The price fell, why?

Holy smokes, what has happened to the Aspen share price? Well, a lot actually and unless you were short the shares I am afraid that it has not gone in the right direction for you. We have been a little puzzled, there are three explanations and it is possibly a combination of these things. First and foremost, Glaxo have sold shares and have indicated that they are possibly exiting out the business in time. It has been a good relationship of injecting assets, on Glaxo's part, in return for greater ownership of Aspen. Relative in size and scale it was a lot more significant in the life of Aspen than Glaxo. The relationship between the two however went back some .... excuse my use of street language! With Glaxo exiting, there is a likelihood that the market would anticipate another bout of share price weakness and perhaps even another discounted placement. There is a connection between the cash flow needs of Glaxo (results yesterday) and them possibly exiting the remainder of Aspen pronto. Take every cent you need, in this case it is negative for the Aspen share price.


Secondly there is always the possibility of a large deal in the works. The management of Aspen have always indicated that if the right deal presented itself, they would ALWAYS be up for it. Using ever increasingly expensive scrip to pay for deals is something that shareholders have been on board with. It has worked in the past, the company does not close deals for the sake of it. That has been proven over time. In fact, back in the day the company passed over deals as they did not make sense. Obviously if there was the sense that something was happening, from a deal point of view, the company is obliged to let the market know. That has not happened yet. It is always a possibility.


Lastly, the stock is not cheap, the stock has never looked cheap for that matter. That is simply another argument to use. I suspect that whilst this is the case, this is a business that you must own. It is relatively small by global standards, yet the chaps in charge have global aspirations. They are more than a safe set of hands that will continue to create value for themselves and their shareholders. The best is still to come. I am very happy to recommend the company as a strong buy at these levels, if you are underrepresented in your portfolio, or have none at all, get them now.