Xero shares climb 24% in a week as seller leaves the market

Xero CEO Rod Drury
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Shares of Xero [NZX: XRO], the cloud-based accounting software firm, have jumped 24 percent over the past week, amid market speculation a large seller has left the market.

The stock climbed as much as $4 to an intraday high of $20.40, the highest since October, from last Monday's closing price of $16.40. The stock recently traded at $20.00.

The Wellington-based firm's stock came under selling pressure last year, falling from a high of $45.99 in March to as low as $15 last October as investors mulled the outlook for growth, particularly in the US, while the escrow period for its 2013 capital raising, which saw it book $180 million from investors, came to an end.

Last week's sudden climb in the share price saw the stock market operator and regulator issue a 'please explain' notice to the company, asking Xero to confirm it was disclosing all material information which might be behind the gain. The tech firm confirmed it was, without issuing any further explanation to the gain in its shares.

Market sources told BusinessDesk they thought a large seller had exited the stock, removing any downwards pressure on its price.

"As far as I know it is mainly the selling has dried up, there was one large seller in the market place and he is pretty much gone," said Grant Williamson, director at Hamilton Hindin Greene. "The buyers are definitely back in control of the stock at the moment."

The appetite for Xero has flowed through to other tech-based companies, Williamson said. Diligent Board Member Services, the governance app developer, has gained 11 percent over the past month, and recently traded at $6.10, coming off from the highest level it had been since July 2013. Outside the benchmark index, Finzsoft Solutions, the software developer under a takeover attempt by its managing director and major shareholder, has gained 19 percent over the past month, and recently traded at $3.80.

"They're following on the back of Xero," Williamson said. "There has been renewed interest in all of those types of stocks and that's getting all the prices trading higher. Although the stocks that pay high dividends have done extremely well, investors are also looking to add a bit of growth to their portfolios as well."


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That doesn't make a lot of sense. Unless the seller was desperate to get out at a 20% discount.. If the seller was so large as to manipulate the price of a multi-billion dollar stock to that degree they clearly aren't a small retail "ma and pa" investor, and would have been alive to the "upward pressure" which it is insinuated exited all along.... and yet they happily take a 20% discount from their own sales activity...a bizarre stock.

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The large seller may have made an acceptable profit, or had a better investment opportunity it wanted the funds for, compared to the price it paid originally for its Xero holding. So it wouldn't see exiting its holding as being done at a "discount" at all.

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Why didn't you name the "large seller"? It seems like important information that any decent reporter would include.

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The large seller was likely the one that triggered the market notice of dropping below the 5% threshold in January.

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So we can explain the sudden increase this week by coming up with a large seller, but nobody thought to mention this one large seller when the price was plummeting a few months ago? OK then.

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