DroneShield rubbishes critics, courts politicians, page-38

A text-only version of the article if this helps anyone else
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No sooner had we written off the Blue Mountains-based manager of his own family office as a small-time “peacocking investor with delusions of grandeur”, than he totally crashed the share price of ASX-listed retail darling DroneShield.

How did he do that? Well, he put out a tweet last week, then gave an interview saying the $2.60-a-share company was on a “wild” valuation that “could end in disaster”. His expanded reasoning: that DroneShield’s price-to-earnings multiple was (and remains) very high.

It’s not a gun: DroneShield chief Oleg Vornik Oscar Colman

Staggering stuff? Hardly, and more or less in line with what several analysts had previously warned. And yet, Forrest’s critique appeared uniquely devastating to DroneShield. The company’s share price has dropped 43 per cent since (to $1.475) in the week since, and no one has a better reason to explain it.

Unveiling its largest ever first-half profit figure on Monday, DroneShield chief Oleg Vornik (who this newspaper once labelled Australia’s “ethical” arms dealer) made clear who he thought was to blame for the unravelling.

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“I believe [the article] essentially started the selling that people are doing now,” he told investors on the results call, not referencing his own (in retrospect rather tragic) decision to sell all his unencumbered stock at a mere 68¢ a pop in March.

Vornik further insisted comparisons made in the piece between DroneShield and established industrial companies was “laughable”, and added there was “fundamentally no new information not in the market at the time the article came out”.

Forrest said on social media he had placed a “small” short position on the company after the piece was published.

Australian Securities and Investments Commission data suggests only 1.6 million of DroneShield’s 762 million shares – or 0.22 per cent of its registry – are short sold. On figures like that, it would take many shareholders selling to actually tank the share price.

Much of DroneShield’s retail-heavy investor base must have only been waiting for a sign to book their profits. On a thinly traded company that had risen nearly six-fold since January, it’s a wonder they waited so long.

For Forrest, up a tidy sum, the attention seems to have been a little much. He has since disabled his previously frenetic social media accounts. We’re told it’s in aim of adopting a persona more in line with that of Big Short-famous hedge fund trader Michael Burry, who regularly nukes his.

Victorian senator James Paterson, left, with a DroneShield gun, alongside CEO Oleg Vornik. LinkedIn

Meanwhile, DroneShield is battered but not out, and still has friends, particularly of the political variety.

The Member for Leichhardt, Warren Entsch, is a (presumably somewhat poorer) shareholder. And its quarterly production reports are illustrated with a photo of a serving politician wherever one is available.

The front page of the next report will no doubt feature self-styled Wolverine and Victorian Liberal Senator James Paterson, who obligingly posted of his visit to the “hugely innovative Australian defence industry business” above a photo of his handling the artillery.

Australian politicians can no longer in good taste pose with a gun. But a capaciously large and Australian-made anti-drone device? That’s the next best thing.