bell potter 17-11

While we are on the topic of shorts, I see we are having a head on recommendation and price target
crash with Macquarie on the now $2bil market cap Mesoblast (MSB). Firstly, I think it is great there
is a different view to ours on MSB because that makes a market and gets debate going on the stock. It
has also brought in shorters (5% of register) which have pushed the share price back to what we
consider good risk adjusted value.
Personally, I think shorters of MSB will lose very serious money in the medium-term because they are
shorting a stock that is now on the radar of big pharma. They are also shorting a stock where the free
float is very small. It’s worth noting MSB CEO Silviu Itescu owns 24.4% of MSB, Teva
Pharmaceuticals 19.9%, M&G Investments 10% and Alex Waislitz’s Thorney Investments at
6.2%. That means 60.5% of the stock is in very strong and strategic hands, while it’s also worth
noting the Teva Pharmaceuticals standstill evaporates on the 7th of December this year.But most importantly I believe our analyst Stuart Roberts has the greatest understanding of not only
MSB, but the entire Australian biotech sector. Remember it was Stuart who told you to buy MSB
when they were $1.66, not anyone else. They were telling you to buy CSL; Stuart was telling you
to sell CSL and buy MSB and anyone who listened to that has made real money.
So what I am saying here today is I 100% stand behind Stuart’s buy recommendation on MSB. I
believe, as I did, 12 months ago, that MSB has the potential to be a large cap global biotech leader.
This is particularly so after the excellent heart failure data presented this week. While I published
Stuart’s latest MSB work yesterday, I didn’t emphasise it which some people interpreted that I
personally didn’t stand behind it. That was the wrong assumption to make.
Not only do I stand behind Stuart’s research ($16.00 target), but I will be hosting him on a 2 day road
show of Hong Kong clients next week to drum home how high conviction we are. Stuarts latest MSB
research is available here in PDF and I encourage you to read it AND the alternative view from
MQG’s analyst. Let’s see who is right in 12 month’s time.