Maybe those people who are cleverer than me and know more about charting, C1/C2, and CRs etc. can enlighten us.
Sorry about the long post, I have a bit of time on my hands and wanted to get a few things off my chest, as well as promote healthy discussion within this thread and forum. Scroll directly to the bottom for the TLDR.
I've always been a member of the value investing school of thought. If you do all your research, with the utmost of diligence, and strongly believe something is of value, stick to your guns no matter what the market does. You win some, you lose some, but if you stick to value investing overall you should be up as long as you meet the 3 criteria of having properly done your research, with diligence, and still believe something is of value.
And someone famous once said, the best time to sell a good stock is never. The only time they sell stocks that are good, is the underlying reason they invested in the stock has changed.
So in that vein, SHE holders can be split into three broad categories.
1. People who have held the stock before the emergence of Protean
2. People who bought the stock because they performed one or more exercises of my above criteria, and bought on value or potential
3. People who bought during the (frankly, ridiculous) ramp up from 0.05c CR to the highs of 6c
Some people could be a combination of one of the three above.
Whether or not you should sell, hold, participate in the CR, or buy more will be determined by which category of the above you are in, and whether or not something has fundamentally changed (that we, the public could know of - ignoring the potential for insider trading).
First let's look at this chart:
1. If you have held SHE shares from before, if you don't believe in the new management or Protean, then you may want to sell. The current prices are 4x higher than they were before.
Or you may think there's still legs and the volume doesn't warrant it you could wait since you're still already THREE TO FOUR TIMES higher than what SHE was trading for the good part of a year prior.
That could be something to say about the current business direction and management. Do note that the Korean Uranium resources are still under SHE, and in fact have got a reasonable JV deal in the pipeworks while relieving the current company of the burden of financing its activities.
2. People who bought the stock and CR after doing their due diligence and finding SHE to be of value, or at the least got into the hype of other peoples research. Well this group of people should be asking themselves, what has fundamentally changed since the 6.0c trading? Has there been some significant negative news with regards the direction of development of Protean? If anything, major risk factors have been removed. So if you believe in your own research, why would you be selling?
a. Several people of calibre have gotten involved in the SHE -> POE project, and come on board to management, in the process increasing the newsflow (good or bad) significantly.
b. Management (whether you believe in them or not) have conducted due diligence on Protean Wave Energy and seen fit to not only take up the option to purchase the company but to significantly change its business direction toward making Protean its main business.
c. Several important steps toward commercialization have been knocked off in quick succession. Myself being manager of a property development consortium and project manager in our projects, am at times in wonderment of some of the quick "runs on the board" that have been coming.
Even in the good times, in the "safe as houses" world of property development, some good projects can take 3-4 years to complete before we start seeing the returns and commercial fruition of a project. The current project I am working on, we took 6 months due diligence on the land, 12 months for settlement, and 12 months for approval (some of that was concurrent). Then another 12-18 months of project development, engineering, construction, etc. all which is utilising millions of dollars of cash injection and debt, before we see a single cent in returns. And this is in the "safe as houses" field of property development.
We've had successful testing, successful negotiation of steps along commercialization, a commercialization contract and revenue .. all in the span of a few months. For a new greenfield technology. Maybe in some people's world that is not fast enough or good enough.
d. We're conducting a capital raising at 5x the price of the previous round. The prospectus has not even been released yet. So even if there's bad news, where's it coming from? Can it be relied upon? Or is it sentiment.
3. Speculators or traders who bought during the ramp up. This group of people may want to, or already have been selling out. Since trading is their daily "business" or "revenue generator", volume is their lifeblood, and right now there's not much of that going on in SHE. These are people who are also unlikely to participate in any capital raising.
I recently spoke with SHE management, and gave them a serve regarding the poor timing of re-negotiation of the convertible notes, and also some "advice" regarding institutional or private investors having a chance at the expense of the public and LT shareholders.
To be fair to them, there have been certain market environment factors outside of their control, and if you need money fast (which often happens when you are trying to chase a strong opportunity or in the midst of research) issuing prospectus etc. to the public can be a painstaking and long process.
SHE management was candid (believing their reasoning or not) about having no choice but to renegotiate the con-notes after the US "Bloody Monday" where the Dow was down nearly 1,000 points at one stage and closed down 588 points. Much could be said about the con-note holders, but to be fair, even as a long term holder, any businessman would renegotiate given the opportunity. We even do it all the time in property development and engineering, where we will re-negotiate a property sale (given clever wording of the original contract) or subcontract given the right conditions. Everybody does it, it's part of business, and the most successful people do it even more. It hurts to be on the receiving end though, but you live to fight another day.
I think the biggest disfavor SHE management did to themselves and the shareholders, whether it was a genuine mistake or something else - was releasing too much news at one shot. This is also partly due to disclosure rules, and also partly because of trying to negate less than favorable announcements with "good news". The good news got lost with the not so good news. The most significant being:
This is an absolutely without a doubt positive announcement, with only 907 views on HotCopper (obviously there are many other sources for the announcement, but nonetheless) vs some other random posts with several thousand views.
$1.5m USD is $2m AUD at current exchange rates. While the funding isn't coming directly to Protean/SHE, nonetheless it is very likely SHE shareholders will directly or indirectly benefit from it. To put it into perspective, $2m AUD is nearly the ENTIRE BUDGET for research and commercialization based on maximum subscription of the capital raising over two years (source: Notice of AGM, 8.5 - Use of Funds).
Have a serious think about that the next time you consider buying, selling, holding, or posting about this stock.
Please feel free to tear me to shreds if I am incorrect or just another cheerleader. I may soon eat my words if the prospectus is bad, and/or market conditions leading the CR to fail, and/or suddenly Protean falls off a cliff. Then I'll be in the category of just another dreamer who had his money fleeced by clever but not so ethical guys on the ASX. Thanks.
TLDR: The share price is down from the highs of April to June, especially around EOFY. Most volume has been traded upwards of 4x of the previous 0.05c public offer. There has been little other than good news in the last few months. Ask yourself are you a value investor, trader, or a wooly animal that is in abundance in NZ?
SHE Price at posting:
2.0¢ Sentiment: Buy Disclosure: Held
