Few interesting observations from the annual report shareholder distribution and top 20 shareholders tables.
1. The % of issued capital held by top shareholders (>100,000 shares) increased from 86.07% to 91.16% between September 2008 to September 2009. These results clearly show significant transfer of shares from weaker to stronger hands and demonstrate how tightly EXT shares are currently held.
2. The % of issued capital held by shareholders with shares in excess of 10,000 increased from 95.57% to 96.83%. However, the total number of shareholders reduced by 30% (i.e. from 773 to 541). These figures confirm that shares are being transferred into fewer hands.
3. The number of shareholders with less then 1,000 shares has about doubled to 1,149. These are likely to be late comers, traders and people who don’t have strong financial capacity but still want to be part of the action. They hold 0.27% of total issued capital at an average of 530 shares/stockholder.
4. Majority of top 20 shareholders have not sold any shares and the % of shares held under nominee’s accounts keeps increasing. Once again this suggests progressive transfer of shares to the so called “sophisticated investors”. With the inflow and outflow of shares between nominees accounts being very similar it is very likely that shares are just being transferred from one account/fund to another.
In summary, in a tightly held shares company when the fair value has been reached, one would normally see increasing register of smaller shareholders who are picking up shares being offloaded by major players (i.e. distribution phase). This is still not the case with EXT (in fact it’s quite the opposite) which strengthens the notion that there is still significant potential for SP growth above current levels. Therefore, recent SP games are simply a continuation of the slow and painful process of accumulation or transfer of shares into strong hands – by taking advantage of basic human vulnerabilities/weaknesses in particular greed and impatience.
I believe that recent 1 : 35 rights issue is unlikely to have changed the above results by much as most shareholders took up their entitlements.
Regards, Drag
EXT Price at posting:
$8.62 Sentiment: LT Buy Disclosure: Held
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