AS THE Punter expected, the initial flood of interest in the shares of the latest infant food company on the stock exchange faded fairly quickly.
Bubs Australia Ltd (ASX code BUB) offered its shares at 10c on January 3 and saw them soar to a high of 45c three days later.
At the time of writing they were back 22c and potential buyers of the shares were beginning to outnumber sellers. The Punter, however, is still not a buyer, though he will keep an eye on the toddler.
The sudden resignation last week of the chairperson, Alan van Noort, was perhaps foreseeable. A barrister and chief executive of Hillcrest Litigation Services for the past 12 years, his only real connection with Bubs was arranging the reverse takeover of Hillcrest, which enabled the infant food company to get its stock market listing.
What is unusual is that Bubs has no one lined up to replace him. Also surprising is the fact that he sold 65 per cent of his shares on January 5, only two days after the company came to the stock market, walking away with $1,050,300. He still has a substantial stake in Bubs, but it was hardly a vote of confidence in the company. Bubs, however, is unusual in a number of ways. It has come to the stock market with a recent track record of rapid expansion but soaring losses and negative cash flow.
Sales in the last financial year approximately doubled to $4 million but inventories over the same period quadrupled to $2.5m. Auditors Logicca Assurance were unhappy about the lack of evidence to support the inclusion as income of $157,000 from a deposit forfeited by one of Bubs’ customers.
The Punter, meanwhile, notes Murray River Organics (MRG) raised $35m at $1.30 a share when it came to market in December.
