Jeez, I could have done without today.
PME down 12.1%
I suspect that the founders have no particular enthusiasm to sell their shares, but as explained in the announcements, they are responding to the perceived need to increase the liquidity of the stock. As I noted in a previous post, PME must have one of the tightest registers of any stock in the ASX200.
In respect to the inclusion of the stock in an S&P index, presumably, what S&P gives, S&P can take away. I wouldn't be surprised if there was a tacit understanding that there would be further freeing up the register as a concomitant to PME being included in the ASX200.
Today's course of sales data indicates that the shares sold be the founders found a home at $36.10.
So its a bit hard to see why that transaction justifies today's 12.1% price drop to $33.38.
Presumably, the founder's shares went to an institution, or institutions.
Perhaps the new institutional holder immediately made the shares available to short sellers.
Maybe there has been a lot of unmet borrowing demand from short sellers who think the stock is overvalued but who couldn't borrow the stock previously to act on their opinion.
Today's volume was 2.965m, so maybe the 2m shares from the founders were short sold today.
I doubt that is the explanation, because it would have started before today.
If an increase in short selling is the explanation, it should show up in the net short interest data next week. As of 2 Sep 2019, the short interest was 0.52%.
However, any shorters may discover that it will only take one contract announcement for PME to hit $40 or more.
If the price drop today is just a response to the founders selling a small fraction of their holding, then it looks like a knee-jerk reaction, especially if as it appears, the founder's shares were sold in response to the urging of the wider market and institutions.
I suspect that the founders would really rather defer cashing in their shares until they have more thoroughly monopolised the world of medical image handling.
Cheers
(20min delay)