“E&P analysts' explanation is that " the sell off seems to be...

“E&P analysts' explanation is that " the sell off seems to be index related, with the expected inclusion in the ASX-100 triggering the exit of small cap funds."”

This doesn’t seem to be a plausible explanation.
Why wouldn’t the small cap funds wait to sell to the index fund demand that would be created if PME is admitted to the ASX100?
Surely, admission to the ASX100 must create net demand for the stock rather than net supply.

Even at Friday’s close, my estimation of PME’s free float market cap was sitting at the 82nd rank in the ASX100 list.
So, PME may still be in with a chance to be promoted to the ASX100 at the next reballance.
In order to be admitted, a stock needs to have averaged the 84th rank or better in the list of all the relevant stocks over six months .
The changes to the index take effect on the third Friday of the quarter end months, but are announced two weeks before, which in this case should be on 1st of this coming March.

It’s tempting to think that there might be some market manipulation in anticipation of PME’s inclusion in the ASX100.
But there would be no point in short selling to drive the price down, if the necessary covering would only add to the demand from index funds when the stock is promoted.
(The short interest in PME has been dropping steadily. It will be interesting to see what happened to the short interest on down days last week.)
Maybe people who had bought in anticipation of PME’s promotion, hoping to profit from the resulting demand from index funds, got spooked when it started to fall.
Or as J P Morgan anticipated, maybe it is just fluctuation.
As someone with a disproportionately large holding. I certainly felt fluctuated.

Speaking of index investment, below is a recent academic paper that argues that passive index ownership is as high as 33.5%, not the 16% that has been attributed to it in the past.
If this is true, it is rather depressing.
If 33.5% of the investment is just dumb money, weighted by market cap and hence towards the stocks that have gone up and away from the stocks that have gone down, you would think that active investors ought to be able to beat that easily.
But, according to all the research, most of us active investors do not manage to do that.
So how dumb that that make us active investors collectively?

The Passive Ownership Share Is Double What You Think It Is
https://www.alexchinco.com/double-what-you-think-it-is.pdf

With respect to the video interview with Sam Hupert, I have long noted the fact that he evidently derives considerable satisfaction from seeing that PME’s product makes a positive difference to people’s lives – the “clinical” return on investment.
I can only suspect that that attitude permeates the organisation – an organisation does tend to come to reflect the personalities of those running it.
Therein may lie part of PME’s success.

Cheers