It's only 200m
Printable View
It's only 200m
I sold out as COVID hit the fan and was underwhelmed SP hadn't reacted with much cheer after the prior annual report. Of course, this was before SP started on it's heady trajectory.
And of course, A2 hit a new ATH ... such is life. I've been philosophical and attempted to integrate the lessons learned from this outrageous year in the markets.
I haven't been paying much attention to the company these past few months. But yeesh - if you'd told me then that A2 would be looking down the barrel of sub $10 I would have laughed you out of the room.
If you have confidence in the long term and have a 5 year+ horizon, then I'd scoop some up now, lock 'em in the bottom drawer and forget about them. As a trade, well - to quote Paul Tudor Jones: "'The trend is your friend' is not repeated often enough" - in other words, go fishing.
Also mentioned further up - consumer behaviour in Asia and local brands gaining traction are very big ??? hanging over the long term. I have my doubts A2 will continue to enjoy the same success as first mover as the market is increasingly exposed to and grows comfortable with quality products from competitors. I've always had some unease with A2 having so many of their eggs in the Chinese market. Yes, it's a lucrative market. Unfortunately, they've struggled to make a sizable footprint in the states; they pulled out of the UK. Yes, A2 has shown an impressive ability to bounce back, but past performance is not always indicative of future results. Nothing is certain in this game.
It's one to keep an eye on. But I'd be reluctant entrusting my money with current management. It ain't a pretty picture.
Maybe they could bring back Jayne to turn things around. <ducks>
KFL might have saved 1.5mill last week but have taken a paper loss of over $10m on the $50m plus they held on to
They probably still happy holding long term - might even see them average down and buy heaps more
Won't really hurt their performance v benchmark seeing A2 such a large proportion of the NZX50 as well
Smart operators, Blackrock & UBS as two institutions who have been specifically mentioned as big guy tree shaking institutions - scaring & conning the small investors out of their ATM shares at $18 all the way down to $14 until the downgrade yesterday?
Yet the same naive, dumb & scared small investors can now buy back same said shares at 30% to 80% discounts to where they were scared into selling said shares to the tree shaking institiutions?
Maybe, the tree shakers are not so smart after all?
Point I was trying to make was that KFL people could see this downgrade coming so they reduced position as much as they thought prudent . Now have to see if they have changed their position about it long term buy or not . If they start adding at lower levels will show that they think it will come back in a year or so
Also a question to all ATM experts here both buy side and sell side experts please ....At what price ATM becomes a value buy ??
I am not suggesting or even thinking it will have V shaped recovery ...it will be most likely U shaped if at all ...but at what SP levels its a value buy with risks rewards in the favour of buying ??
On a very serious note, reading through all the postings in the last 3 days, I believe imo that there are several pertinent observations I would make about the downgrade announcement yesterday:
1. Directors and management obviously do not have a good handle of what's happening with sales & stocks in the market - been too easy in the last few years with demand exceeding supply. Management information system is deficient and frontline staff have been asleep on the job.
This is a very serious problem & issue for a company which is attempting to go global. The fact that we have had 2 shocking downgrades within the space of 3 months is testimony to that fact.
2. Daigou sales are very significant (hundreds of millions of dollars) and ATM is extremely vulnerable to any disruption to that sales channel. With the stroke of a pen, the China government can wipe out that channel.
3. Related to 1 and 2, have there been channel & brand switch? So the decline in sales is really the cannibalization of sales from daigou channel to the direct sales channels in China? This could explain why sales growth to China are now going backwards overall.
4. Management selling in the quantum and the timing begs the question if there has been skulduggery in the way they presented sales forecasts in the last 3 months. Revert back to 1 above if there is no skulduggery. Either way, there is a very serious issue which the company needs to come clean on.
I would certainly stay clear of investing in ATM until answers are forthcoming on the above points.
Speculation only that KFL knew this was coming.
Cash would have be required for last weeks dividend payout and as only part of the cash required being covered by dividends received they would have to sell down some holdings. ATM could have been the chosen one which in hind sight was a good choice.