Tuesday, 22 February 2011

An Insider's Look into Insider Selling at Neptune

Neptune Technologies & Bioressources
Basic Shares: 42.0 million
Fully diluted: 45.48 million

There has been some speculation over the past several weeks about why management and other Neptune insiders have been selling stock. It’s for that reason we’re going to provide clarification on the transactions, some of which involved fairly hefty volume, as this will give investors a fuller understanding of what has transpired. And more importantly, why.

First to the insider selling plate was Hugh Cleland, Portfolio Manager of Northern Rivers Funds, a fund within BluMont Capital Corporation. BluMont was the registered seller of roughly 3 million shares in late January of the 7.4 million Neptune shares Mr. Cleland accumulated over the years. Mr. Cleland lined up these sales as he had a net redemption while closing one fund and launching another on Jan. 31st. He will still own over 10% of Neptune.
Most importantly, the sales of the shares were to a number of strategic buyers, strategic in the one sense that the buyers wanted to invest in Neptune at this foundational time and before the results of years of work come to fruition. The latter work is a reference to a number of expected key events, among them the anticipated launch of Bayer's krill oil product and the pending public listing of Neptune subsidiary, Acasti, on the TSX Venture Exchange.The buyers are strategic in another sense in that they can bring great market support to Neptune as it grows its business.

The next major block of insider shares sold were by Neptune CEO & President, Henri Harland, Neptune's VP Finance and Administration, AndrĂ© Godin, and Chief Scientific Officer, Tina Sampalis. Together the three sold 515 thousand shares in late January and early February. Under the guidance of a senior investment advisor at MacDougall, MacDougall & MacTier, the sales were made in order to finance the exercise of options that were about to expire and to cover tax liabilities.A strategic buyer was also located by the brokerage firm so there was no disruption to the market. The exercising of options by the three key executives would normally signal to markets that executives were confident in their company’s future.