That notice regarding Prosser this morning served as a welcome distraction for me. I was in a different frame of mind at the start of the day, my mood around Phoslock having been thrown off by the rather infelicitous date.
The 27th of September is a date of some significant for Phoslock holders: or, at the very least, it is a date burnt into my memory-bank, though not at all for a good reason.
Long-term and long-suffering shareholders might recall the heady days of 2019, which looking back today seems like a halcyon-age, a time when face-masks were seldom seen beyond the confines of construction sites and when the PET share price was high up in the clouds, above the $1.00 mark.
In August of that year, I was faced with an unusual dilemma in relation to Phoslock shares: I'd been caught out by the run-away share price, which had moved well beyond my initial sell target price. The question was, was the share price headed still higher, or was this just a flash in the pan?
Pondering this conundrum, I decided upon a course of action: I set a sell order at a higher price, and if the target was not hit, I would sell my shares in exactly one month from the day I made my decision: the 26th of September.
In the event, the share price didn't rise to meet my sell order over the next four weeks, and that fateful day, the 26th, was soon upon me. I resolved to stick with the plan, and took some time off in the morning of that day to make sure I had the opportunity to put the plan into action.
The same morning, as the market opened, I set down a sell order, at $1.40. But as it appeared on the screen, doubt started to cloud my mind.
'What exactly am I doing, selling to meet some contrived, artificial schedule? This is magical thinking, not a rational plan. I should be aiming to sell for the best price possible'. So I canned the sell order, and resolved I would logon again the next day, resolved to watch the market movements over the course of trading, and sell off at the best price possible.
The next day, I got up, logged onto my computer, and as is my habit, had a preliminary scan through the financial media.
The stock was basically panned by the panel, with obvious implications for the share price when the market opened that morning. And it was pretty much all downhill thereafter for the PET shareprice.
Bizarrely, the day before, a date I had plucked out almost at random a month earlier, turned out to be pretty much exactly the right time to sell.
The reason I mention that anecdote here, is because almost exactly a week later after that Livewire piece, on the third of October, the company released an announcement advising that the directors had sold their shares to an institutional investor ('Strategic sale of shares', 3/10/19)
Amused commented in a post on this thread a little earlier that the directors had engaged in insider trading in this stock disposal, dumping stock while fully aware of problems within the company that had not been disclosed to the market. There may be some truth in that suggestion.
Personally, however, I strongly suspect that it was that negative coverage from Livewire was the main catalyst for the stock-disposal by the directors. The word was out, and they knew the tank was running on empty.
With the wisdom of hindsight, the negatory Livewire segment should have served as the first a 'sell' signal for holders, and the disposal by the directors should have served as a second warning. I didn't end up selling off, however, because I had made the mistake of anchoring on to that $1.40 price at which I'd set my order on the 26/9 (I did sell a small chunk of my shares earlier that year, albeit at a lower price, just below the 0.900 mark).
Anyway, I had a bit of a conceit earlier this month, thinking that it might be instructive to conduct a bit of a 'thought experiment', going back and reviewing all of the recommendations of those two Fund Managers in that same Livewire segment back on this day, three years ago, that had painted Phoslock in such a dim light.
So, we know that they rated Phoslock as a 'sell'. So which stock did these two Fund Managers rank as a buy?
There was only one stock that both the Fund Managers agreed was a buy: EML payments. So let's look at how that tip panned out over the past three years.
Back on the day of that Livewire segment, the EML share price was sitting at $4.17. It hit a high of $5.66 in February 2020, prior to getting smashed in the pandemic-induced crash. It rebounded again thereafter, only to crash once again.
Today, the EML share price hit an all-time low of 0.800, closing only marginally above that mark.
So in other words, if a Phoslock shareholder had dumped their shares after viewing that Livewire segment, and ploughed all the proceeds of the sale into EML payments, as per the recommendation, they would have 'only' lost just over 80% of their money.
And this was the consensus buy?
I don't think I would be going out on too much of a limb if I suggested that the 'buy' rating from those two probably reflected the fact that these fund managers were up to their eyeballs in EML stock, and needed some fresh new buyers to create enough liquidity for them offload their position. As far as they were concerned, the Livewire segment was probably just grist to their mill.
The example above illustrates the extent to which unscrupulous behaviour is entrenched in the corporate world. The conduct of the previous Phoslock management was rather disgraceful, but sad to relate, it was by no means unusual.
Anyway, getting back on topic, that buying from Prosser has ticked off a second box. The first, and toughest challenge was getting the stock relisted, and this purchase by the director is a second positive sign.
That said, I wouldn't say that we are out of the woods just yet. The next 12 months are probably going to be challenging. With the local cash rate looking like it is set to rise above 3% within the next six months, like most stocks, Phoslock will likely be under the pump, and perhaps more so than most, given the legacy issues.
I agree with the previous comment on this thread that meaningful purchases on the part of the other directors would probably help to stabilise the share price.
PET Price at posting:
5.9¢ Sentiment: None Disclosure: Held
(20min delay)