Disclosure woes hit Newcrest
Despite a stable gold price, shares in Newcrest have slipped more than 4 per cent in the past two trading days as controversy rages over briefings the company gave analysts in the weeks before a major corporate restructure on June 7.
Newcrest has denied revealing market-sensitive information, but has not denied that briefings took place.
ASIC and the ASX are investigating why the Newcrest share price lost almost 15 per cent of its value in the 72 hours before the restructure was made public, and also why numerous analysts downgraded the stock over the same period.
Newcrest shares have fallen on five of the past six trading days since June 7, despite the gold price being steady during that time.
When asked if those falls and Tuesday's 20¢ fall to $11.15 were likely to be related to the disclosure speculation, Shaw Stockbroking analyst Vince Pisani said "absolutely".
"If there is going to be any suspicion of wrongdoing, a lot of fund managers would think if they hold the stock knowing full well that there could be an inquiry, then they've got to justify that to their trustees," he said.
"There is no way in the world that you would walk in front of a trustee meeting and say 'I'm still holding Newcrest', only to hear 'Don't you know all this stuff is going on'?
"People are conservative and say, 'I'm going to take a loss and at least I can justify it because there may be an inquiry'."
Mr Pisani said the stock would be a good buying opportunity at these prices if the company was cleared of any wrongdoing, but there has been no sign of that yet.
"Not a lot of people want to buy a stock if there is a hint or a question mark on selective briefings, if that was done," he said.
Newcrest shares have been sliding for much of the past nine months on the back of repeated gold production downgrades.
Frequently Asked Questions about this Article…
Newcrest's share price slid after market speculation about selective briefings to analysts in the weeks before a major corporate restructure on June 7. The stock lost almost 15% in the 72 hours before the restructure was made public and has fallen on five of the past six trading days since June 7.
The controversy centres on briefings Newcrest gave analysts ahead of the June 7 restructure. The company says it did not reveal market-sensitive information but acknowledges briefings took place. Market watchers are concerned those briefings may have affected the share price and analyst recommendations.
Yes. The Australian Securities and Investments Commission (ASIC) and the ASX are investigating why Newcrest's share price fell sharply in the 72 hours before the restructure and why numerous analysts downgraded the stock over the same period.
No. Newcrest has denied revealing market-sensitive information, but it has not denied that analyst briefings took place. There has been no indication in the article that regulators have reached any conclusions yet.
According to the article, the gold price was relatively stable during the recent falls, suggesting the share price weakness was driven more by disclosure speculation and market reactions than by changes in the gold price.
Some analysts, like Vince Pisani of Shaw Stockbroking, say the stock could be a buying opportunity if Newcrest is cleared of any wrongdoing. However, because ASIC and the ASX are investigating and uncertainty remains, many investors and fund managers have been cautious. Consider the regulatory uncertainty and seek personal financial advice before buying.
Fund managers often take a conservative approach when there is suspicion of wrongdoing or an inquiry. The article explains many would rather sell and report a loss than hold the stock and face questions from trustees while an investigation or uncertainty is unresolved.
Yes. The article notes Newcrest shares have been sliding for much of the past nine months largely due to repeated gold production downgrades, in addition to the recent disclosure-related concerns.
Call 1300 880 160
Start a chat
Schedule a call
