WHEN a major holder lightens up at a 22 per cent discount but sells to a gaggle of eager buyers, confusing signals are emitted.
Start-Up Ventures, which held 27 per cent of anxiety drug developer Bionomics, has sold down to 8.9 per cent, at 57c a pop.
Start-Up ran a tender process in March for its stake and at the time the talk around the petri dishes was of a bid of 80c or more. The tender was discontinued, either because no one offered a decent price or, as Start-Up's George Jessup claims, Start-Up was so impressed with fresh drug trial results it couldn't bear to part with the shares.
Jessup said yesterday that the "orderly sale" resulted from numerous institutional inquiries and would broaden the register, while the company stressed the removal of a share overhang.
It's not unusual for block sales to be done at a big discount, but a 22 per cent discount (based on Wednesday's close ahead of a trading halt) seems light on for a stock in so much demand. Then again, Start-Up's entry price averaged about 10c so its own anxiety levels will be low.
We appreciate the potential of Bionomic's lead drug, BNC210, but there's a price for everything and we stick by our view the stock is a sell above 75c and a buy if it falls much below that.
BNO Price at posting:
73.6¢ Sentiment: Hold Disclosure: Held
