if you had a margin loan you could go to 180%?
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and down we go... there were big bids (126 on ASX for >$1.5m in total last time I looked @ $9.50 AUD , (about $10.40 NZD) all day, and they've just been filled in and more.
i bottom-picked earlier in the day but just sold out.
(my Mum always told me that picking my bottom was not going to end well..)
So...8 days to go to MSCI index rebalancing. One might think that the vast majority of the shorts would want to cover their position before then.
One thing is for sure...never a dull moment. On the other hand...37 years counting beans...plenty of dull moments...
I found this on short-selling on the ASX. My read is, that there has been a slight increase recently. Interesting to see that there was definitely short-covering in the original break up through $10, as there are almost no shorts left after that.
Attachment 9689
I’ve read countless posts here on ST about how investors should never try to catch falling knives. Now that ATM is falling, the only posts I am seeing are from people describing the beautiful knives they have caught or will soon catch.
That might be your experience but I have often found myself on the other side of the ledger with bull to my considerable profit.
Objectively removing your or my own opinion the fact of the matter is bull is currently in 139th position out of 170 contestants in the 2018 sharemarket competition.
come on, Beagle.. I might not have entered that competition if I knew it was going to be used to add / subtract credibility from every post! As it happens, I used a deliberate high-beta strategy in the comp, meaning that i picked high-risk stocks which could all fall to zero, but had some chance of a lottery payoff. I could do that in the comp, because there was no $$ at stake. I wouldn't do that in real life with my money or any money I was managing.
FWIW in regard to the competition I can't be bothered hounding out high beta or binary outcome stocks...I just follow my snout and put into the comp my five biggest market positions at the start of the year.
Regarding ATM most brokers are around 40 cps for FY19. Work the forward PE on the current SP, (its moving so fast I won't calculate it) other than to say at $10.00 its a forward PE of 25 which when one considers their track record of growth and outlook...
This drop is really quite harsh. A 20% drop from here and we'll be looking at a forward PE of around 30!
This from shortman au
Date Gross shorts 1 Issued capital % Capital shorted 2 Trade volume 3 Shorts as % of volume 4 Tue 22nd May, 2018 1,210,020 730,039,067 0.16% 6,733,713 17.97% Mon 21st May, 2018 1,945,365 730,039,067 0.26% 6,220,078 31.28% Fri 18th May, 2018 2,485,204 730,039,067 0.34% 8,685,867 28.61% Thu 17th May, 2018 3,054,425 730,039,067 0.41% 10,261,306 29.77% Wed 16th May, 2018 3,284,832 730,039,067 0.45% 22,163,857 14.82%
SML back to parity, but not in a good way, it just falling slower
If I have understood this table correctly the total shorts represent a small fraction of daily turnover. If so they are noise as they could be cleared very quickly. On Wed. Shorts increased by about 230k or 1% of the volume traded that day. The other 99% is not shorts related.
I get you guys are all optimistic due to MSCI etc but the chart is absolutely shocking.
People wondering who the sellers are might be better asking themselves who is buying.
At least wait for the indicators to poke back up over the 20 sell line at the very least, because they
all under it and still heading south
I think you need to look into the last column (shorts as percentage of volume), and this number is higher. Shorts as percentage of capital (the small numbers) is quite irrelevant for short covering later on - unless the shorters have access to the total market cap (which they obviously haven't).
If volume goes down over the next couple of days many of these shorter's will be in the proverbial ...
balamys - bal getting hammered too so not just a a2 thing
FEAR and Greed the two greatest motivators. Stock was $13.38 when I made (thankfully just a small) a top up last Thursday, (not even one week ago).
We are down $3 in less than a week and the decline has been very steep and swift. I think there's a LOT of fear out there and a lot of holders have moved to lock in profits or stem losses. Could just as easily turn on a dime tomorrow. Fundamental's at this level look very attractive but I agree the chart looks pretty bad.
Disc: Holding for long term growth.
Say a guru fundie like Harbour Asset lent heaps of their A2 to shorters at say $13
They’ve collected a few % by way if a fee
But their fund is down heaps at the moment ...heaps more than the fees they have collected
So by aiding and abetting these horrible shorters they’ve damaged their own returns eh
Probably justify their decision to do this by saying it’s improved liquidity
Feb 20 the SP was $9.20 so it wasn't that long ago it was around thsi level.
Having a 1/4 of the trades be shorts is a large number... on par with some of the most heavily shorted stocks on the ASX
2.5-3% of A2 is short currently and the more that number grows the more damaging the squeeze will be... like what we saw in Feb.
Just about every sizeable movement down has been accompanied by a smaller increase in total shorts than what we have seen this past week.
Attachment 9690
But doesn't the last column simply say that on the daily volumes traded, 100% of the shorted volume could be cleared and still only represent 20-30% of daily turnover. If say a third of the shorted volume was to clear tomorrow, this would create buying demand of 1m shares. Thats nothing for A2M given the size of the market.
Oh,
I had been mislreading the chart as total shorts not new shorts established. Yes that's quite a bit of new shorting, but the graph shows that participants had previously established shorts equivalent to 4-8% of capital and have only re-established shorts equivalent to just over 2%. This may make it heavily shorted relative to other stocks, but lightly shorted relative to past experience.
Here is what i think will happen in the next week.
Price will drop to somewhere in the 9.50 to $10 region because:
a) that is the point where the trend line prior to the feb jump would intersect
b) the gap in feb will be filled
c) it roughly coincides with the end of may when msci kicks in (4 trading days left)
d) the pe is not too high
e) the machines/shorters run out of borrowed shares (maybe). They have done their job for the big boys to get in cheaper.
Would be interesting if anyone has looked at what happening with other stocks perhaps on asx that are being included in index to see if they have had the same treatment.
should have sold and bought back in at much lower price but would not have believed this would happen from a slightly lower forecast
I don't think the shorters will ever go away from ATM ....or at least while its trading at outrageous PE multiples.
Shorters love stocks that are priced to more than perfection where there are significant known risks that could cause a dramatic slow down in growth
We have to get used to their presence ...why worry about them on a day to day business
One thing about shorters though (more so the big ones shorting with conviction rather than traders) is that they are often right in their judgment of the company and hang in there until they think the price has fallen to a more realistic level.
Shorters have had some terrible times with A2... 8% was the baseline for most of 2016-2017, then settled around 3-4% for the last 6 months and hit essentially 0.05% in march after the latest squeeze... this quiet period after the update is the perfect opportunity to short without risk of a repeat burn.
As an aside doesn't look like mercury is suffering any with coming off msci
Shorters have lost heaps in this stock and they will soon lose heaps more, they continue to play the game because it's an addiction/adrenalin rush. However shorters are not the main driver of this massive drop, it's the big boys and it's orchestrated, when they have what they want, watch the turn around. It's a classic Game of Thrones in real life happening at the moment, holders can be sucked into the game or watch the action from the sidelines, your choice. PS-If it drops much further, I'll be joining the game as a buyer not a seller.
Perhaps you guys need to listen to the news a bit more?
1/ Mycoplasma Bovis now it appears has been spread by feeding surplus milk on one farm to calves on another. No tracking records have been entered on the NAIT system for these milk movements. This could be extremely serious in disrupting milk supplies.
2/ Fonterra gives first forecast 2019 year of $7/kgMS, That is about 10% higher than some analysts expected, and will flow directly into higher value processed product input costs, like A2's baby formula,
3/ China President Xi Jinping reminding the world stage that he can influence any prospective meeting between Kim Jon Ung and Donald Trump. Kim Jon Ung has gone cool on the proposed Trump meeting since his second meeting with President Xi, who doesn't want a united Western style Korean Democracy on his doorstep This is a reminder to the world that China is a command economy that will always ensure local interests ('Mengniu A1 free childrens milk') are not put out by foreign interlopers (like A2).
These are three things that could significantly affect ATM going forwards that have come to light over the last three or four days. Yet all the ATM believers seem completely blind to it all! I find that amazing.
SNOOPY
Sounds an awful lot like that time no one would listen to your talk about raw milk supply not meeting markets expectations of $700m in sales... fast forward to $900+ and that faded pretty quickly.
$3 valuation *amazing*
There has never been any shortage of local products in China, mid-higher end consumers choose to buy premium ANZ brands while the low-middle class buy domestic producers... there is room for everyone in that massive and expanding market, likely to increase with the easing of the two child policy.
There have always been things that could significantly affect A2, there always will be... your list is not convincing.
Investment in intangibles is a reason it has grown so quickly.
https://www.nzherald.co.nz/business/...ectid=12040941
Brian Gaynor: Intangibles taking over the markets
“One of the major challenges facing investors is that fast-growing US companies have a strong focus on intangible assets, instead of the more traditional physical assets. Intangible assets include software, brands, human networks, intellectual property, patents, market research and employee training, while physical or tangible assets include bricks and mortar, as well as equipment. This raises the question of how to value intangible-intensive companies as most of their investment is expensed, and has a negative impact on earnings, while physical investment is capitalised.
Uber is a massive taxi company that doesn't own taxis and Airbnb is a major accommodation group that has minimal property assets.
The delisting of Xero was a blow to the NZX because it was our largest intangible-intensive company although a2 Milk has some of these characteristics. The milk company has total assets of $548 million, with the main components being $240m of cash, a $105m investment in Synlait Milk and only $10m worth of property, plant and equipment. Intangible assets can be scaled more quickly than physical assets. Auckland Airport has $2.2b of debt, minimal cash and massive capital expenditures ahead. New Zealand's main airport can't cope with existing passenger numbers, never mind further growth.
The expensing of intangible investment has reduced the earnings of these companies even though this investment may create huge shareholder value in the long term. Thus, companies that invest heavily in intangibles are being penalised by earnings-focused investors while companies that don't invest in this area are treated more favourably.”
Snoopy's list could have been more convincing if he had added 1. A major Middle Eastern war. 2.Trump or Kim Jon push a nuke button. 3. A large meteorite striking earth. 4.The current Govt get a second term.
I had no idea about the level of shorting that existed on the ASX, but it does help explain the trading volumes that are much higher than in NZ.
shortman.com.au is a great resource - Thanks Hardt.
So A2M's at 2.56% shorted, what does this mean. Well there's 100 ASX stocks with a short ratio of 2.91% or higher. While ATM may be high, there's nothing unusual if you are not even in the top 100. A2M's a comparatively small company, and companies like BHP's are as big as they get in Australia. Well its got shorting of 2.23% so being around 2% could be defined as normal.
Looking at a bunch of bigger Australian stocks, there's basically a structural level of shorting in the Australian market. I'm not sure what causes this but it may be taxation driven with bigger entities using shorts to neutralise their holding without actually selling it and realising taxable gains.
I am not calling time on the growth of ATM and A2 baby Formula in China. I am just saying that not all news in the market is relentlessly positive. There are real reasons why ATM should pull back at times, that cannot be shrugged off as 'market manipulation'.
Today's $10.24 closing price on last years 12.9c of earnings represent an historic PE of 79. There are huge expectations still built into that share price that only a forward earnings guidance of perfection can justify. Even 'wobble the cart' news could see that share price plunge. This doesn't mean I don't have huge respect for ATM and the A2 product. I'm readying myself to get on board the bus with you guys when it pulls up at the $6 stop.
SNOOPY
Or Synthetic milk. ATM's point of difference is that it doesn't have the A1 protein. Am I missing something or would this point of difference would mean little if synthetic milks become mainstream. The article below suggests that the availability of synthetic milks could be as few as two years away.
https://agrihq.co.nz/#
still dropping... now $2 dollars lower than when I sold...PE still inflated and this may well be the trading share of the year.
It is some news sure, but not the news that would cause such a fall.
1) m Bovis. Very small number of herds affected and does not affect milk. Now it is A1 and M Bovis Free milk,
2) Increased product demand and margin improvement sees greater farm gate payout.
3) A command economy with citizens who will go to any lengths (emptying foreign land supermarket shelves) to get a premium product
That said I accept the news is a useful way of stimulating worry in the short term
ASX closed A2M at $9.30 or $10.16 so we can expect more action today. I've got my hand out for more at $10.00
Westland Milk considering producing A2 products https://www.nzherald.co.nz/business/...ectid=12056492
Assumption here is that big boys are driving down the price with a view to driving it back up.
What if it is just normal sell off due to underwhelming result, general news, technical selling charts,
overinflated P/E, increasing headwinds in the future, etc etc
Oh the joys of owning shares in a 'high growth' company!
Non-cow milk has been around for years - soya milk, almond milk, rice milk, coconut milk - and then from farming enterprises in NZ with animal alternatives - ie goats milk and sheep milk on a small/growing scale, priced well ahead of cows milk. There has probably been some traction of non-cow and plant dairy in recent times but would suggest that has still been relatively small.
(Sorry couldn't find the article with the link)
But I also predicted that super high growth companies will grow their way through some moderate PE contraction that I expect over the next ~ 18 months, (was 24 months but we are part way through this now). Now on a forward PE of just 25 and looking at their prospects and the way they're growing its starting to look like this correction is overdone but that said these things can often over correct so in the short term the roller-coaster ride continues. Shouldn't worry long term investors, just strap yourself in tightly and take some anti nausea tablets and continue riding the tiger.
gap chant time again
And there we have it. I ve made a parity buy of ATM at 10.00 and SML at 10.00. Lets see how many more fingers I loose with these knives.
Yep, looks like we will have today some serious gap filling. The Moose predicted it (in some different place) when everybody else was still euphoric.
Interesting question is - will we reach the bottom or will we drop below the MA200 (which sort of coincides with the bottom of the respective gap (around 930 - 950)?
That GS report which seems to have become the A2 bible has sales growth slowing quite considerably in the future ...
F18 at 70% odd and then F19 at 33% and then F20 at 20%
As BP says ...spot the trend
Shoulda dumped at 13.40 last week
if you look at the whole infant formula space they are all getting hammered a2. bal , jat etc all down double digits last 10 days ... something up ? or just a rotation out of the sector
Dont sweat the daily moves. Remind yourself what you are in this for. What was your goal. What has happened to stop you reaching your goal.
( With ATM i figure the world is broadly getting richer. As we get richer we become more worried. As we become more worried we look for alternatives to the traditional nutrition which are now the perceived causes of our worry. And we now have the money to put those worries to bed. I see this worry increasing over the years and I see consumers having more money to spend on supplements. Of course I could also be barking mad )
Looks like 10 bucks held
It's clear that selling at $13 was a very very compelling option; given that at the time the share was overpriced. If you sold at $13 and found an actual bargain in the market to replace ATM with, you would be on the path to doing very well. ATM has experienced extreme growth and there are certainly lower risk shares that could produce similar or greater returns from here.
Looks like some short covering on the Aussie early.
Just as a side note, the whole thread on A2M on Hotcopper has become bit toxic with few posters getting way too personal.
In the meantime, business as usual for the company and I think the stock bit oversold now. As some members here said the long term story is still in tact and going as per plan. The recent EU free trade deal that is currently underway for NZ and AU should bode well.
Happy days :)
I was one picking a fall as per my earlier post. Am looking to buy more but have lost a bit of confidence in understanding mr market at moment. I think I will wait until rebound looks more certain and we are closer to the end of the month. Hopefully it will settle down by then. Down 5% Up 5% the next day :mellow:
That morning buy order is paying off
Mate been busy today and rang to see how ATM was going ....I said it’s about 11 dollars and been a good day
He’s happy ...no stress for him today
So have the shorters made a killing/zillions today ....buying and locking in their gains ....or is it I just don’t get it