company.

If the company can manage to win enough of these small projects to cover the basic operating expenses, that should help to stabilise the Phoslock share price, which should surely be the priority for the management at the moment.