Apologies the reply function is not working, I'm not sure who...

Apologies the reply function is not working, I'm not sure who posted this comment

Why would big investors take a LT position, when with 8 billion SOI they can just trade the **** out of it, day in day out?

Anyway, Catching up on some posts tonight and I came across this one. It’s a good question but one that may be best answered by coming to an understanding of what it is so called big investors are searching for. Or should I say holding for. From my experience most big investors are searching for capital gains when it comes to pre revenue stocks such as Imugene (IMU - ASX).

In answer to your question:

Firstly I would note that In Australia you are required to pay CGT tax if you sell a stock for a profit within 12 months of acquisition. Therefore if you are buying for capital gain, then the extra tax paid upon short term selling is a hefty percentage of your earnings.

Secondly despite the large number of SOI there are relatively small volumes traded of IMU stock in dollar terms on a daily, if not weekly basis. Therefore it is much more difficult stock to trade effectively than large blue chip stocks where the volumes traded are much higher than those in small to medium cap stocks such as IMU. As an example, were a large investor to trade out of a 10,000,000 parcel of IMU tomorrow on the open they may find it difficult to obtain the asking price given the limited number of bids on offer.

Thirdly I would note that big investors, be they of a sophisticated or institutional basis, tend to have analysts who make buying decisions based on a stocks fundamentals, as opposed to moving day averages. They tend to analyse a stocks longer term potential, as opposed to its near term trading cycle. Some funds, (i.e.,in particular hedge funds) have a mandate to trade, including taking both long and short positions. However the majority of balanced and equity funds, such as those investing superannuation monies, view equities as a three to five year investment. Therefore their analysts are more inclined to present prospective data to their fund managers centred around these time periods.

Fourthly big investors realise that when it comes to biotech stocks catalysts such as asset sales, promising clinical trial results or indeed takeovers, can occur at any time during the business cycle of the company. Therefore to buy and in turn sell, presents one with the situation where they may be out of the game at the very time when large capital gains accrue. As a consequence large or as you refer to them “big investors” tend to focus on the stocks fundamentals and its capital growth potential over and above the current holding period for stocks (e.g., 10 months). That said big investors may not choose to stick around should a strong buying opportunity present itself further afield, or should macroeconomic conditions change drastically.

Finally, if you are referring to Imugene, which I am assuming you are, the reason big investors would, (and I dare say are), taking a long term position is due to the fact that contrary to the negative sentiment being portrayed by many on these threads, the stock is derisked when it comes to the major products present within its pipeline. The B cell platform has established proof of concept with an excellent safety profile being enhanced by significant extension of life over and above the existing standard of care. There are many combination therapy opportunities as a result. Azer Cel has exhibited strong results in large numbers of blood cancer patients, with the prospect of a Registration Trial for the drug as close to 12 months from now. Whilst CF33 Vaxinia has already established proof of concept with “in human” trials identifying an excellent safety profile in addition to viral replication and a significant number of positive immune responses within patients.

As a consequence given the ongoing collaboration with the FDA, which from all accounts continues to be promising, big investors can be satisfied that there is a strong chance one of Imugene’s current FDA (IND)’s shall strike pay dirt in the years to come, in other words within their existing timeline for investing. Whereas in the short term, the speculative nature of the stock must be considered, given the fact its overall market cap restricts many larger funds from investing. Therefore I am confident that although the stock is traded vigorously in small dollar volumes on a daily basis, the overwhelming majority of big investors, be they either of a sophisticated or institutional nature, would be seeking to hold Imugene (IMU - ASX) longer term, as opposed to trading the xxxx out of it, as you suggest. Close scrutiny of the top 50 shareholders on the IMU register highlights this fact, with large investors in the company failing to buy and sell or alter their holdings immeasurably in recent years, irrespective of the day to day ebb and flow of the share price.

I myself am still looking ahead to Vaxinia results in the ensuing weeks, at the outside months. It has now been over 100 days since the January cohort was dosed at 10 parts to the 8, so trial supervisors must be close to the next data cut. With an expansion into bile duct cancer already upon us it’s exciting for the company to engage in a trial with over 100 patients gazetted to participate. For many years given its capital restrictions Imugene has had to succumb to small clinical trials in late stage cancer patients. Now with both Azer Cel and Vaxinia (as well as PD1 Vaxx) enrolling close to 100 patients in ongoing trials, the data amassed over time is sure to result in a sample size of interest to both the FDA and Big Pharma, should the data prove efficacious.

DYOR Seek investment advice as and when required Opinions only

Enjoy the week ahead and keep posting everyone if and when you can add to the debate, I for one look forward to your valuable contributions.