I don’t know much about state street but David Williams has been up for a (profitable) fight with shorters in the past… another opportunity ?

@Nnyck777 It's true they do a lot of short selling.

$PNV consensus FY25 revenue growth is only 27%, a big step down from FY24 of 57% (albeit that was helped by the strong BARDA kicker and $IART recall - see more below). I believe if 1H reveue comes in anywhere north of 35%, we could see another leg up in SP. Cost base looks reasonably predictable.

Look out for a likely 1Q trading statement in a few weeks, ahead of the AGM.

Of course, if $PNV revenue growth slows down, then for the next couple of years it is exposed on pretty much whatever multiple you choose. Therefore, it remains a high risk stock on short/medium term volatility, in my view. But I remain strapped in for the long term. I've lived through two major shorting cycles on this one, and I've learned to enjoy the ride (if that's possible), so long as the underlying product keeps selling. As far as I am concerned, the shorters can short until they are dizzy - although they are quiet at the moment (Current short position is only 2.1% and still trending down.)

We are back at around my expected value ($2.60) - but I hold this business for the assymetric long-term upside. I dare not reduce because, as luck would have it, the very next day will see a trading update and off she roars.

Of course, I am a totally biased $PNV bull, and if the future looks like the past, then there'll be a pullback at some stage. Maybe it's time in FY25, because, FY24 was such a strong year. But then again, maybe not. I don't see any mis-pricing here to trade.

-------------------------------

Further note - on why $PNV's US tailwind continues to blow into FY25.

While on the subject, $PNV had somewhat of an additional tailwind from the Integra recall in late 2023. According to a report I read recently, Integra's woes are far from over.

See also the AI summary (below) from the most recent conference Q&A.

What's interesting is that other firms in the space like $AVH and $ARX don't seem to be getting quite the same benefit that $PNV got in terms of a US revenue kicker. This is just the right time for $PNV to be grabbing outsized share in the US, even before it files its FTB PMA!

Integra Update - Morgan Stanley Healtcare Conference 6th September (Summary by my BA Perplexity.ai)

Based on the conference transcript, Integra provided some updates on the status of their product recalls and related supply issues: Integra initiated a Compliance Master Plan following the Boston facility remediation, which is expected to be an 18-month journey to address quality system and GMP compliance issues across their manufacturing network.

They announced temporary shipping holds on some products in Q2 2024, which they are addressing on a product-by-product and country-by-country basis throughout Q3 and into Q4 2024.

The company expects the impact of the temporary shipping holds to be about $50 million in Q3 and $10 million in Q4 of 2024.

Integra is releasing products from the temporary shipping holds throughout Q3 as compliance gaps are addressed.

For their Integra Skin product, production is ongoing but not yet at normalized run rates. They now expect to reach normalized production levels by Q4 2024, later than the originally anticipated Q2 timeline.

The company has not stopped shipping Integra Skin to customers but has not been able to meet all demand due to production constraints.

Integra expects to see a return to growth for Integra Skin in Q4 2024 and into 2025 as they regain their position in meeting customer needs.

For 2025, Integra is allowing for potential supply disruptions as they continue to make progress on their Compliance Master Plan, though they don't have specific known disruptions planned.

While the transcript doesn't provide detailed updates on specific recalled products like PriMatrix or SurgiMend, it does indicate that Integra is working through supply challenges and quality compliance issues across their portfolio.

Disc: Held in RL and SM

Yes, State Street DO short companies themselves and/or loan stock to shorters (i.e. facilitate shorting) but remember that State Street are the THIRD LARGEST ETF providers / managers in the world behind Blackrock and Vanguard - see here: https://stockanalysis.com/etf/provider/

They have almost $1.4 Trillion US Dollars of funds under management within their ETFs and they run 143 of them - and that's just State Street - the other two are much bigger - so when you see Blackrock, Vanguard and/or State Street move in and out of Substantial Holder lists, remember that it could be (and I would suggest often is, although perhaps not in this case) just driven by passive investors buying into their ETFs - which are open ended so as people buy those ETFs the ETF providers/fund managers (like State Street) have to buy more of the underlying companies held by that ETF - using Market Makers - but the shares are owned by State Street, and the opposite happens when people sell out of their ETFs. Never forget passive investing flows - it accounts for more trading than you probably realise.

State Street's ETFs are called SPDR - here's a list from earlier this year: https://www.ssga.com/library-content/products/fund-docs/etfs/us/information-schedules/spdr-etf-listing.pdf

It starts off with US company ETFs and then there a heap of global ones, a small cap global ETF and ETFs specific to health care and biotech are all in there.

Just One Example: https://www.ssga.com/us/en/intermediary/etfs/spdr-sp-international-small-cap-etf-gwx

That link is to their info on their GWX ETF, which is their SPDR® S&P® International Small Cap ETF and it currently has HUB24 (HUB.asx) as a top 10 holding in that ETF - and you might say, well HUB has a $4.6 Billion market cap, and PNV's is more like $1.8 billion. Yes, but that one ETF holds a whopping 3,422 companies, so they go a LONG way below the market caps of their top 10 positions. The GWX ETF's Weighted Average Market Cap (per company held in the ETF) is US$1,255.51 Million or US$1.25 Billion, and that's around PNV's market cap.

SPDR's GWX ETF also has Australia as its third largest country weighting after Japan and South Korea - see page 2 of this: https://www.ssga.com/library-content/products/factsheets/etfs/us/factsheet-us-en-gwx.pdf [GWX is an ex-USA small cap ETF for US investors mostly, so doesn't hold any US companies]

That one ETF alone would NOT account for State Street owning 5% or more of PNV however because that ETF only has around US$673 Million of FUM, so split across 3,422 companies, that's not going to do it, but it's just one example.

That said, even though they do most likely hold PNV shares due to those many, many ETFs that they manage, they also loan shares to shorters, and/or borrow shares to short companies themselves, as evidenced by their list of Global Master Securities Lending Agreements and Securities Lending Authorisation Agreements at the end of their Notice of initial substantial holder for PNV today that list State Street as one party and various unnamed counterparties to those agreements. So there could be some shorts building.

OR there could be some shorters returning stock to State Street due to closing out their shorts - see here: https://www.shortman.com.au/stock?q=pnv

Shorts have been falling, which makes sense because the PNV share price has been heading north east at around a 45 degree angle, just the way we like to see it.

Share price now higher, more shorts closed out. That shortman.com.au data is T+4, so four trading days old, but it does show a steady decline in PNV shorting from above 5% in November, down to just below 3% in late March, back up to around 3.5% shorted towards the end of June to now probably around 2% if the trend has continued for the past 4 trading days. The decline in shorts over that last 2 weeks was a fairly steep drop, so the pace that PNV shorts were being closed out in late August and the first half of September was certainly increasing.

In that light it makes sense to me that if State Street had previously loaned their PNV shares out to people to short (as they do) and those shares have now been returned to them - because those shorters have closed out those shorts - in addition to State Street having to buy more PNV shares as PNV's share price rose - to keep State Street's SPDR ETFs in balance - then that might do it.

The share price is behaving in a similar fashion to the way it was from the first straw 3 years ago.

What's different this time?

@umop3pisdn quite a bit, including:

• Now profitable
• Now $>100m sales; 3 years ago <$30m
• Now, no issues with hospital access. 3-yrs ago, sales growth muted due to pandemic constraints
• Now, sales in 29 countries to grow to 41, then around 6-10 with only 4 with significant sales
• Now, standard of care in more markets
• Now, broad applications in burns and trauma, with the latter growing strongly; 3 years ago - burns focus
• Now approaching interest rate easing cycle; 3 years ago SP decline exaccerbated by rising interest rates
• Now - CEO with global medical devices track record; 3 years ago = not

But maybe for technical analysts there are similarities. I don't invest that way.

Would this then imply that the share price was massively over-inflated 3 years ago?

Yes, is the short answer.

But how did this happen? To understand this, you need to go back 5 years and understand the history.

In 2019, $PNV achieved sales growth of 140% from $5.99m to $14.38m, At the 2019 AGM, the then CEO Paul Brennan said that he expected Novosorb sales could double every year for 5 years. I was already a holder at the time, and this struck me as quite a statement (just do the maths!) In my view, it clearly was never going to achieve $450m sales by 2024 because of: 1) the wide range of competing and emerging products in its potential indications, 2) the fact that surgeons tend to be conservative in changing their practices, 3) it takes time to build evidence leading to changes in the standard of care in each indication and 4) the immaturity of the $PNV sales force.

Anyway, the SP has always been volatile, and after the COVID sell-off, early re-opening saw a return to enthusiam, and getting into 2021 some brokers started putting price targets of up to $4.00 on it. When the price ran up to $4.00 I decided it was over-valued and exited.

2021 then saw several things happening: sales growth comparables meant Paul Brennan's remarks lost all credibility, as a result cashflow breakeven got pushed back indefinitely, new product launch timelines didn't materialise, interest rates went up and unprofitable company share prices got hammered .... including $PNV.

That's a summary version of the longer answer. In my view, in 2021 at $4.00 it was over-valued, But in early 2022 when the fall continued below $1.50 and even below $1.00 it became way under-valued again. And so, I bought it again.

I think we could all list a couple of hundred shares that get ahead of themselves and then appear a few years later to not have improved. All those points of progression @mikebrisy pointed out regarding PNV highlight the importance of understanding the business you invest in and focusing on the progression there rather than price.

One of the things I have been personally working on is to set my buy price after reviewing the financials and combining this with all the other business markers I am monitoring. It has taken patience but, I can already see the value in my initial buy in price. Of course you will miss the ones that run and don’t seem to pull back.

However, there is always another business to invest in. That’s the issue with other forums much of their comments are based on the timing of their initial buy price.

In terms of PNV it ran up to 2.60-2.70 and it took some will-power not to chase the price. In fact it was one of your posts that allowed me to patiently wait. Now it is in that 2.30 zone I think is attractive. That patience has resulted in a 15% more attractive entry point. Easy said than done but Strawman has helped.

I am presently using that same focus re: AIM :)

I’m traveling. So can’t write a long response. But the $4 was a short squeeze. And not reflective of the value PNV was at that time.

pNV has also been played with by the bid end of town. And often. ASX 200 in/out games etc.

this things can be used for a better entry. Or even traded.

@NewbieHK this is an excellent point, and so important I want to expand on it.

It takes a lot of work to develop a deep understanding of a firm. Because to understand a firm well, you also need to understand the market in which it operates and it's competitors. The benefit of holding - or at least following - the same company over a long period of time, and perpertually researching it, is that your knowledge deepens and as long as you remain active, the incremental effort is relatively small, and becomes smaller over time.

So, with this in mind, I've developed the following capital allocation approach.

I have the personal capacity to follow about 15-20 companies in depth. Some I own, some I don't (as of today). And enough remaining capacity to actively watch about another 15-20, a list I churn quite hard. Of course, I consider many, many more and dismiss them for a whole host of reasons - often just because there are uninteresting to me, or sit well outside my circles of competence.

Sometimes, with a little research (a few hours) you can identify that a new idea is potentially attractive. But the very information that's put it on your radar screen is liklely also available to others. So perhaps when I first move and take an initial stake, I am caught up in a positive news-SP up-trend. It is important to be self-aware that this might be going on.

Because of this, I typically only place about 20% of my intended capital allocation when I first initiate a position in a new stock. Sure enough, more often than not, the momentum changes, and you get the chance to add more at a much more attractive price, or to exit as you learn more. The initial 20% is a hedge against the possibility that the trend becomes so strong that it moves out of reach. At least I'm on the bus, but with still plenty of capacity to add more at a future date.

Having some skin in the game by being invested helps my psychologically to focus on getting to know the company better. Have I made a mistake and need to get out? Or have I made the opposite mistake and need to buy much more? Or, do I just allow time to do it's thing - testing my thesis and allowing me to learn more over time?

Like you, I am doing precisely this with $AIM. I've placed an initial tranche at a price which - more likely than not - we'll see a pullback opportunity (or several!) over the next 12 months. But I am interested in what happens over 5-10 years, and not the next 12 months.

Of course, I still have to consider the initial investment as attractive on valuation grounds. But to be brutally honest, how much can I possibly know with a few hours research? Answer, not much. I'm likely to be swayed by CEO charisma or analyst views and momentum, or even group-think (e.g. on SM, which is why bear case challenges are such an important part of our discourse here).

Another company where I am applying this is $BIO. Because it is quite a speculative play for me, my "tranches" have been even smaller than usual. I can see highly plausible scenarios where the value of this business today is worth well north of $1.00. So in July, in RL, I initiated with two small tranches at $0.62 and $0.73. Before reporting season, I started my deep dive, and lost myself in the world of probiotic clinical research - the good the bad and the ugly - and also did some research on other more mature probiotics specialists. In parallel with this, the SP pulled back, and with increased confidence I had opportunities to add more at $0.545 and $0.475, taking my RL position to 1.25% of my ASX portfolio at an overall cost base of $0.556.

TBH I don't have a clearer view on value at this stage, but I am more confident that >$1.00 is reasonable. My plan is to listen to the 2027 growth strategy presentation which is coming in the next 2-3 weeks and, if that further strengthens my view, to take my holding up to 2.5% at the next time of price weakness. I highlight this point because the market has gotten a little excited about the business with the cholesterol product and the FY24 result, so we are now at a SP of $0.785. Who knows, if Blair does a good job with his 2027 Strategy presentation it might go on to climb north of $1.00. But it takes discipline not to get caught up hype. A lot of that money will be dumb money, following momentum, and I am pretty confident that some time in the next year, I'll get a chance to do better. Adding around $0.60-$0.65 gives me a good margin of safety to where I think the fair value lies. Eventually, I'll do some more detailed modelling to develop a more robust view.

Importantly, my price levels are informed by fundamentals and are not static. For example, the strategy presentation or the next quarterly sales report, or clinical trial data might cause me to change my view on value - up and down. So, I find you have to follow the businesses you own closely and carefully, and be guided by your valuation and not the "feel good" or "feel bad" of SP momentum. It is easy to say and harder to do, particularly when many - if not most - of the "talking heads" are momentum investors or technical investors. BTW, I am not criticising these, but just saying that these are not my styles of investing.

So, coming back to $PNV: there is some short term negative momentum building. But as it's not based on any information beyond SP movements as far as I am aware, I choose to ignore it. And I particularly ignore it because we are around the bottom end of my valuation range.

To conclude: I believe it is important to know what kind of investor you are: know your lane, and stay in it. Me: I don't invest in share prices, I want to invest in a business. But I also want to make money, so if someone thinks my business is worth a lot more than I do, then I'll take their money. And then I'll buy it back from them if I think its worth a lot more than the SP on another day.

@Parko5 very good point, I left out that important context.

I've posted the short position from that time. There were two phases.

End-2020, closing of shorts was driven by analyst upgrades which - interestingly - wasn't really driven by much fundamental information.

When the SP started increaing in Q4 CY2020, the shorts weighed in. But towards the end of the year analysts continued to upgrade $PNV PT with one even putting in a PT of $4.00.

Shorts then started covering, which drove the SP from around $2.80 right up to over $4.00.

At the time my valuation was around $2.40 ($1.60-$3.50, range), so I said thank you very much I'll take $4.00, ... in fact I offloaded at a range of prices from $3.43 to $4.01.

The second phase was in May to August 2022, and I think we all remember this one more clearly, because DW was in the market buying large volumes from the short sellers, and jaw-boning them at each presentation.

He won. And he used the proceeds to buy a house in the US for $10m, I seem to recall!

The second wave of short selling was, I think, more driven by the fact that even though sales were strong and the SP was recovering off its early 2022 lows, it was becoming increasingly clear that 1) Paul Brennan's 100% annual growth story was never going to happen and that 2) $PNV was running out of cash, and would have to raise capital (which they did in late 2022).

Compared to those volatile times, today the shorts have largely left the scene ... for now. (See bottom chart)

So, @umop3pisdn - back to your original question - the short postion today is very different from this time 3 years ago.

@mikebrisy Thank you very much for these detailed responses. I'm still finding my feet as an investor and this has been very informative!

A pleasure! I find it very instructive for myself to go back over history, to make sure I've learned the lessons. Sometimes, it is only with the passage of time that things become clear.

Not sure if people have noticed, but as the PNV shorts continue to reduce, so has the PNV share price over the past few weeks, down from $2.65 on the 1st of this month to $2.34 today. I exited PNV today here, because I am repositioning parts of my portfolios towards some shorter term trading gains - hopefully - unless my cunning plan turns pear-shaped, as sometimes happens.

My concerns over PNV are:

1. Their SP has been showing relative weakness, i.e. falling on some of the ASX's strongest days over the past few weeks.
2. One director has just quit, effective immediately - see here: Retirement-of-Non-Executive-Director.PDF [30-Sep-2024] No notice was given, nor was there a reason given for his departure, other than that Bruce had decided to leave, effective immediately.
3. Two more directors have sold significant quantities of their own PNV shares on-market this month. See here: Change-of-Director's-Interest-Notice---Andrew-Lumsden.PDF and Change-of-Director's-Interest-Notice---Leon-Hoare.PDF [both on 02-Oct-2024]
4. The director who quit the board at the end of September, Bruce Rathie, sold 750,000 PNV shares on-market on 13-Sep-2024: Change-of-Director's-Interest-Notice---Bruce-Rathie.PDF
5. The company's Chairman, David Williams, is a Promoter Extraordinaire, which is great for raising a company's profile, and spreading good news, but he tends to put a positive spin on everything, so I don't know that we can rely on him to tweet out the bad news as well as the good.
6. While I seriously respect the well reasoned opinions and research of the brains trust here on SM - and don't have any solid counterpoints to make - so won't try - my main issue is that I just don't have the same conviction around this company as I do with other companies that I understand a whole lot better, so my thought process is that I've strayed outside my wheelhouse again and I better get back in it before I get washed overboard again by another freak wave.

Short version is: I sense that all is not well, but I can't explain it any further than that.

@Bear77 I have also been observing those points.

SP is stuck in a range until we get sight of the revenue momentum of 1Q FY25. Latest will be at the AGM, but expect a trading update any day.

DW said at full year results, they are going to stop record month reporting. I’ve been on at DW for 2 years convincing him to go to regular quarterly trading updates.

Rathie … 14 years on board, 38 yrs into his career. Maybe he’s just scaling back or wants a change.

Other Directors selling … not great but they still have decent chunk of their positions.

For me, it’s what DW does that counts.

If there is a loss of momentum, he’ll have seen it coming and would have sold down. If he sells down, I’ll take that as confirmation.

So it’s all about the next report for me.

Alert, but not worried. ATM.

Held.

Thanks for that @mikebrisy - I appreciate the response. Agreed, Hoare still has 1.1m PNV shares despite selling 100,000, but Lumsden has just sold one third of his 150,000 shares, so now only holds 100,000. Rathie still holds 2.5m shares but no longer has to disclose his sales because he's not on the Board now and is also not a substantial holder, so he may continue to sell down and we won't know.

DW is a billionaire and if he did sell down it would likely see a negative PNV share price reaction as others follow his lead, which I reckon he is fully aware of, so his motivations might be a little different, including that he may have a longer time horizon for his PNV investment than the others where a substantial share price decline might impact their own personal wealth more than it would for DW who has a number of irons in a number of fires, including his own consultancy business and other investments and Chairmanships. He would be more aware of and concerned about the optics of selling down, so if he did sell down it would DEFINITELY be a red flag. My concern is that there could be issues and they're just not big enough (yet) to force a move from the big fella.

I'm likely jumping at shadows, but if in doubt, I'll sit it out.

Great post @Bear77 and timely too.

I have been watching this one for some time from the side lines.

Great to get your take on the sate of play.

A look through reviews on glassdoor is informative, though to be taken with a grain of salt... average review is "average", but quite a few comments outline a siloed and potentially repressive culture driven from the top-down.

The reviews are mixed and not universally negative, but interesting to consider alongside the above observations

Held, but losing conviction. Good product but PNV are not the only ones with "skin" in the game (lol)

Will be very interesting to see if PNV breaks recent support around $2.30 or if buying action comes in

@Aaronfzr I think everyone is in "wait and see" mode, and I'd expect low volumes and lack of any direction until there is new information.

There's a big difference in revenue growth from last couple of years and consensus for the next 3 years, implying the market is assuming growth is starting to mature (if 27% consensus for FY25 can be considered maturing,.... of course it is cf. 2024 growth of 57%).

And of course, because they've just passed through the inflection point, no-one really has much idea what earnings will be this year.

There's also been an absence of newsflow. Is that because they've stopped reporting "record months" as DW indicated the Board was considering? Or is it that there hasn't been any record months for a while ... consistent with "maturing"? The communication on that point was less than clear.

If form is anything to go by, there is likely to be a trading update ahead of the AGM, which is on 28th Oct. I'd hoped we might have seen a 1Q Trading Update, ... but its starting to get a bit late if that was the plan.

My position is, in the absence of new information, my view is unchanged.