Up until recently I held a position in ACL. Whilst I'd held that...

Up until recently I held a position in ACL. Whilst I'd held that position for four years I got spooked and recently sold all my holding just prior their pending announcement. Why would I do that having held this position for so long? In short there are two reasons.

Firstly, I chose to lock in a certain 50% profit rather than an uncertain larger profit, which of course could be negative if they report poor results.

Secondly, when i went back and reviewed their past results I felt increasingly uncomfortable, particularly when I considered the adjectives they use in their communications as well as the far greater stastical results achieved by potential competitors. More specifically:-
* The stastical significance reported by ACL is marginal at best;
* Even if ACL do report good numbers, there are too many competitors trying to bring other treatments to market who have already achieved better results and would trump ACL's product once they get their own to market;
* I'm suspicious of any firm that delays reporting to market regardless of their rationale. If everything is going well but their are delays a credible firm would report this to the market using appropriate language. I do not see ACL behaving this way. They appear to be continually pushing out their target dates without providing any meaningful information. If the trial was truly going well I'd expect ACL to be using descriptive language like "on target", "exceeding expectations", etc. language that unambiguously communicates managements understanding of how a trial is progressing. Yet we do not see that with this firm, rather they use language like "excited", really? Excited about the surprise of not knowing what is going on? Or are they excited about new prospects they can pursue once they have been able to bring closure on a trial thas not played out well? Quite frankly I've never seen a firm delay the release of good news, even if they are yet to attain closure, rather management will always put off the release of bad news for as long as possible.

There is also the reaffirmed sell recommendation from the Bioshares team, which had ACL in their portfolio for a very long time, this is a stock they should no extremely well given how long they have followed and owned it, yet they have also lost confidence in their ability to bring the product to market.

One final concerning observation is the lack of institutional buying. Hunter Hall appears to be the only institution that is meaningfull increasing their position. What makes them so smart, so right and all others wrong? It is not as though they have a good track record, whilst they did well out of Sirtex that is also the dominant driver of their performance (I.e. if you take that one single name out of their portfolio their performance track record would be poor, this similar to what you saw with BT in their Australian share fund many years ago when their large overweight to Westfield Holdings was enough to offset poor performance in most of their other holdings, that one name made BT's numbers look good, without it their performance was poor due to the lack of breadth of winners in their portfolio).

I may well be jumping at shadows, but when you have to make decisions with incomplete information there are just too many other options, this one just doesn't feel right. If I'm right I have locked in my 50% profit, if I'm wrong I merely suffer regret from a lost opportunity, but even in that case I need to way that up with the return I got from that reallocation of capital.

If you choose to hang onto your stock I hope you do get appropriately rewarded for the risk inherent in the position.