Ok, I have a theory that might explain some of the sp action of...

Ok, I have a theory that might explain some of the sp action of the last few weeks.

What do we know?

16 Jan, EHR announces an update to ABID valuation of 43c - 88c ... The market goes bananas over it, before it gets smacked down hard by some serious selling pressure.

So who was selling?

3 Feb, I obtained an update of the Top 20 Holder Register which showed that Merrill Lynch and David Sutton were no longer in the top 20. The register also showed that La Jolla had obtained Mal Lucas-Smith's 9.7m holding via an off-market cross trade.

So what does this all mean?

In one word, motivation. Ok, so maybe I'm a bit slow, but the penny dropped for me today. The previous directors of EHR (David Sutton, Stephen Pearce and Alex Rose-Innes) were owed $203,086.34 in directors fees which shareholders recently approved to pay in the form of shares. David Sutton was the only of those three on the top 20 and we "know" that he sold his shares in January. Chances are that his mates, Stephen Pearce and Alex Rose-Innes also sold some share too. By suppressing the sp, they stood to gain more shares in yesterday's issue. By my estimation, these three men have picked up 6m shares yesterday. If they had allowed the sp to run away to 5c - 6c in late Jan, early Feb, they would only have received 3.5m - 4m shares.

So where does Merrill Lynch fit into this? And why would they sell their shares too?

Again, one word, association. Merrill Lynch came on board with EHR under the previous management. I think they paid 1c per share and selling at ~4c is a tidy profit in its own right and, if it helps out your mates David, Stephen and Alex, then that's a bonus too.

Now, I will issue a caveat here. All of this is pure speculation on my part (albeit warranted by a reasonable examination of available evidence). I am not involved in the company and, therefore, have no inside information except what I am able to obtain by simply asking questions and reading announcements on the ASX. Also, I do not intend to impugn the character of any person or the integrity of any organisation in relation to my speculation. It is what it is, pure speculation.

It will certainly be interesting to see whether the brakes have been released. Hopefully, the buying will return to normal soon.

If anyone has another theory why our sp is as low as it is after the long string of sensational announcements we've had, I'll be happy to hear it. I know that the low cash position of the company may give investors pause for thought before buying, however, we do have a guaranteed $3m up our sleeve with Socius and another 116m placement shares that I'm sure insto's will lap up if they get the chance. So, I'm not certain that the current cash position is a real problem at all.