Construction company Stefanutti Stocks [JSE:SSK] saw its share price plummet on Wednesday, after Sanlam Investments disposed of nearly half of its shares.
Stefanutti stocks issued a notice to shareholders on Wednesday afternoon indicating that the investment management firm's total interest in securities was reduced from 9.97% to 4.58%, following the disposal of shares.
Stefanutti Stocks' share price, which opened at 26c on Wednesday, subsequently reached a low of 20c by 16:35. The share price was 19.23% weaker at 21c by 16:39.
Speaking to Fin24 by phone, Musa Makoni, trading specialist at Purple Group, said that market sentiment on the stock had not been its best, especially following a scathing article about the firm published in the Daily Maverick in November 2019.
Stefanutti Stocks was among four contractors of the Eskom's Kusile power station that, according to Daily Maverick's report, made substantial payments to a business, Babinatlou Business Services, whose account was used as a slush fund to benefit Eskom officials.
At the time Stefanutti Stocks issued a notice to shareholders in November, where it said it had been engaging with the Special Investigation Unit on the matter, and that the amount of R2m paid to Babinatlou related to a corporate social investment initiative - particularly the completion of a four-classroom block at a high school in Limpopo.
Stefanutti Stocks further said that effort was made to ensure the monies were used for the intended purpose.
"At the time, Stefanutti Stocks was unaware of the fact that Babinatlou may have been utilised to front for certain Eskom executives," the construction company said.
"The payments to Babinatlou were made purely for the purpose indicated and importantly were not made for any illicit purposes involving any Eskom executives... Insofar as Stefanutti Stocks has been able to ascertain, the monies it paid were utilised for their intended purpose."
Makoni commented that the share price had fallen as low as 7c and has since recovered to the 20c range. He noted that the decline on Wednesday appeared better than that which was observed in November.
He added that the market might be "reading too much into" the fact that a major investor like Sanlam has disposed shares. He said other investors might suspect Sanlam is privy to new information and have in turn dropped their shares out of fear.