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Medibank Private Ltd shares begin normal trading: Will they flop?

More than a week after Australia’s largest private health insurer, Medibank Private Ltd (ASX: MPL), began trading on the ASX, investors will finally be able dispose of their shares on a normal settlement trading basis.

Medibank Private’s share price since November 25, 2014. Source: Google Finance

This comes after myopic retail traders were left with feelings of “anger and frustration” – according to the Fairfax Press – when they realised their shares could not be traded immediately for a stag profit.

For long-term investors unappeased by the modest 7% increase in the value of their Medibank shares since they floated 10 days ago, the question of whether the share price will be sold down may be concerning.

However analysts, such as The Motley Fool’s Matt Joass, believe fair value is slightly above $2.00 per share – a modest extension on the final price retail investors paid for their shares.

Given the current market price for Medibank is around $2.15, their valuation does not appear to imply a gross overvaluation, and therefore I’d say it’s unlikely we’ll see a dramatic sell off any time soon.

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Motley Fool Contributor Owen Raszkiewicz owns shares of Medibank Private Ltd. You can follow Owen on Twitter @ASXinvest.

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