It has been a rough first two weeks of trading for shareholders of recently listed VA Automotive. However, the last two trading days marked a trend shift and actually finished in the green. Nevertheless, since its first day of trading on Nasdaq OMX’s First North list on Monday December 1st, the share is still down almost 19% compared to its IPO price of SEK 6,50.
As we could report last week, the share price decline was rather mysterious due to the absence of any company communication or industry data. On the contrary, on December 2nd, US November auto sales topped estimated with an annualized sales rate of about 17.2 million vehicles, according to industry consultant Autodata Corp. That was the best pace for that month since 2003 and well ahead of the estimated 16.7 million in a Thomson Reuters survey of 41 industry economists and analysts. Obviously that is great news for a supplier to the automotive industry, such as VA Automotive.
The only reasonable explanation for the share price decline that we came across in our investigations was the fact that Mr Rolf Gustafsson has been unwinding his shareholding in the company. Mr Gustafsson used to be the CEO of Moderna Verktyg, a company that was acquired by VA Automotive. To our knowledge, Mr Gustafsson is not involved in the operations of VA Automotive and the company does not list him as an insider anymore. It is our best guess that Mr Gustafsson wanted to get rid of his holding for a while and is now using the opportunity given by the public floating. As of September 30th, Mr Gustafsson owned 325 440 shares in VA Automotive, according to the company website.
Looking at the trading statistic for VA Automotive, as provided by Nasdaq OMX First North, we find it interesting to note that the volume in shares traded has gradually declined ever since the first day of listing. In our opinion, this is a sign that speaks in favour of the thesis that Mr Gustafsson was behind the oversupply on the sell-side. By the end of last week, we had the two trading days with the lowest volumes traded, as you can see in the table below. Maybe this is a sign that Mr Gustafsson is done.
It will be interesting to the see an updated shareholder list for VA Automotive and we hope to see it soon. Not only will it become obvious, whether Mr Gustafsson did flood the market with his shares but also we are hoping that further insiders have participated in the IPO or utilized the share price slaughter (e.g. the CEO who did not own any shares prior to the IPO).
Without an overeager seller in the market, we believe the market can finally start to focus on the fundamentals of the VA Automotive case. We believe that the share should trade around SEK 10, as indicated in our article from December 1st. The VA Automotive stock offers a great amount of fantasy. The Swedish capital goods sector is supported by a weakening SEK, which makes it even more competitive on the international arena and the growth drivers for the automotive industry are in place for the years to come.