I started to write the following reply to a question on the Hot Copper disccusion board. As it became longer than I intended I decided to post it here.

It seems I have not made my position clear, so perhaps a little clarification is in order. I have a sizable investment in Biota, which I bought around 40 cents when I was analysing Biota on this site. I have not sold any shares. I do not care where the share price in today, tomorrow or next week. When I see a poor risk/reward profile or a better place for my money I will sell.

I have no contacts at Hunter Hall. I simply pick up the phone and call people when I want information. Most business people are happy to discuss their business, especially if you ask open, well informed questions.

I don’t think I endorsed the $1.80 Taylor’s value of Biota. I said their analysis was good as it was full of excellent information. However, their value is in the same ball park as my valuation mid point. If LANI is success, Biota do a good deal for worldwide rights and Relenza royalties are good then we could see considerable higher prices this year.

I agree that a low royalty payment from GSK to Biota is very unlikely for this quarter, but if there is any place that a little conspiratorial thought may be well placed it is in GSK. GSK do what is in their interest and it is mere coincidence if that aligns with our interests as Biota owners. It could even be possible that GSK’s best interest is in making companies, which operate in their segments, weaker.

I have now established a small position in Hunter Hall. I am extremely positive on the probability of an excellent return from them, but caution that it is extremely thinly traded with very large bid/ask spreads.

I have no opinion on the recent share price movements of Biota. I find all the talk of manipulation vaguely interesting, as I wonder where these ideas where seeded from. I have read scores of investment and finance books and academic studies and not once did I read about share price manipulation like discussed here. If someone can point me to an academic study, book or even a website that discusses this manipulation I am interested in reading it. I’m not saying it doesn’t happen.

The high sell volumes on Biota are interesting and perhaps in a small market like Australia, in a stock mainly owned and traded my small retail holders, the holders/traders are easily manipulated by such trivial things. In my investing I place zero weight on buy/sell volumes. If you look at Alleron IM they have had some interesting changes in their Biota position. Perhaps they are attempting to manipulate the share price, but even if they are, I ask SO WHAT? How does it really affect you or the intrinsic value of Biota.

I recently watched a video of Peter Hall, from Hunter Hall. He surprised me with one of his comments on Vestas Wind Systems. Hunter Hall state their investment philosophy as “The Funds’ are managed using a deep value investment philosophy based on fundamental analysis of individual companies.“  Mr Hall basically stated that they were trading Vestas, timing the share price peaks and troughs, aiming to lower their cost on Vestas. While I love his adoption of a fusion mentality, timing a share is the antithesis of value investing. I mention this as perhaps there is a belief among Australian fund managers that they can time and perhaps some even believe they can manipulate share prices.

As always this is not a recommendation, do your own research. I am wrong a lot of the time.

Related posts:

1. Hunter Hall discusses Biota
2. Biota Relenza Royalties and Production Update Overnight
3. Quick Notes on Biota
4. Biota 2008 AGM
5. Biota Hits Ball Out of Park
6. Talk to me CV Therapeutics Board! I’m the Owner