The move sent a poor sign to investors about the short-term future of the company and its ability to secure funds for its controversial $2.5 billion pulp mill project, financial analyst Tony Gray said.

A Gunns spokesman said Mr Gay would not comment on the sale, which was announced via the Australian Securities Exchange after trading closed yesterday.

Mr Gay disposed of 3.4 million of his directly owned Gunns shares at a value of $3.095 million - or 90.9 cents a share - via on-market trades between December 2 and December 7.

He now holds 4.14 million shares directly and 8.1 million shares indirectly.

Mr Gray said that Mr Gay could be selling to pay down debt or to spend it on "something else entirely" but the market would not care about the reasons why.

"All directors can buy into the company and it is seen as supporting the company but there's never a good time to sell - it doesn't matter what it is sold for," Mr Gray said.

It is understood that negotiations with Swedish giant Sodra about becoming a joint venture partner in the mill are at a pivotal stage.

There has also been speculation that Mr Gay may step down from his management responsibilities for the mill.

Mr Gray said that would be expected sooner rather than later.

"From a community relations perspective, I can see why there would be benefits of someone else taking on the spokesman role," Mr Gray said.

"They have been gradually moving to broaden the board, bring in a chief executive (Greg L'Strange) and John Gay has stepped back.

"It is a natural progression - and then you wouldn't have the personal grudge there (between Mr Gay and anti-mill opponents)."

Mr Gay's sale announcement came a day after an ASX release revealed that value manager Investors Mutual Ltd had bought 12.5 million shares in the past four months to become a substantial shareholder with a voting power of 5.21 per cent.

Mr Gray said the purchase was a good sign for Gunns' long-term future. "They follow a company's cash flow and earnings forecast and buy if they think a company is undervalued," Mr Gray said.

Gunns shares closed up .5 per cent to 88 cents yesterday.