Billionare buys Amrad stake

In a much-needed show of investor support, cardboard king Richard Pratt has become a substantial shareholder of Amrad Corporation (ASX:AML).

Almost two weeks after a boardroom reshuffle that saw the chairman replaced by corporate recovery specialist Olaf O'Duill, Pratt's family company Thorney increased its stake in the company to 5.7 per cent.

Increased investor interest on the back of the support - and some suspected further buying by Thorney - helped lift Amrad's share price by more almost 6.5 per cent to 82 cents at noon today.

Analysts said it was the highest price for the stock since late April, but was still significantly lower than the $1.15 share placement price in February. Intersuisse biotech analyst Peter Russell said Pratt's purchase was a positive move that would add to the confidence of other investors.

"You naturally buy into a stock if you like it," Russell said.

"So I think Thorney becoming a substantial shareholder is a positive."

Assirt Equities Research biotech analyst Chris Kallos said the stock was tracking in line with his organisation's valuation of 79 cents, although more positive news could see it appreciate further.

Nonetheless, Kallos said Assirt maintained a hold recommendation for the stock. "Obviously when a large player comes in, it always bodes well for a company," he said.

"Amrad has gone through a rough patch but they seem to have resolved a lot of things and they still have some attractive projects in the pipeline.

"But we'd like to see further clinical evidence before we review our recommendation."

On May 29, Thorney took up almost 7.5 million shares to snare a stake of more than 5.7 per cent, in the process becoming a substantial shareholder.