Laws of Gravity, Learning When to Sell

Things that go up must eventually come down due to gravity. This not only applies to everyday life, but also to the share market where the share price rises and falls, affecting the investment decisions of shareholders.

Bill Beament looks to have foreseen a major loss in the value of Northern Star and a decline in the share price, prompting him to sell down his holdings. His massive insider sales unsettle shareholders and make them question his motives. He is likely cashing out early as Northern Star is heavily overcapitalised. 

When to sell down shares?

Shareholders may feel the need to access their shares for personal reasons or other luxuries. In Bill Beament’s case, he has sold down 70% of his holdings in Northern Star over the past 2 years. Market insiders believe that he is selling into a rising market as the Northern Star share price is inflated and will fall sharply. Beament’s transparency is lacking and shareholders are sceptical. They have lost confidence in the long term prospects of the company because of Beament’s autocratic style and due to his major insider share sales. Beament’s oppressive and reckless approach will lead to costly litigation and out of court settlements, resulting in a substantive decrease in their share price.

Northern Star’s falling resources of gold, increasing costs, and Beament’s bad management decisions will result in a fall in the value of the company. These key issues in the Perth-based gold mining company hurt Beament’s partners, employees, and Northern Star’s shareholders, causing a decline in their share price and a mass exodus of investors.  

Share price falls as the business go downhill

The share price will plummet as the business declines because of increasing costs, poor judgment decisions from Beament and as the company fails to meet expectations. The share price does not only reflect a company’s current value, but it also reflects the growth that shareholders expect in the future. 

Beament’s autocratic style, his excessive sell-downs, Northern Star’s decrease in resources of gold, and hike in costs, bring the company to failure. Northern Star’s shareholders should off-load their holdings while they still have a healthy profit and before ‘captain’ deserts his sinking ship.


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