I believe this will be a failed/false head and shoulders in that I don't anticipate the share price to drop below the right hand shoulder. I expect a reversal. Unless there is some very bad news in the yearly report or the shorters are able to exploit overall market weakness/pull-back to drive it down further.
Trading on the 17 July signaled to me that the shorting campaign to drive the price down was exhausting. buying kicked in to push the close price back up above the open.
The chart moved into accumulation with support around $2.20 and resistance around $2.30. Last week however, short interest went back up with another push to bring the price down. Note that head and shoulders neckline (yellow) appears to be maintaining support.
I am very long term bullish on PNV. I bought around the $2.20 to $2.25 mark recently and if it drops down below $2 I will buy again. It could get down to $1.80.
Polynovo is still an early stage, pre-profit, company. COVID-19 will have had an impact on what should be an exciting period of sales growth through adoption by surgeons. Its Novosorb Biodegradable Temporising Matrix, I believe, will be widely adopted as best practice for dermal reconstruction, such as under skin grafts, other reconstructive surgery such as Mastectomy. They are developing a product for hernia repair.
Being pre-profit and trading at an elevated PE, stocks like PNV tend to be the first to fall, fall harder but recover sooner during a market correction. That was the case during March.
Phil King of Regal Funds Management came out and said in the media some time ago now that they were shorting PNV. Well, Regal haven't done too well with their short strategy lately so I read. I'm certainly outperforming Regal's Long Short fund by a country mile.
But I guess that is the great thing about being a fund manager. You only have to find enough people more stupid than you to part with their money to generate an income stream through management fees.
Phil King you're a ding dong. Here's some advice. Stick to the basics. Is the product a winner (does it meet a need)? (hint: it's the best and likely to be globally adopted clinically, perhaps to become clinical best practice). Are the management on their game? (hint: yes). Is the strategy right (hint: yes, but COVID-19 presents headwinds).
But then again, I should be thanking you Phil and your hapless investors who are getting what I consider to be a poor return in your long short fund. You see, I get to profit from your short campaign, which you so kindly announced to the media ("'Bubble' in biotech stocks troubles investors", AFR 25 Nov 2019) along with your reported proclamation that the biotech sector is "the biggest bubble in the Australian stock market" back in November 2019, not long after you were inducted into the "Funds Management Hall of Fame" (I know what you're thinking, does the managed funds industry really have a hall of fame? Well ask yourself, does the circus have clowns?) around about the time the AFP raided Regal's offices and ASIC announced an investigation into Regal ("ASIC investigates prominent investor Regal Funds Management", SMH, 26 November 2019).
Little retail investors like myself can sit back and watch the chart and the shorting and nimbly trade and take advantage of the long and short campaigns of fund managers like you without the inconvenience of AFP raids and ASIC investigations.
Anyway... PNV, I'm long, recently topped up but the share price could be driven lower in the short term by the accumulators before a turnaround and it head back up. Great company, good management, great product and good strategy and implementation so far. The yearly report will give an updated picture of how things are going, especially given COVID-19 headwinds.
[edited: typo "AFP" not "AFR"]