re: looks like cus has got the sell in may syndrom Bulletin...

re: looks like cus has got the sell in may syndrom Bulletin 2/05/06

We took profits on Adamus Resources (developing a gold project in Ghana) and Customers, which is successfully building a network of non-bank automated telling machines around Australia. While I still have confidence in the growth potential of Customers, I notice a large institutional shareholder is likely to keep a cap on the share price, since it has been a steady seller over the past five months. Hunter Hall Investment Management built up a holding of 56.9 million shares to last October, but has since been steadily shedding stock. Two weeks ago, its holding was down to 52.3 million, or 12.8% of the company.

Customers also has a welter of cheap, in-the-money unlisted options outstanding. With a present issued capital of 408.87 million shares on issue, the company also has 85.65 million options exercisable at 5¢ between December 2006 and September 2008, plus another 30 million options exercisable at 14¢ between March 2008 and March 2009. Last month, 4.5 million options were converted to shares for the payment of just 5¢ each. With the shares around 30¢, it must be tempting for various option holders to convert when they can, and thus contribute further to keeping a cap on the potential share price.


I have to say, his comments about option holders exercising is a tad presumptious.

2006 5c ex options= 13 mill seed caps and 10 mill management
2008 5c ex options = 40 mill mezzanine financiers
2009 14c ex options = 30 mill management
2009 5c ec otions = 22.5 mill management

I would have thought that there would be a reasonable chance of 13 mill coming out between now and xmas (no big deal since the stock does 5 mill a week turnover)
The management, one presumes will take theirs up. That leaves 40 mill for exercise in 2008 owned by mezzanine financiers. A block that size would be crossed to a single party that wants to get set, and probably wont see the mkt again.

As for Hunter Hall selling, thats normal practice for a fund who has made 6x their money. you expect them to trim the portfolio so as not to be overweight, but I very much doubt the whole lot is on the market, especially since the company hasn't put a foot wrong since getting into the business.

Just my opinion mind you, but sell at your peril.