Update on previous two EHT post: The knife continues to fall. Share price has done a 180 degree turn and hit a all time low of 51.5 cents. Following the rally on Monday, I assumed that the selldown was over and the share price has stabilised with 54 cents as the support level. Totally wrong on this.
A total of 26.3 million shares exchanged hands for a total value of $14.2 million. This makes EHT the 5th most active counter by volume. Comparatively, the average daily volume for the past 3 months is merely 4 million, a fraction of the total volume today. EHT is not on the list of top shorted stocks by volume, so today’s movement should be attributed to the reduction in stake of the substantial shareholders over the past few days. Approximately 35% of the trades were off the market deals, largely done at a price of 54.5 cents, as indicated by the blue column below. The share price recovered slightly to close at 52.5 cents. 51.5 is the new support level and there is a possibility of dropping below 50 cents if this support is broken.
From a psychological perspective, perhaps 50 cents will be an important support level.
Should the share price continue to fall, I might continue to accumulate. However, the reason for the continued selldown is still unclear, so that is a consideration before increasing my stake. The majority shareholders are still dumping their shares, millions at a time with off market deals without an explanation for the sell actions.
Nothing is clarified from the management either. Confidence in the company falls when substantial shareholders, especially the largest shareholder, dumps the stocks. Do they possess certain information which isn’t privy to retail investors which caused them to sell the shares? After all, EHT has dispelled the rumors surrounding Queen Mary so there is no other factors known by the public which could warrant an explanation for the large sell volumes of the past few days.
Personal opinion, if I was a substantial shareholder or part of the management team, I would either do nothing or accumulate more shares if I already participated in the IPO at 78 cents (hang in there folks). The only scenario where I would reduce my stake is that I am no longer as optimistic about the future prospects of the company and there is somewhere else with higher returns to deposit my cash. Somewhere which can guarantee a return of more than 11.5%. On the other hand, I am not a substantial shareholder nor management team, so that doesn’t hold much water.
The size of the off market transaction is worth millions, which leads me to believe that the buyer is not a simple retail investor. I could be wrong here, but how many average investors have spare cash in the millions lying around? Hence, I am led to believe that this could be an institutional purchase. Should their percentage of holdings hit 5%, they would become a substantial shareholder and their identity will be revealed in a mandatory filing to SGX. In the meantime, I will continue to monitor the situation and wait for the Q3 results update in two weeks time before making a decision whether to hold or to sell it all.