Ann: Change in substantial holding-SDI.AX, page-6

@eternalgrowth,

I am usually completely loathe to spend any effort thinking about what drives share prices in the short term (over the longer-term share prices tend towards intrinsic value, of that much I am sure), and I am just as loathe to consider who is buying or selling shares on a daily basis, and why they might be doing so.

However, in this case, I think there is something relevant that warrants mention.

Celeste Funds Management is having a bit of a performance problem, with investment returns in its core Australian Small Companies Fund running well below the appropriate benchmark index for all time frames up to three-years.

As a result, the fund is clearly experiencing capital redemption from the fund's investors, with funds under management (FUM) falling dramatically from $127m to $72m over the past 12 months.

And when you have this sort of dramatic decline in FUM, the asset consultants who represent institutional clients don't like seeing too many non-Index stocks remaining in the fund, especially when they are as illiquid as SDI. (For context, Celeste's initial holdings of 10.4m shares equated to over $5m at the time Celeste commenced selling which is significant in the context of a $72m fund ... to be fair, this is not the only fund Celeste operates so it is not possible to know how much SDI stock was sitting in their core fund and how much was allocated elsewhere in the individual mandates Celeste manages but given individual mandates tend to have greater liquidity limits, I suspect - without knowing for certain - that the bulk of the SDI stock was sitting in the Small Companies Fund, and therefore needed to be disposed as the fund shrank.)

So Celeste's selling in recent weeks bears all the hallmarks of being forced, rather than being at their discretion.