Correcting research mistakes: Pharmstandard – SELL
A few days ago, I introduced Pharmstandard as a potential special situation with a catalyst in the form of a buy out offer.
Thanks to the input of a few commentators, I recognized that I got one very important detail wrong:
The record date for the potential 16,50 USD offer was already on July 5th, so a few days before they announced this offer. Anyone buying now will not be able to tender the shares. Interestingly, this information was nowhere to be found in the English language section of the official releases.
This of course wipes out the most significant part of the investment case at the current stage and explains the relatively low price.
As a consequence, I will therefore sell my 1% position as of today and watch the developement from the sideline. Maybe there will be another potentially interesting entry after they spin of the OTC drug unit.
In general, I think it is quite important to act quickly if a significant part of a stock analysis turns out to be wrong. It would be even better to identify this beforehand, but that is one of the drawbacks of not having an awful lot of time to analyze. In those cases it is even more important to start a position small in order to lower the risk of things turning out like they did here.
I think it is also a good example for extending the “Circle of Competence”: In this case I have learnt that you should not rely only on the English language announcements of a Russian company….
Anyway, thanks to all the commentators for their helpful comments !!! This is what makes blogging so much fun