Chelsea Therapeutics Intl Ltd fka CHIP

[Guppi00]

I guess the easiest way to explain my way of thinking is to take a dramatic example. Let's say your willing to pay a 100% premium for the company, effectively doubling the value. Now let's say tomorrow a couple big buyers decide to dump shares and the share price is now $2. Is the company really only worth $4/share?

Now let's go the other way and assume the price still tanks. Valuing Northera (and thus Chelsea) at $1 billion based on a couple years of potential sales, the cost of the ongoing study, etc. Then we see the value of the company as closer to $10 a share rather than $4 just because a couple big guys sold their position.

Theoretically the market is efficient, but in reality it's not. So the market isn't always a proper indicator of company value.