CR Risk, page-35

"So the institutions haven't had the same opportunity as retail investors to buy in over the last few weeks at these prices?"

No, volumes have been too low for them. Very small instos have certainly had the opportunity to build (or at least lay the foundations of) a meaningful holding at very low prices over a slightly longer period, which is why I excluded them, but bigger funds wouldn't even bother trying. Since the autumn, NUH has been valued pretty consistently at less than A$50m, which is well below their radar.

Instos which want into microcaps like this nearly always go in via initial launches, CRs or off-market transfers from other substantial investors who want out. That's because the attractive ones are usually tightly held, and it's very difficult for them to acquire a meaningful stake on market. Nuheara is a partial exception because of constant selling, but even then I think there was probably only room for one (or at most two) small instos to get in the hard way. The majority of retail investors have far more flexibility.

"The reason you do a CR is to raise funds."

That is the primary reason, obviously. However, if you do not use your CR to tackle other issues - most notably, in this case, a weak share register - then you are naive, poorly-advised or both. Imo their last CR was quite badly botched in this respect, although the offer price was reasonable, and I expect they will take care to demonstrate greater professionalism next time round.

"The problems with CR which are just instos is that it generally occurs with a significant discount to the market prices."

The size of the discount is largely governed by supply and demand. A well prepared and executed CR will offer significantly fewer shares than the market wants, leaving many existing and potential investors disappointed and still hungry. In these circs, companies and their advisers have to decide which categories of investor should be prioritised and structure the CR accordingly. Obviously, the most important objective should be to raise the required funds with as little new equity as possible - ie, at the highest price obtainable - but there are other considerations. Nuheara should know better than most small cos that some shareholders are nothing but trouble.

"As for 5.5-6c where did that figure come from?"

You could start by glancing at the chart on your right. NUH has been trading at that level off and on since September, and pretty consistently from mid-November until a week ago.

"The share price shot up on potential, sold off through profit takers and found a fair value."

I can only agree with the first part of that. Much of the subsequent selling had nothing at all to do with profit taking. 'Fair value' is in the eye of the beholder, of course, but in my judgment the shares were absurdly underpriced at 5.5-6c, and at 7.9c (still 1.3c below last July's CR) still offer newcomers huge potential. That's a judgment I was (and still am) prepared to back with quite a lot of money, but then I've seen way too many 'fair values' upended in no time at all and often for no discernible reason. At bottom, any sp is merely a function of prevailing supply and demand; there is no collective reasoning or judgment behind it at all.

It is not true that Nuheara hadn't sold any units until the last quarter, or that the technology is only now becoming commercialised. This has been the case for the best part of a year, though we expect to see a major uplift in sales for the Dec quarter. If you are seriously interested in the shares, you might want to research the company's history a bit more thoroughly - now, I admit, quite a major task. They have packed an awful lot of company development into a very short space of time.