Here's my 2 cents on this peejay2. ST1 has 3 major holders (Diamond, Regal and Thorney). They seem to be holding a large %. So the problem there is that they all have to exit together, or the first one to leave may start a selling landslide. I understand Diamond's last transaction was a Sell (1Mill shares, just under the ASX reporting line). So, once a seller, always a seller. Now lets look at the business. Regardless of the numbers, they are selling the infrastructure. When you look at the margins they are moving downwards in the Gross profit line, from a high of 70%+ to circa 50%... lets see what this half delivers. So with the imminent sale of the commercial data network, they are becoming a reseller (NBN and other cloud services), with reseller margins. So, logic will tell you that you cant go from a high margin business and then drop 25 basis points, without having to lower your operating cost base. The half will tell that too. The shareholding structure means that it has become an ill-liquid stock. very low numbers are dropping the SP. The big 3 cant sell... If they do they will need to notify the market (Diamond apparently sold last year without breaching the threshold). Shaws, who have done a few of the recent raises, have just downgraded the stock target price by 18% to 31 cents. So, it stands to reason that the three major shareholders would be asking Shaw's "Why?" (Note that Diamond has a son working at Shaw's and a son working at Spirit).
All of a sudden we have the biggest trade volume since 1st December, when the SP was at 23 cents. Or the 18th Nov when the SP was at 27 cents.
So now the major shareholders will be looking at each other and thinking 'Who's going to move first?'
Three shareholders, holding the fate of many... it has less to do with the business operation and more to do with the risk associated with the power players.
And to think that you topped up at 28 cents...Would you put your destiny in the hands of these three?
ST1 Price at posting:
18.5¢ Sentiment: Hold Disclosure: Held
