Agree - and I essentially made the same point to the company....

Agree - and I essentially made the same point to the company. While it isn't the board's direct responsibility to worry about sharemarket behaviours and general trading actions, part of the key mandate must include maximising shareholder returns since their collective salaries are paid out of shareholders equity. As far as I am concerned, "maximising shareholder returns" must include addressing price dislocations arising from potential market concerns/expectations. After all, shareholders (owners of the business) can only unlock value in the company by selling their shares on market. So if the company continues to perform but the market continues to discount it, it is only prudent that the board seeks to try and understand the underlying concerns or issues the market may have with the company that may explain for the huge discount. And if all else fails, then the board must also at least explore various options to close the price/value gap.

It isn't uncommon for some stocks to be undervalued for many months, and some time years. In a lot of cases, there is usually an obvious reason, rightly or wrongly. JHX was severely sold down in late 2022 on expectation of severe US housing market slowdown - one which never happened and the fact that its sales is driven not just from new homes but existing home renovations. BLD was heavily punished/discounted for the underperformance of the US businesses pulled together under Mike Kane. That discount remained until the board was agitated by Stokes to do something about it and when it did, it unlocked billions in capital returns to shareholders. WES bought Coles Group when all the underlying businesses within the group was struggling. Even after the likes of Coles, Officeworks etc started to outperform, the WES price was constantly at a discount to SOP valuation. This was mostly because Coles is a capital heavy business with low margins and it was dragging down WES's much-lauded ROC performance. So they listened and divested Coles, and all concerned have since been richly rewarded. TLS was in the doghouse for many years as the transition to NBN kicked in. However, with the the end of transition in sight and signs of earnings growth emerging, the market refused to price it properly even though it was open knowledge that the carrying value of the towers and fibre optics etc on its books were a fraction of their true value. So the board sold down 49% stake in towers asset for 2.8bn when the carrying value for the full asset was a fraction of that. The market rerated the stock ever since (plus the earnings growth and rational market pricing also helped).

So.... the point I am trying to make is that STX isn't the first company to be trading at a large discount. Typically companies are discounted for a reason and it is up to the board to listen to act. A company can also be discounted when it becomes to large and the SOP isn't well understood/valued (eg. WES and TLS). But as shown above, there is often steps a company can take to help the market breach that gap.

In STX's case, I struggle to understand the driver/s behind the huge price/valuation gap, but I am not the one out there facing investors/fund managers as part of my job. That is why it's critical for the board to try and sound out the market for a possible reason behind the discount.

Look, all of this discussion may well be moot by mid September if the index rebalacing kicks STX out and the shorters cover by buying out the index fund position, and our share stopped trading like it is in a fraudulent market. I reached out to the company because I felt this conversation had to be started now in case it continues to trade as if we are carrying a hidden 400mn liability on our back.

Sorry for the long ramblings but hope it makes my thought process clear.

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