Price drop followed by price rise?
So why did it drop so significantly over the last year? Most everyone holding since 2018 has seen a dramatic reduction in their paper profits but are still in a profitable situation. They had no tax reason to sell. However, two investors, CI Investments and Claret Asset Management who claimed to be passive with their 13G filings were exceptions. Between them, they recently sold 4.75 million shares.
CI Investments first filed their 13G in Feb 2021 for 2.33 million shares. So, they must have purchased in Jan/Feb 2021 $10-13 Cdn. They filed another 13G in Dec 2021 for zero shares which means they sold in Nov/Dec 2021 at $7-8 Cdn for a loss of about $3. The timing suggests tax loss selling.
Claret Asset Management first filed in Jan 2020 so they must have purchased between $8-9 Cdn.
They filed another 13G in Feb 2022 which means they sold in Jan/Feb 2022 at $6-7 Cdn for a loss. They probably sold to do a sector rotation of their holdings coinciding with the pandemic ending. In other words, the price decline caused by CI Investments sale made VMD a candidate for triggering a tax loss.
Had these two investors not sold, I expect the price would be $7-8 Cdn today. One investor unloading such large holdings in a thinly traded stock took a toll on the price which in turn triggered another to review their holdings.
However, the 13F filings suggest that most other institutions are still in a profitable position having held since the spinoff in 2018.
Now the question is whether new institutional and small investor buying will occur. This is where management has to give some meaningful guidance post pandemic and get on the road again to drum up investments.
The price will likely return to $7-8 in short order but beyond that will take some rethinking of their IR strategy or a quarterly track record that returns it to growth. That may not happen in Q1 2022 because the Omicron surge would have limited uploads in the first six weeks. But Q2 and Q3 2022 are looking favourable for its well positioned model to perform at its best.