ATM - A2 Milk Corporation Limited

[bull....]

A2's millionaires still dumping stock
Aug 27, 2020 – 5.49pm

Kiwi milk company (and ASX darling) A2 is near its historic highs, and you better believe a swag of insiders are locking in their paper gains

https://www.afr.com/rear-window/a2-s-millionaires-still-dumping-stock-20200827-p55pzn

normally signs of a top if heaps of insiders selling

[Greekwatchdog]

You have it in for this stock. Knock Knock just like some others that you comment on ST. Have to say your constant knocking on this one is not working, well not for me anyway. Keep playing your games..

[jimdog31]

A2's millionaires still dumping stock
Aug 27, 2020 – 5.49pm

Kiwi milk company (and ASX darling) A2 is near its historic highs, and you better believe a swag of insiders are locking in their paper gains

https://www.afr.com/rear-window/a2-s-millionaires-still-dumping-stock-20200827-p55pzn

normally signs of a top if heaps of insiders selling

Im fairly sure they are selling to pay tax for their next lot of shares being issued. understandable

[couta1]

You have it in for this stock. Knock Knock just like some others that you comment on ST. Have to say your constant knocking on this one is not working, well not for me anyway. Keep playing your games.. He's all over the place like Covid 19 and unfortunately for us there is currently no vaccine available.

[Greekwatchdog]

There could be for Mad Bull Disease..

[bull....]

You have it in for this stock. Knock Knock just like some others that you comment on ST. Have to say your constant knocking on this one is not working, well not for me anyway. Keep playing your games..

what a lot of bull , i was very bullish under $1 check the thread

[Getty]

Maybe a Greek Style servicing is what the Dr ordered.
That should smash a few plates...
And tenderise his stake.

[Greekwatchdog]

Sacre Bleu...Off to enjoy the Spoils of being invested in A2 for 10 years. Cheers and Look forward to the next 10 years!!

[Beagle]

He's all over the place like Covid 19 and unfortunately for us there is currently no vaccine available.

There is a vaccine available. Its called the ignore button. I highly recommend it and can attest to its excellent efficacy. Think of it like an automatic pollution filter :)

[Waltzing]

Off to enjoy the Spoils of being invested in A2 for 10 years"

makes me feel unwell.. wont say what we sold out at, reminds me of FPH and Zero. We have a good reason to sell and none of those good reasons come over the horizon. In the case of zero we said they are out of cash, 2 weeks later a US injection of a lot of money arrived. Never sell a good story unless the storms actually looks like it will hit tomorrow..wait and hold... w


well dont that man.

[couta1]

Off to enjoy the Spoils of being invested in A2 for 10 years"

makes me feel unwell.. wont say what we sold out at, reminds me of FPH and Zero. We have a good reason to sell and none of those good reasons come over the horizon. In the case of zero we said they are out of cash, 2 weeks later a US injection of a lot of money arrived. Never sell a good story unless the storms actually looks like it will hit tomorrow..wait and hold... w


well dont that man. My bull**** meter is well tuned in to screen out all the noisy trolling and downramping around here, listening to that noise can cost you a lot of capital gain over time.

[Greekwatchdog]

I say hold to your conviction, the rest as they say is drama lama.. Bull enjoy your down ramping....Those that have DYOR will be fine..

[couta1]

I say hold to your conviction, the rest as they say is drama lama.. Bull enjoy your down ramping....Those that have DYOR will be fine.. 75% of the shares are tightly held by Instos so whose doing the selling, oh I know it's the retail sheeple being influenced by shorters/downrampers/trolls and bots.

[bull....]

hammer time , directors etc selling is usually good for a short term trade

[Leftfield]

hammer time , directors etc selling is usually good for a short term trade

Go for it Bull....good luck to you!

... and if your many short term trade gains on ATM can beat this 8000% plus long term tax free buy and hold gains I'll shout you a beer.

11906

[bull....]

Go for it Bull....good luck to you!

... and if your many short term trade gains on ATM can beat this 8000% plus long term tax free buy and hold gains I'll shout you a beer.

11906

without doubt a2 has been a good long term hold for those lucky to hold from start to now. one of the best but not the best i believe xro has returned better over 12000 % gains

[bullfrog]

without doubt a2 has been a good long term hold for those lucky to hold from start to now. one of the best but not the best i believe xro has returned better over 12000 % gains

Crikey, didn't know %'s went that high...

[tomm]

This is how much the shorters are growing since the announcement. Nothing to do with the A2M business itself .

https://www.shortman.com.au/stock?q=a2m

[BlackPeter]

Watch this space $19.50/share is going to be history.

Well, yes - you are so right. We are watching the space and $19.50 is getting every day a bit more historical.

These were the good old days ... :p;

[winner69]

Crikey, didn't know %'s went that high...

bullfrog .....%s can be very high ..... close to but not quite to infinity

[allfromacell]

When Bull starts talking about hammers it's usually a good time to buy

[Cyclical]

When Bull starts talking about hammers it's usually a good time to buy

Yep, just took his cue and grabbed a few more. Happy to have the opportunity to average down and keep accumulating....maybe the next lot I'll get below $18 :)

[couta1]

When Bull starts talking about hammers it's usually a good time to buy Yep best buy indicator going, amazing buying opportunities like this dont come around that often.

[tomm]

Well, yes - you are so right. We are watching the space and $19.50 is getting every day a bit more historical.

These were the good old days ... :p;
I meant $18.50 :-p

[Cyclical]

I meant $18.50 :-p

If it gets down to $18.50something, it will be a sweet 10% gain when it gets back to what it was this time last week ;-)

[tomm]

USA continues to be a strategically important market‒
Largest global milk market with significant and growing premium segment‒
Significant growth in awareness will create a platform for future product innovation‒
Initial milestone continues to be US$100 million of annualised sales
• Launched in Canada via a licensing agreement with Agrifoods in July FY21

[tomm]

Capital allocation frameworkAs we noted in February 2020, as part of the Board’s ongoing review of the most appropriate use of capitalfor the business, we continue to prioritise investment in growth initiatives ahead of returning capital toshareholders.As we have announced previously, due to the increasing scale of our infant nutrition business, we considerit now appropriate to assess participation in manufacturing capacity and capability to complement ourexisting supply chain relationships. Accordingly, we are presently evaluating opportunities to address thisissue, with significant progress made during the year.With our cash balance growing it has become increasingly important for the business to review our capitalrequirements going forward. A significant review of our capital allocation framework was commenced inthe second half with a view to defining the discipline and prioritisation of our financial parameters in a waythat optimises and supports our long-term plan.

[bull....]

looks like shorts are winning again today . yaha probably to do with all the negatives at the moment

directors selling
nzd up
china may ban them if nz upsets them
bubs says diagou trade not good at the moment
destocking occurring in households

probably all short term stuff eh

[Greekwatchdog]

Perfect for you to play your short game Bull

[couta1]

Perfect for you to play your short game Bull With the fall since the result, only numpties would be opening a short position now.

[Greekwatchdog]

And there are one or two of those around..

[Ggcc]

With the fall since the result, only numpties would be opening a short position now.
At the end of the day who cares as long as they make money. As for me Ill see you at $30 per share next year.

[iceman]

At the end of the day who cares as long as they make money. As for me Ill see you at $30 per share next year.

That's exactly right. Who cares whether its $18.50 or $ 20.00 today. Not me

[Muppett]

That's exactly right. Who cares whether its $18.50 or $ 20.00 today. Not me

What if it hits is real value of $16.50?

[iceman]

What if it hits is real value of $16.50?

I will buy more

[tomm]

RSI is clearly stated oversold. Will bounce back.

[couta1]

I will buy more I would but have run out of money, still 90% of portfolio is a goodly amount.

[Cyclical]

That's exactly right. Who cares whether its $18.50 or $ 20.00 today. Not me

I do. Preferably it will go a lot lower to allow me to get more for my money. If I can have 6@$16.66 vs 5@$20 for every hundy spent, I'll be a hell of a lot better off when they hit 30 bucks each, thank you very much :)

[Beagle]

............Edited. Gone back to my kennel.

[bull....]

Crikey, didn't know %'s went that high...

this investment return will blow your mind makes a2 returns look crappy if compared over the same 10 yr period

a $1000 dollar investment in bitcoin in 2010 would have returned 18573155 % now that makes 8000% return on a2 look bad lol

[BlackPeter]

this investment return will blow your mind makes a2 returns look crappy if compared over the same 10 yr period

a $1000 dollar investment in bitcoin in 2010 would have returned 18573155 % now that makes 8000% return on a2 look bad lol

And don't forget the amazing returns for anybody who manages to buy a winning lotto ticket ...

$1 today. $1 million tomorrow. That's an annualised return of ~ 40000000000% without the need to reinvest your gains. Obviously - has nothing to do with investment and neither has bitcoin.

[dobby41]

And don't forget the amazing returns for anybody who manages to buy a winning lotto ticket ...

$1 today. $1 million tomorrow. That's an annualised return of ~ 40000000000% without the need to reinvest your gains. Obviously - has nothing to do with investment and neither has bitcoin.

Not really the thread to discuss this but you'd think that with such amazing returns the bitcoiners would be so rich already that they don't need to work or invest anymore. But they aren't for some reason.

[keenkiwiflyer]

NZ markets always positive. As soon as Australian market opens, it plummets. Bring on November

[Sideshow Bob]

NZ markets always positive. As soon as Australian market opens, it plummets. Bring on November

First 20 mins in Oz does about 5x the volume of the first 2 hours in NZ.....

[Cyclical]

Looks like the slide may have abated and it finished positive on the ASX. I guess the remainder of the week will be telling. Scooped up a few more today in the $18.20s and have a bid in south of that, but remains to be seen if it gets filled.

Just read a post over on HC about someone combining skiing, Canterbury Cream and A2 milk...it's forced me to pour a Baileys when I should be off to bed...thanks Couta ;)

[tomm]

Dow Down -807.77 points yesterday, ........expect....the unexpected...

[see weed]

Dow Down -807.77 points yesterday, ........expect....
A2 has a life of its own. Have been following a2 for a bit over 6 years. But a lot more over the last 2 years. If you look at the 2 year chart, for some reason sp goes down in August to Nov. Then starts heading back up through to August the next year. The low for the year was $12.19c on 7/11/19 then it reached its height of $21.74c on 18/8/20. A $9.55c gain in a 9 month period. Maybe a low of $16 to $18 this year, who knows? A2 was 100% of my port folio earlier this year but is now only 38%. Dividend chasing at the moment.;)

[bull....]

short going good could be more if markets keep tanking

[MauroNZ]

A2 has a life of its own. Have been following a2 for a bit over 6 years. But a lot more over the last 2 years. If you look at the 2 year chart, for some reason sp goes down in August to Nov. Then starts heading back up through to August the next year. The low for the year was $12.19c on 7/11/19 then it reached its height of $21.74c on 18/8/20. A $9.55c gain in a 9 month period. Maybe a low of $16 to $18 this year, who knows? A2 was 100% of my port folio earlier this year but is now only 38%. Dividend chasing at the moment.;)

Thanks for sharing your experience.

[couta1]

short going good could be more if markets keep tanking And we needed to know this info cause?

[Greekwatchdog]

He's bored and frankly boring

[couta1]

He's bored and frankly boring And that ain't no bull.

[bull....]

more downside today , cross fingers. be plenty of people caught in the bull trap

[couta1]

more downside today , cross fingers. be plenty of people caught in the bull trap I'm off skiing, no time for Trolls.

[Waltzing]

dont get to far in front of your ski's....

be careul up there the health system is still under huge strain according to my tuesday night trip the light fantastic kick your heels up dance the night away society...its a champagne september...money money money ... abba playing ... strobes flashing... get ready to buy the dips..

[Greekwatchdog]

Enjoy the day Couta and finish up with Canty Cream/A2

[tomm]

I see trolls trolling around every year... and I also see them hiding nice and neat in their cave :))) so I just having my breakfast with a glass of A2 milk , enjoying the spring...
My Niece has autism and before I found the A2M , she was upset and couldn't go to toilet properly her poo is hard and smell.. But thank God I found A2Milk and sceptical I tried but still sceptical.. after a while I see her smiles and start speaking, nothing in her mind... nothing is sciencetific proved, but she is now not worry about a stommy pain or unable to bear when go to the bathroom anymore, she smiles and go to mainstream school. The rest were hard but now I am able to teach and talk to my niece, she is now able to tell me a story at her school and her dream...

I don't give a damn about the trolls or insto's are trying to shake the tree to collect weak hands... Just proud to hold a share in a profit company. Things will come and go..so the same as trolls.

[Beagle]

dont get to far in front of your ski's....

LOL Classic.

[Hello123]

I see trolls trolling around every year... and I also see them hiding nice and neat in their cave :))) so I just having my breakfast with a glass of A2 milk , enjoying the spring...
My Niece has autism and before I found the A2M , she was upset and couldn't go to toilet properly her poo is hard and smell.. But thank God I found A2Milk and sceptical I tried but still sceptical.. after a while I see her smiles and start speaking, nothing in her mind... nothing is sciencetific proved, but she is now not worry about a stommy pain or unable to bear when go to the bathroom anymore, she smiles and go to mainstream school. The rest were hard but now I am able to teach and talk to my niece, she is now able to tell me a story at her school and her dream...

I don't give a damn about the trolls or insto's are trying to shake the tree to collect weak hands... Just proud to hold a share in a profit company. Things will come and go..so the same as trolls.


I could not walk before drinking A2M now i run 20k marathons every weekend!

[mfd]

I could not walk before drinking A2M now i run 20k marathons every weekend!

If you do a little research you will find Tomms story is not uncommon. There is a strong epidemiological link between A1 milk consumption and autism (as well as heart disease, diabetes and other diseases) which does not exist for A2 milk. Studies have found an A1 and gluten free diet can relieve symptoms of autism.

[Hello123]

If you do a little research you will find Tomms story is not uncommon. There is a strong epidemiological link between A1 milk consumption and autism (as well as heart disease, diabetes and other diseases) which does not exist for A2 milk. Studies have found an A1 and gluten free diet can relieve symptoms of autism.

Oh no i don't disbelieve, i do believe what he has said.

I was bored just had a troll urge i think!

[bull....]

cool theres a herd of sharesis folk at 1800 we should fill them

[mfd]

Oh no i don't disbelieve, i do believe what he has said.

I was bored just had a troll urge i think!

No worries, my mistake. I think the research is generally not well known as the company hasn't really needed to push it far to get all the growth they can handle. There's enough evidence that I expect in a decade or two there will be very little A1 milk left in the world, and we'll all be healthier for it.

[Dotbond]

cool theres a herd of sharesis folk at 1800 we should fill them

Yes you should sell all your A2 shares to them

[psychic]

And....its gone

[bull....]

looks like shorts are winning again today . yaha probably to do with all the negatives at the moment

directors selling
nzd up
china may ban them if nz upsets them
bubs says diagou trade not good at the moment
destocking occurring in households

probably all short term stuff eh

see a2 presentation today reiterated some of the negative stuff i mentioned a week ago

[Sideshow Bob]

cool theres a herd of sharesis folk at 1800 we should fill them

That will be about 43 shares then.....in total.

[psychic]

That will be about 43 shares then.....in total.

No - it was about 40000 shares! Wiped in a flash as with the pile at equiv AU $16.50.

[MarineSalvage]

Ray Dallio is betting heavily on massive Chinese economic growth, am sure if their economy grows it will be "nothing but the best" for all those "little emperor" kids - I can wait

[Beagle]

No position - so here is my read on this.

https://www.marketscreener.com/quote/stock/THE-A2-MILK-COMPANY-LIMIT-11384022/financials/

Clearly the growth rate is slowing. Average analyst forecast, (and this stock has very wide analyst coverage), is for eps growth for the next three years of 17%, 18% and just 14%. From today's investor presentation

Current observations
• Unwind of 3Q20 pantry stocking in the early part of FY21
• Softness in retail daigou continuing due to reduced tourism from China and international student numbers
• Some disruption being seen in the corporate daigou / reseller channel resulting from Stage 4 lockdown in Victoria

Market falling out of love with this mature stock now its growth rate is clearly slowing to quite a material degree ?

I wouldn't get "over my ski's" on this one as the distinct possibility of a bad fall on your face straight into hard ice clearly exists. (Fell on my bum last year on hard ice skiing with Couta1 and even though my backside is very well "padded" it really hurt !)

Forward PE based on average analyst forecast of 61 cps next year @ $18 is 1800 / 61 = 29.5
Has been trading on a similar forward PE in years past when it was growing much faster than its forecast too now.

Some people appear to be implying this is dirt cheap and a massive oversized position is warranted. Sorry but whether they are a friend or not it is overdue that someone posts a rational response.
I don't see it. This looks fully priced to me at $18 for the current modest growth rate. Clearly there's a case for a modest position as part of a well diversified portfolio but I'm not seeing the "amazing" opportunity here some others seem to think there is.

With average growth in eps expected for the next three years of 16.3% I think if the forward PE came down to (no growth PE of 11.5 + 1g =16.3) = 27.8.
27.8 x 61 = @$16.95 the shares might be worthwhile accumulating a modest stake as part of a very well diversified portfolio.

[bull....]

Is A2 Milk's cash cow about to dry up?


But Citi analyst Sam Teeger recently downgraded his call to "sell" from "buy"' and slashed his target price by 20 per cent to $17.20. He believes the outlook is increasingly risky given a resurgence of local brands in China. He also noted the risks of the evolving regulatory landscape and increasingly delicate political relationships between Beijing and the West

https://www.afr.com/companies/manufacturing/is-a2-milk-s-cash-cow-about-to-dry-up-20200902-p55rsn

[allfromacell]

Is A2 Milk's cash cow about to dry up?


But Citi analyst Sam Teeger recently downgraded his call to "sell" from "buy"' and slashed his target price by 20 per cent to $17.20. He believes the outlook is increasingly risky given a resurgence of local brands in China. He also noted the risks of the evolving regulatory landscape and increasingly delicate political relationships between Beijing and the West

https://www.afr.com/companies/manufacturing/is-a2-milk-s-cash-cow-about-to-dry-up-20200902-p55rsn

It beats me how that man still has a job, he's consistently wrong about this company.

Beagle, analysts almost always underestimate growth for the stock this far out and only revise upwards after the trading updates. I think your growth forecast is very conservative.

[Greekwatchdog]

Bull, Don't you have better things to do? Maybe in researching crap put your on analysis to work and see what you come out with. What a crock.

[bull....]

Bull, Don't you have better things to do? Maybe in researching crap put your on analysis to work and see what you come out with. What a crock.

i am putting my analysis to work shorting it lol . you just need to understand stocks dont only go up esp in a straight line and money is too be made long and short on a2

[Dotbond]

i am putting my analysis to work shorting it lol . you just need to understand stocks dont only go up esp in a straight line and money is too be made long and short on a2

Very true��

[couta1]

It beats me how that man still has a job, he's consistently wrong about this company.

Beagle, analysts almost always underestimate growth for the stock this far out and only revise upwards after the trading updates. I think your growth forecast is very conservative. Teeger is a tosser, he's just a frontman for game playing Citi. PS-Feeding trolls is like feeding ducks, the more you give them the more they quack.

[bull....]

did you know aug/sept traditionally are not good months for a2 share price.

and those huge director etc selling was a big red flag. they know better than all of us

[Beagle]

Technically, the 100 day MA has been a good reliable indicator of new momentum or broken momentum over the last 5 years.
Momentum looks broken to me on the chart now. I might take a small stake when it breaks back up through the 100 day MA.
Smart move shorting this breakdown Bull, well done.
Sorry, old chart attached...just bring up the current one from direct broking and you'll see what I mean.

[couta1]

I reckon once the ski season finishes I'm going to get straight into the fishing again, not keen on trolling though, much prefer bottom fishing. Hey Beagle just for your info, I've just done 22 days skiing without a fall so far this season despite hitting 93 kph yesterday, not at all keen on falling at that sort of speed. Time for that A2 with Canterbury Cream.

[Beagle]

No trolling mate, just making some objective observations so others can consider an alternative point of view. You're much too far out on your ski's if you start classifying everything that's not positive as trolling.

P.S. I've taken quite a liking to regular Anchor milk powder over the Covid lockdown, so much so that I've kept using it ever since but to be honest Canterbury Creme is best drunk straight but is very fattening so I've gone off it because I'm fat enough already lol

[couta1]

No trolling mate, just making some objective observations so others can consider an alternative point of view. You're much too far out on your ski's if you start classifying everything that's not positive as trolling.

P.S. I've taken quite a liking to regular Anchor milk powder over the Covid lockdown, so much so that I've kept using it ever since but to be honest Canterbury Creme is best drunk straight but is very fattening so I've gone off it because I'm fat enough already lol Same old on here, price drops and all and sundry come out quacking, price goes up they all disappear, pinch of salt material.

[Ggcc]

Same old on here, price drops and all and sundry come out quaking, price goes up they all disappear, pinch of salt material.
I would tend to agree. There is something to be said about the uncertainty of COVID for 2021-22, after that up up and away. I am longterm in this one so selling is not an option

[Beagle]

The problem with getting too big a position in something is its very easy to lose the ability to think objectively and start selective hearing. Its a well known thing. https://www.healthline.com/health/selective-hearing

[Ggcc]

The problem with getting too big a position in something is its very easy to lose the ability to think objectively and start selective hearing. Its a well known thing. https://www.healthline.com/health/selective-hearing

Similar can be said about investments in Xero, FPH, All Ports of NZ, AIA, Mainfreight and the list goes on. All overvalued in my eye and many other I spoke with at AGMs for different companies in 2019. Still their share price went up and I missed out. I just feel this is cyclical and we will see a price hike in about November/December after we get an update, unless the update is terrible due to COVID, otherwise I see this share keep performing and heading to new heights.

[Beagle]

You may have missed the point I was trying to make so let me illustrate.
Others are probably much better than me at this but I know for myself when I go over a 10% portfolio position in any one stock I find it increasingly hard to truly stay objective and I start to subconsciously filter out any negativity, (selective hearing...although I usually keep at least one ear and eye wide open to friends and contacts on here I respect for any balancing viewpoints), and only look for positive reinforcement. I know my limitations and work within them so don't generally go over a 10% position in any one stock. For me I think this makes good common sense and is also consistent with sound portfolio diversification and risk management principles.

Others might feel capable of staying truly objective in their thinking at above that level and even above 50% in one stock but I have my doubts about that.

[Waltzing]

" Xero, FPH, All Ports of NZ, AIA, Mainfreight "

just shows you that if the market thinks they are good companies they will be in demand.

At some stage i bought all of these at great prices and found reasons, good reasons to sell. After not losing any money and sometimes making.good...more good was to come.

Dont sell good assets until the storm comes over horizon ... a hard lesson to learn...

A high P/E is no reason to sell.

[Leftfield]

....... I know for myself when I go over a 10% portfolio position in any one stock I find it increasingly hard to truly stay objective and I start to subconsciously filter out any negativity, (selective hearing...although I usually keep at least one ear and eye wide open to friends and contacts on here I respect for any balancing viewpoints), and only look for positive reinforcement. I know my limitations and work within them so don't generally go over a 10% position in any one stock. For me I think this makes good common sense and is also consistent with sound portfolio diversification and risk management principles.

Others might feel capable of staying truly objective in their thinking at above that level and even above 50% in one stock but I have my doubts about that.


I get what you are saying Beagle......however your 10% strategy is more a strategy to get average returns than a strategy to get exceptional returns.


Say you held 10% of your portfolio in ATM back in 2012..... all good so far, but then ATM grew so fast that in subsequent years it rapidly became 70% of your portfolio (as it did in my case.)

If you had continually adjusted your portfolio each year to your 10% level I would argue that you will have foregone very serious money and exceptional returns in one of the best performing companies in the history of NZX..

Much better to let your successes run... and run..... than to blindly stick to an averaging rule that is inflexible (even if it is well intentioned.)

Lastly, objectivity is a skill that has nothing to do with diversification. To paraphrase the great Warren Buffett, "Diversification is overrated. Much better to keep all your eggs in fewer baskets, but watch those baskets carefully."

Objectivity is what keeps me invested in ATM despite a few market hiccups along the way.

[couta1]

I get what you are saying Beagle......however your 10% strategy is more a strategy to get average returns than a strategy to get exceptional returns.


Say you held 10% of your portfolio in ATM back in 2012..... all good so far, but then ATM grew so fast that in subsequent years it rapidly became 70% of your portfolio (as it did in my case.)

If you had continually adjusted your portfolio each year to your 10% level I would argue that you will have foregone very serious money and exceptional returns in one of the best performing companies in the history of NZX..

Much better to let your successes run... and run..... than to blindly stick to an averaging rule that is inflexible (even if it is well intentioned.)

Lastly, objectivity is a skill that has nothing to do with diversification. To paraphrase the great Warren Buffett, "Diversification is overrated. Much better to keep all your eggs in fewer baskets, but watch those baskets carefully."

Objectivity is what keeps me invested in ATM despite a few market hiccups along the way. Well of course I couldn't agree with your post more, diworsification has always cost me when I've gone down that track, very much horses for courses though.I think objectivity is enhanced when you stay staunch during tough times like the current period, I'm well used to being deeply in the red with this stock at various times since holding yet no other stock has given me the returns this one has. The worst thing anyone can do is get talked out of their holding by naysayers, both well meaning and the not so well meaning.

[Ggcc]

" Xero, FPH, All Ports of NZ, AIA, Mainfreight "

just shows you that if the market thinks they are good companies they will be in demand.

At some stage i bought all of these at great prices and found reasons, good reasons to sell. After not losing any money and sometimes making.good...more good was to come.

Dont sell good assets until the storm comes over horizon ... a hard lesson to learn...

A high P/E is no reason to sell.



I totally agree. I feel A2 has currently become a shorter and trader stock https://www.shortman.com.au/stock?q=a2m and I feel in the longterm will continue to outperform expectation. The old P/E expectation may not be so relevant if interest rate term deposits are hitting near zero in the coming months/years.

PS well said left field you explained it how I was trying to explain it as A2 went from 8 percent of my portfolio to over 20 percent

[Beagle]

Fair enough Gents and a good robust debate. At the end of the day everyone has to find their own pathway that works for them.

I posted today as a way of contributing and asking has the fast growth story run its course ? I think it is a question well worth putting out there because clearly the analysts are projecting out much slower growth rates going forward than what ATM has enjoyed in the past and ATM shareholders are shortly to again lose the wonderful and incredibly valuable expertise of Geoff Babbage. How the new guy will go is clearly a risk, just as it was when Herdlicka came on board.

For what its worth, my story is I have also done very well out of ATM..I rode it up for a few years and sold out most of my holding in March 2018 at just under $13. Before this I trimmed some along the way and I am sure others made a lot more from ATM than I did and good for them.
Since late March 2018 by my calculations ATM has increased in price by 39.5%.
In very late March 2018 the NZX All Gross Index was 9060 and is now 12,820 so is up 41.5% over that same timeframe.

I think ATM's slight underperformance of the NZX all gross index over that timeframe adds some validity to the merit of my question today pondering whether the good times have ended and I guess the question I am posing is really one that asks whether ATM is now a mature company with much more modest growth rates going forward ? Will we get market outperformance going ahead after slightly underperforming the market since March 2018 ? That's the $64,000 question, (so too speak), or for some people, quite considerably more ;)

[Cyclical]

I get what you are saying Beagle......however your 10% strategy is more a strategy to get average returns than a strategy to get exceptional returns.


Say you held 10% of your portfolio in ATM back in 2012..... all good so far, but then ATM grew so fast that in subsequent years it rapidly became 70% of your portfolio (as it did in my case.)

If you had continually adjusted your portfolio each year to your 10% level I would argue that you will have foregone very serious money and exceptional returns in one of the best performing companies in the history of NZX..

Much better to let your successes run... and run..... than to blindly stick to an averaging rule that is inflexible (even if it is well intentioned.)

Lastly, objectivity is a skill that has nothing to do with diversification. To paraphrase the great Warren Buffett, "Diversification is overrated. Much better to keep all your eggs in fewer baskets, but watch those baskets carefully."

Yeah, diversification is all well and good to a point, but really you're just spreading (or hedging even) the risk at the likely expense of diluting the potential gains. It gets to the point where you may as well just throw it all at an ETF (or dare i say diversify into several haha) and forget about tracking those individual stocks and trying to trade or whatever...boring aye?


Fair enough Gents and a good robust debate. At the end of the day everyone has to find their own pathway that works for them.

I posted today as a way of contributing and asking has the fast growth story run its course ? I think it is a question well worth putting out there because clearly the analysts are projecting out much slower growth rates going forward than what ATM has enjoyed in the past and ATM shareholders are shortly to again lose the wonderful and incredibly valuable expertise of Geoff Babbage. How the new guy will go is clearly a risk, just as it was when Herdlicka came on board.

For what its worth, my story is I have also done very well out of ATM..I rode it up for a few years and sold out most of my holding in March 2018 at just under $13. Before this I trimmed some along the way and I am sure others made a lot more from ATM than I did and good for them.
Since late March 2018 by my calculations ATM has increased in price by 39.5%.
In very late March 2018 the NZX All Gross Index was 9060 and is now 12,820 so is up 41.5% over that same timeframe.

I think ATM's slight underperformance of the NZX all gross index over that timeframe adds some validity to the merit of my question today pondering whether the good times have ended and I guess the question I am posing is really one that asks whether ATM is now a mature company with much more modest growth rates going forward ? Will we get market outperformance going ahead after slightly underperforming the market since March 2018 ? That's the $64,000 question, (so too speak), or for some people, quite considerably more ;)

Well, well, the ETF wasn't so boring afterall ;)

[Leftfield]

Fair enough Gents and a good robust debate. At the end of the day everyone has to find their own pathway that works for them.......
Since late March 2018 by my calculations ATM has increased in price by 39.5%.
In very late March 2018 the NZX All Gross Index was 9060 and is now 12,820 so is up 41.5% over that same timeframe.

;)


Sorry Beagle/cyclical....... you are wrong.......... see this chart (NZX the Black squiggle at the bottom)

11932

Take the same chart since 2012 and you will see the truly amazing return ATM has been....
so even if there is a hiccup at the moment (or even for the next 3 months) I would argue that ATM is likely to outperform the NZX av for the next 2 - 3 years so is still a good default stock to hold your wealth in.

[winner69]

I like the fact that Kingfish are very overweight A2 .....no doubt other funds are as well. Harbour Asset are highly regarded and they seem quite keen as well with sizeable chunk of some of their funds in A2

Putting 13%/14% of your fund in is pretty high conviction I reckon

[dobby41]

Say you held 10% of your portfolio in ATM back in 2012..... all good so far, but then ATM grew so fast that in subsequent years it rapidly became 70% of your portfolio (as it did in my case.)


Say you had 10% of your portfolio in Pike River?
Hindsight is a wonderful thing and being selective in example is great too.

[bull....]

Say you had 10% of your portfolio in Pike River?
Hindsight is a wonderful thing and being selective in example is great too.

to true hindsight is wonderful

[Leftfield]

Say you had 10% of your portfolio in Pike River? Hindsight is a wonderful thing and being selective in example is great too.

Not hindsight in my case....... it is actual........ and I can prove it.

FWIW.....Beagle's questioning of diversification was raised on the ATM thread, not the Pike River thread, so ATM examples are v relevant and proven.

That's all from me on this subject folks.... feel free to ignore what I say..... I don't really care.

Happy investing!

[BlackPeter]

Technically, the 100 day MA has been a good reliable indicator of new momentum or broken momentum over the last 5 years.
Momentum looks broken to me on the chart now. I might take a small stake when it breaks back up through the 100 day MA.
Smart move shorting this breakdown Bull, well done.
Sorry, old chart attached...just bring up the current one from direct broking and you'll see what I mean.

On top of that - did anybody else see the beautiful head and shoulders on beagles chart? Quite anti-bullish indicator.

[winner69]

On top of that - did anybody else see the beautiful head and shoulders on beagles chart? Quite anti-bullish indicator.

As long as it's not an abandoned baby pattern we'll be OK

They truly awful those abandoned babies

There was a beautiful haed and shoulders pattern on the A2 chart when the price was about $8 ...remember it well

[BlackPeter]

As long as it's not an abandoned baby pattern we'll be OK

They truly awful those abandoned babies

There was a beautiful haed and shoulders pattern on the A2 chart when the price was about $8 ...remember it well

Absolutely ... you will get one at any change from uptrend to downtrend and the inverse pattern on the way back.

Sometimes trends change often ... ;):

[bull....]

Technically, the 100 day MA has been a good reliable indicator of new momentum or broken momentum over the last 5 years.
Momentum looks broken to me on the chart now. I might take a small stake when it breaks back up through the 100 day MA.
Smart move shorting this breakdown Bull, well done.
Sorry, old chart attached...just bring up the current one from direct broking and you'll see what I mean.

your chart is nice and shows the break well , not something i use for my timing though m/a are lagging indicators but they good if you use a longer time frame. i trade it so the trailing stop i use is currently sitting at 18.80 protects the profits and maintains disapline

my entry was based on the break of the consolidation between 21.30 / 20.40 to the downside coinciding with not so good earning report etc

[Beagle]

Sorry Beagle/cyclical....... you are wrong.......... see this chart (NZX the Black squiggle at the bottom)

11932

Take the same chart since 2012 and you will see the truly amazing return ATM has been....
so even if there is a hiccup at the moment (or even for the next 3 months) I would argue that ATM is likely to outperform the NZX av for the next 2 - 3 years so is still a good default stock to hold your wealth in.

You have posted a 3 year chart. I stand by what I said yesterday. Since late March 2018 (2.5 years) ATM has underperformed the NZX All Gross index. I'm not debating whether ATM has been a great long term performer, that's not in dispute. The question everyone is very conveniently dodging is has ATM now matured into a much slower growing blue chip stock ?

I think its clear Geoff Babbage is sounding some notes of caution in their latest investor presentation.
I'll leave it at that because I think selective hearing and emotional attachment are prolific with this one.

[bull....]

You have posted a 3 year chart. I stand by what I said yesterday. Since late March 2018 (2.5 years) ATM has underperformed the NZX All Gross index. I'm not debating whether ATM has been a great long term performer, that's not in dispute. The question everyone is very conveniently dodging is has ATM now matured into a much slower growing blue chip stock ?

I think its clear Geoff Babbage is sounding some notes of caution in their latest investor presentation.
I'll leave it at that because I think selective hearing and emotional attachment are prolific with this one.

you are right beagle

[Beagle]

My 2017 financial year spreadsheet records ATM closed the year in March 2017 at $2.99. In the 2018 financial year it more than quadrupled in price to just on $13 in March 2018 when I sold out.

It hasn't done much since, (slightly underperformed the index). In my opinion some people are in denial about that fact, are emotionally attached to the stock and are actively practicing selective hearing.

[winner69]

My 2017 financial year spreadsheet records ATM closed the year in March 2017 at $2.99. In the 2018 financial year it more than quadrupled in price to just on $13 in March 2018 when I sold out.

It hasn't done much since, (slightly underperformed the index). In my opinion some people are in denial about that fact, are emotionally attached to the stock and are actively practicing selective hearing.


My spreadsheet records OCA closed July 2017 at $1.02.

It hasn't done much since, (significantly underperformed the index). In my opinion some people are in denial about that fact, are emotionally attached to the stock and are actively practicing selective hearing.


Sorry mate ...but couldn’t resist that ....sometimes you bring the worse out in people eh.

[Cyclical]

My spreadsheet records OCA closed July 2017 at $1.02.

It hasn't done much since, (significantly underperformed the index). In my opinion some people are in denial about that fact, are emotionally attached to the stock and are actively practicing selective hearing.


Sorry mate ...but couldn’t resist that ....sometimes you bring the worse out in people eh.

LOL, a similar reply crossed my mind, but I resisted the urge there winner!

Disc hold way more than 10% of OCA in my portfolio and somewhat less in ATM.

[Waltzing]

Mr B crossed the T and took the Money. Great decision and i wish yet again we had held but once again we found a reason to sell. CHINA regulation and the CCP. Dont sell until you see the rockets taking off.

Spreadsheet? yes the YAHOO rest API for quotes was closed i havnt set up and tried the suggested API work around but when i do ill put it up on the web for a stream live for you all so you wont have to create and look after those spreadsheets..

I havnt tried the lastest API in MS Office but i will look into it. Bit busy with the new global engine.

[Beagle]

It seems nobody is prepared to have a mature conversation about whether this company has matured into a slower growing blue chip company. My time here is obviously wasted.

[Waltzing]

"my tuesday night trip the light fantastic kick your heels up dance the night away society.."

this is not a trivial comment nor a trolling as this society actually exists and put in a year on year performance from die hard performers who make the numbers on the beat year in year out...

actual performing dance company who never misses the beat nor drop their performance standards...

It At2 performed like this group i would have held ... yes it did in the end overcome its overrated non performing high profile total out of time CEO from AUS. What a poor timer and a performance flop, she was completely out of time and just tripping round the stage spilling the drinks and knocking over the stage props intoxicated as the champagne corks popped up there in the sky high executive suite .

There needs to be a performance rating on companies not just a P/E

a performance key index.

[dobby41]

You have posted a 3 year chart. I stand by what I said yesterday. Since late March 2018 (2.5 years) ATM has underperformed the NZX All Gross index. I'm not debating whether ATM has been a great long term performer, that's not in dispute. The question everyone is very conveniently dodging is has ATM now matured into a much slower growing blue chip stock ?

Pick your period I suppose - 2556% over 5 years
https://www.stuff.co.nz/business/300103336/five-years-2556-per-cent-return-heres-where-the-share-market-has-delivered-the-most-value

[davflaws]

It seems nobody is prepared to have a mature conversation about whether this company has matured into a slower growing blue chip company. My time here is obviously wasted.

Go and have an afternoon at sea mate!

[Beagle]

Pick your period I suppose - 2556% over 5 years
https://www.stuff.co.nz/business/300103336/five-years-2556-per-cent-return-heres-where-the-share-market-has-delivered-the-most-value

As I said a little earlier, EVERYONE is ignoring my question as to whether this company has now matured into a slowing growing mature blue chip stock.

And for the record Winner, its obviously a completely spurious and inappropriate observation, (yes it appears its easier to being out the worst in some people than others) comparing a listed company in a different sector in the first three years of its listed life (OCA) with a blue chip company that's been listed for ages but just for your edification I went back on MSN money as far back as the chart would go and in April 2004 it appears ATM started trading at it was 27 cents on 30/4/2004. Three years later on 30/4/2007 it was just 10 cents so had lost nearly two thirds of its value in the first 3 years of its listed life. As recently as 2009 it was still losing money http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/192489/116019.pdf.

Its early days for OCA but I think they are building a base for growth and are currently priced by the market as though they are never going to grow. FYI I have a 7% portfolio allocation to them and am not emotionally attached. If I don't see reasonable growth over the next 4-5 years I will take the appropriate course of action.
In the meantime there's the expected yield of about 4.7% per annum, unlike with ATM eh :p

[Beagle]

Go and have an afternoon at sea mate!

That would be an excellent idea if I still owned a boat.

[Waltzing]

Im with MR B on this one. To many have made the big money on this one and popped the french champagne if they had good taste and are still drunk on the hang over from the high.....

it doesnt mean it wont go sky high again it the market gets excited again...

When you roll high and risk goes up the brain in many one off new investors is floating in the clouds.

its hard for the new investors (since the GFC) to come down to earth. it usually takes a loss for that to happen.

[BlackPeter]

It seems nobody is prepared to have a mature conversation about whether this company has matured into a slower growing blue chip company. My time here is obviously wasted.

Don't be too harsh on us ;):

I am with you that ATM will grow slower from here. I guess this is just following the laws of physics (inertia and all these things). It doesn't help either that they start piling "hardware" onto their balance sheet (in form of buying milk producers like Synlait and others). While it might make sense for them, it will reduce their future growth-rates.

On the other hand - They do have in my books a forward PE of 27 (yes, based on analyst consensus forecasts) - and even if their growth drops to something like 10 to 15% pa would the current price not look expensive to me. Maybe fairly priced.

More important however is that the big boys seem to like to play jo-jo with the ATM share price, and it currently feels its moving in its down-cycle. Never try to cross or abruptly change the path of a mighty large JO-JO ... from childhood experience I can confirm that this can really hurt ...

[McPussPuss]

I would not describe ATM as a blue chip stock, it provides very sound revenue growth yoy that most companies in 2020 would be green with envy over with big gains in market share still to be made. The fundamentals remain strong with the same old risks e.g. exposure to china which never materialise.

The 'downside' with the stock as an investment in my opinion is that it is so heavily traded and played with on the ASX, but that is an upside to those who trade it.

The pattern with the share price is almost too predictable now with weakness at this time of the year and associated commentary questioning it's future profitability and growth. This always gives way to new highs each year as the games peter out and instos position for the next round of trading.

Time to shut up shop and watch it possibly drift lower before new ATHs in the next 9 months.

[Beagle]

Don't be too harsh on us ;):

I am with you that ATM will grow slower from here. I guess this is just following the laws of physics (inertia and all these things). It doesn't help either that they start piling "hardware" onto their balance sheet (in form of buying milk producers like Synlait and others). While it might make sense for them, it will reduce their future growth-rates.

On the other hand - They do have in my books a forward PE of 27 (yes, based on analyst consensus forecasts) - and even if their growth drops to something like 10 to 15% pa would the current price not look expensive to me. Maybe fairly priced.

More important however is that the big boys seem to like to play jo-jo with the ATM share price, and it currently feels its moving in its down-cycle. Never try to cross or abruptly change the path of a mighty large JO-JO ... from childhood experience I can confirm that this can really hurt ...

Yes mate...one of Herdlicka's first moves was to blow $161m on Synlait shares at close to $11, (nearly halved since then and a company that's gambling more that the last 6 years of its profits on the outcome of a Supreme court case)...absolutely "brilliant" https://www.nzx.com/announcements/321685
Maybe their next move into investing in processing capability will be better...or maybe just another rat hole to sink a few hundred million more ?

[Waltzing]

Next level 17.60 , then 15.60. might move up from there if the numbers are good.

[Gerald]

As I said a little earlier, EVERYONE is ignoring my question as to whether this company has now matured into a slowing growing mature blue chip stock.

And for the record Winner, its obviously a completely spurious and inappropriate observation, (yes it appears its easier to being out the worst in some people than others) comparing a listed company in a different sector in the first three years of its listed life (OCA) with a blue chip company that's been listed for ages but just for your edification I went back on MSN money as far back as the chart would go and in April 2004 it appears ATM started trading at it was 27 cents on 30/4/2004. Three years later on 30/4/2007 it was just 10 cents so had lost nearly two thirds of its value in the first 3 years of its listed life. As recently as 2009 it was still losing money http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/192489/116019.pdf.

Its early days for OCA but I think they are building a base for growth and are currently priced by the market as though they are never going to grow. FYI I have a 7% portfolio allocation to them and am not emotionally attached. If I don't see reasonable growth over the next 4-5 years I will take the appropriate course of action.
In the meantime there's the expected yield of about 4.7% per annum, unlike with ATM eh :p


To be fair A2 can easily pay a 3% dividend out of free cashflow, unlike some companies which we won't mention which "have a PE of 10", yet have to borrow money, and punish their balance sheet to pay its 4.7% divi.

I think it's reasonable to expect growth to slow especially with pantry destocking, but please let us know when you see it. History isn't on your side and people throwing around 10% growth need to read an annual report (34% eps growth anyone?)

I always appreciate your posts Beagle, but to be fair you've been all over the place on this one. A year ago when it was $12 you were calling it overpriced saying you might be interested at $8, and not long ago you said it was about fair price at over $20. But seeing how you love those LIC's overweight in A2 we all know you have seen the light my furry friend.

SP looks weak, and may continue for awhile, and geopolitical risk / Nestle & Danone etc moving into the A2 space pose ongoing risks, i'm not worried as it creates opportunities to accumulate. As A2 grows its MC should attract more investment from larger funds to support the valuation. In a permanent low interest rate enviroment one could call the current valuation comparitively attractive when comparing the PEG ratio to almost all other profitable NZ/AU companies.

Attached are some graphs for you to chew the cud. Whilest I joined you wrestling in the mud with this mongrel OCA by purchasing between 52-60c during the selloff, I am considerable more confortable holding a growing company with a strong brand, huge addressable market and no risk of the SP going skydiving 75% in its free time like some mutual acquaintances :)

https://i.imgur.com/u7YfdJB.png

https://i.imgur.com/k2EFGuD.png

https://i.imgur.com/Axwsrou.png

[winner69]

I think it's been Babidge whose driven the investments in Synlait and Matuara. The Synlait deal (including the notorious $11 shares) was already underway when Hrdlicka joined - I don't think one can blame Jayne for taking A2 down this path.

[couta1]

That would be an excellent idea if I still owned a boat.
Plenty of charter boats around meantime we are going to have to find you another bone to gnaw on, you will probably rebury this one though and dig it up again this time next year.

[jimdog31]

Does any senior members have any graphs or data on yearly changes to institutional investment levels? ie what % was owned by institutions 2017,2018,2019,2020. I buy into the "shaking the tree" theory but i feel like if you could demonstrate that year on year its increasing that would put my mind and many LTH's mind at ease

[BlackPeter]

Does any senior members have any graphs or data on yearly changes to institutional investment levels? ie what % was owned by institutions 2017,2018,2019,2020. I buy into the "shaking the tree" theory but i feel like if you could demonstrate that year on year its increasing that would put my mind and many LTH's mind at ease

Assuming you are talking about the institutional investment levels at A2? Why don't you just pull out the relevant annual reports, do the numbers yourself and report back?

[jimdog31]

Assuming you are talking about the institutional investment levels at A2? Why don't you just pull out the relevant annual reports, do the numbers yourself and report back?

Thanks for the tip, however the annual report is only the top 20 largest holders so not all institutional holders Id guess?

63.66% 457,109,300 1 august 17
65.92% 481,337,466 1 August 18
73.20% 538,061,522 1 August 19
74.90% 554,182,113 1 August 20

[Beagle]

Nice pretty charts Gerald.
The fact remains that ATM's share price is only up 39.5% since I sold out in March 2018 and there have been no dividends since then.
The Fact remains that this has underperformed the index since then which is up just over 40%.
I would love to post how much my portfolio is up since March 2018 and especially how much its up since March 2017 but that sort of information is not for public knowledge so you'll just have to take my word for it that I am very happy with how my stash of dog bones is growing.

[couta1]

Thanks for the tip, however the annual report is only the top 20 largest holders so not all institutional holders Id guess?

63.66% 457,109,300 1 august 17
65.92% 481,337,466 1 August 18
73.20% 538,061,522 1 August 19
74.90% 554,182,113 1 August 20 Looks about right, so institutional holdings are increasing at the expense of weak retail hands.

[BlackPeter]

Thanks for the tip, however the annual report is only the top 20 largest holders so not all institutional holders Id guess?

63.66% 457,109,300 1 august 17
65.92% 481,337,466 1 August 18
73.20% 538,061,522 1 August 19
74.90% 554,182,113 1 August 20

Cheers for coming back :): Given that you've been only interested in the trend am I sure that these numbers are good enough.

[clearasmud]

Nice pretty charts Gerald.
The fact remains that ATM's share price is only up 39.5% since I sold out in March 2018 and there have been no dividends since then.
The Fact remains that this has underperformed the index since then which is up just over 40%.
I would love to post how much my portfolio is up since March 2018 and especially how much its up since March 2017 but that sort of information is not for public knowledge so you'll just have to take my word for it that I am very happy with how my stash of dog bones is growing.
Well done Beagle but remember the index is a gross index so Atm has outperformed the capital index plus net dividends.

[Beagle]

Yeah...I finally got a well thought through response, (by email from a former member) to the question I posed - Has the growth rate slowed ?
Good Afternoon Roger,

Hope you are doing well and that the dog bone pile continues to climb.

I see the STers are avoiding your question. I tend to concur with you that the best days of growth are over and that ATM is going to be seeing quite a bit of slower growth. The main points the STers are not talking about (as usually, gloss over the negatives...):

Daigou market is most definitely slowing - QEX, Blackmores and Bubs have all stated this. It is not an isolated incident, but a macro factor now - and it is huge.
A2 knew the golden days wouldn't last forever and started transitioning to stores within China for selling product. Unfortunately, it takes plenty of time to turn the boat, and COIVD ensured the golden goose dried up before they managed to complete the transition (still a few years away imho).

The Law of Larger Numbers ensures A2 will never be the same beast that it was. a $13B mcap company is a much different proposition to a $1B one. With ~8% share of the cash cow Chinese IF market they will be bumping up against major competition, with the easiest fruit now well plucked. Growth in fresh milk, as evidenced in the past in the UK, will NEVER have the same margins IF has, even if it is in the gigantic US market. Milk consumption is declining anyways, but that is a different sidetrack here (and I am biased as an almond/soy milk drinker)...

All people are naturally hard-wired to accept or like ANY sort of change. Fact is, A2 is transitioning from a high-growth, awesome margin company to one of consolidation and slower growth. Headwinds are a-plenty, and the company will have to fight much harder to ensure to maintain margins and market share. That means multiples will be lower, some will sell out in resignation, but that many others will still hold on for dear life, come hell or highwater trying to maintain the illusion of a growth story.

In the end, with very cheap and very easy debt visible for the next few years at least a la post-GFC, this Moose would say a PE of around 23-25 would be appropriate for a 15-20% growth rate company with oodles of cash. I don't see much upside from $20 NZD and there are better opportunities out there, long term. Short-term, will be a great trading stock, as always.

The https://www.bing.com/images/search?view=detailV2&ccid=6FC1STa5&id=5DBA2C7D034198D1966A33E7AFFDB63C64849F63&thid=OIP.6FC1STa5XxtotQCQzPt1EgHaEK&mediaurl=https%3a%2f%2fvignette.wikia.nocookie.net %2fparody%2fimages%2fe%2fe8%2fMoose_%2528Animals%2 529.jpg%2frevision%2flatest%3fcb%3d20181128003005&exph=394&expw=700&q=Moose&simid=608048544703057678&ck=E28E13D8CB9FAF04DD34302745A6818C&selectedIndex=8&FORM=IRPRST&ajaxhist=0 has spoken.

I edited a little bit of it out that was a comment about one member that its probably best isn't repeated on here.

[jimdog31]

Cheers for coming back :): Given that you've been only interested in the trend am I sure that these numbers are good enough.

Forgive me I feel the below shows the trend more accurately.

100,001 shares or more

No of holders 290 571,102,053 1 august 17
No of holders 232 575,517,122 1 august 18
No of holders 191 618,338,672 1 august 19
No of holders 142 643,520,013 1 august 20

I'm relatively new to investing, but that feels like proof of tree shaking YOY.

Less holders, holding more shares. What will 1 Aug 2021 look like? I bet you Citi have more shares then.

[Dotbond]

Great explanation. Cheers

[Cyclical]

Yeah...I finally got a well thought through response, (by email from a former member) to the question I posed - Has the growth rate slowed ?

A good considered and pragmatic email that. Thanks Beagle for posting and also to the original author. That in conjunction with the backdrop of some key people selling does give pause for thought. Might just sit on the sidelines for a bit and see where she falls (no pun intended of course ;) ).

[couta1]

Forgive me I feel the below shows the trend more accurately.

100,001 shares or more

No of holders 290 571,102,053 1 august 17
No of holders 232 575,517,122 1 august 18
No of holders 191 618,338,672 1 august 19
No of holders 142 643,520,013 1 august 20

I'm relatively new to investing, but that feels like proof of tree shaking YOY.

Less holders, holding more shares. What will 1 Aug 2021 look like? I bet you Citi have more shares then. Lol I'm one of those holders and I haven't cut off any branches.

[jimdog31]

Lol I'm one of those holders and I haven't cut off any branches.

Its crazy to think 142 holders own 87% of this company!!

[JeremyALD]

After adjusting for cash and US losses, the PE for A2 milk is sitting well below 30.

They have predicted strong revenue growth, with good margin for the year head. A2 milk has never let us down on their forcasts. I am also impressed with how they are managing costs, given the amount of growth in recent years.

I personally think there's very good value at this level, compared to the rest of the market (NZX50 average is 28!). Happy to recently increase my holding by 50% too.

[couta1]

Its crazy to think 142 holders own 87% of this company!! And those 142 holders will ultimately determine where the sp ends up not the other 13%.

[jimdog31]

And those 142 holders will ultimately determine where the sp ends up not the other 13%.

You gotta be pretty brave to swim against the tide of the big boys but there is clearly reward in doing so, the 87% dont want the price to go down long term.

[winner69]

Beagle asked ‘has growth rate slowed’

It’s one of those Dorothy Dixer questions .....like the answer is in the question.

Anyway it deserves a response. Working on that and let you know in a day or two. And I’ll reckon it’ll be more objective than moosie’s response.

[Ted2]

And those 142 holders will ultimately determine where the sp ends up not the other 13%.

I'm in the top 100 with you Couta but somehow I don't feel as though I have any power to shift the dial!

[Beagle]

After adjusting for cash and US losses, the PE for A2 milk is sitting well below 30.

They have predicted strong revenue growth, with good margin for the year head. A2 milk has never let us down on their forcasts. I am also impressed with how they are managing costs, given the amount of growth in recent years.

I personally think there's very good value at this level, compared to the rest of the market (NZX50 average is 28!). Happy to recently increase my holding by 50% too.

Hi mate,
I normally listen closely to what you have to say on here but on this occasion my view is that adjusting for losses in countries in which the company is trying to achieve growth and eventually achieve critical mass is a pretty creative way to assess a growth company's forward earnings, especially if much of that growth that's hopefully forthcoming is in lower margin milk sales. On one hand the company is projecting growth and on the other you're adding back the cost of getting that growth, that's pretty creative accounting. Why stop there ? Add back all their marketing spend as well and then you could make the case its really cheap for a growth company...ahem...but remind me again, how are they going to achieve that growth without that spend ?

No argument from me that the market overall is VERY fully priced, but I would argue ATM included for its future more modest growth rate.

[dreamcatcher]

Interestingly those insto's that own the majority of ATM stock constantly sending out their hyenas for short raids with their BORROWED computer assisted algorithm trading. Taking the largest feast once the tree shake damage is done the goal to "keep increasing that pot-of-gold" All part of the a2 cycle now for years with brokers using low ball valuations or fake news to create doubt among holders as without them they have nothing.

Normally flick a few shares out yearly but this time decided to hold.

[JeremyALD]

Hi mate,
I normally listen closely to what you have to say on here but on this occasion my view is that adjusting for losses in countries in which the company is trying to achieve growth and eventually achieve critical mass is a pretty creative way to assess a growth company's forward earnings, especially if much of that growth that's hopefully forthcoming is in lower margin milk sales. On one hand the company is projecting growth and on the other you're adding back the cost of getting that growth, that's pretty creative accounting. Why stop there ? Add back all their marketing spend as well and then you could make the case its really cheap for a growth company...ahem...but remind me again, how are they going to achieve that growth without that spend ?

No argument from me that the market overall is VERY fully priced, but I would argue ATM included for its future more modest growth rate.

I agree its a bit creative, but I'm happy to take into account their extremely large pile of cash. They did exit the UK market, so if they find USA is not attractive after a few more years they could exit that also and not incur future losses. I personally think the USA presents some opportunity, but clearly China is the key growth driver, with Australia at a maturity stage.

There's not many places to put money at the moment. Looking objectively across the NZX I have HLG as my main yield stock and ATM as my main growth stock. Happy to reassess that in 6-12 months, but I don't see a lot of downside at the current SP. I also don't see many other great opportunities to put cash, aside from property!!

I think there is also opportunity for a2 to get into new verticals, although I have been a bit disappointed with how slow or non-existent the partnership with Fonterra has been.

[couta1]

Interestingly those insto's that own the majority of ATM stock constantly sending out their hyenas for short raids with their BORROWED computer assisted algorithm trading. Taking the largest feast once the tree shake damage is done the goal to "keep increasing that pot-of-gold" All part of the a2 cycle now for years with brokers using low ball valuations or fake news to create doubt among holders as without them they have nothing.

Normally flick a few shares out yearly but this time decided to hold. Are you sure they are not sending out Beagles and Bulls. Lol

[Snoopy]

After adjusting for cash and US losses, the PE for A2 milk is sitting well below 30.


Jeremy, a company can choose its equity structure (the balance between equity and debt) and choose what markets it operates in. The equity structure is what the operational business is built on. The operational business in the case of A2 milk consists of both fresh milk and value added product, of which infant formula is the headline high value add item.

You could 'adjust for cash' if the company had committed you to paying out the cash as a special dividend. But A2 has not done that. AFAIK A2 milk plan to use the cash to develop their markets and supply chain. So if you 'adjust for cash' you are also taking out the future business development that the cash is ear-marked to fund. You may think the company can run on less cash. But the company has chosen to retain a significant cash balance for reasons that you or I may not fully appreciate, and we have to accept that this is how management has chosen to run the business. Put this way and in this circumstance, I hope you can see that 'adjusting for cash' in these circumstances is not an acceptable valuation technique, because the company will be unable to execute their growth strategy if you do this.

Now on the subject of geographic market losses. A2 has pulled out of the U.K. So it would be legitimate and desirable when making an earnings comparison with a previously comparable period and constructing an historical earnings profile to remove any UK market losses from the company earnings history. However, in the USA as I understand it A2 are doubling down on their investment and pushing hard to getting critical mass and earnings momentum. There is the cost of establishing in new markets. All successful growth companies will make a loss when first establishing in a new market. Losses in the establishment phase cannot be avoided. I put it to you that by excluding US market losses in your valuation you are modelling the A2 business in a way that is not real. Doing that will likely lead to poor investment decisions, and relatively poor outcomes for you as a shareholder. If the US was a zombie market that A2 were in the process of withdrawing from then your approach would be fine. But the truth is quite the opposite. The US is still down as a major growth engine for A2 into the future.

SNOOPY

[dreamcatcher]

I would like to think that progress for IF for the USA may be close...........

[jimdog31]

Interestingly those insto's that own the majority of ATM stock constantly sending out their hyenas for short raids with their BORROWED computer assisted algorithm trading. Taking the largest feast once the tree shake damage is done the goal to "keep increasing that pot-of-gold" All part of the a2 cycle now for years with brokers using low ball valuations or fake news to create doubt among holders as without them they have nothing.

Normally flick a few shares out yearly but this time decided to hold.

Couldnt agree more. If you were to collect all the negative headlines, fake news of the last few years, this company has weathered them all.

Over time the lack of supply/demand of the retail share float kicks in and so the share price has only one direction long term, if the fundamentals remain good.

Once the company is paying dividends , the tightly held register can kick back and watch the money come in year after year with no need to shake the tree as no retail investors left to be shaken.

[Beagle]

Are you sure they are not sending out Beagles and Bulls. Lol


Jeremy, a company can choose its equity structure (the balance between equity and debt) and choose what markets it operates in. The equity structure is what the operational business is built on. The operational business in the case of A2 milk consists of both fresh milk and value added product, of which infant formula is the headline high value add item.

You could 'adjust for cash' if the company had committed you to paying out the cash as a special dividend. But A2 has not done that. AFAIK A2 milk plan to use the cash to develop their markets and supply chain. So if you 'adjust for cash' you are also taking out the future business development that the cash is ear-marked to fund. You may think the company can run on less cash. But the company has chosen to retain a significant cash balance for reasons that you or I may not fully appreciate, and we have to accept that this is how management has chosen to run the business. Put this way and in this circumstance, I hope you can see that 'adjusting for cash' in these circumstances is not an acceptable valuation technique, because the company will be unable to execute their growth strategy if you do this.

Now on the subject of geographic market losses. A2 has pulled out of the U.K. So it would be legitimate and desirable when making an earnings comparison with a previously comparable period and constructing an historical earnings profile to remove any UK market losses from the company earnings history. However, in the USA as I understand it A2 are doubling down on their investment and pushing hard to getting critical mass and earnings momentum. There is the cost of establishing in new markets. All successful growth companies will make a loss when first establishing in a new market. Losses in the establishment phase cannot be avoided. I put it to you that by excluding US market losses in your valuation you are modelling the A2 business in a way that is not real. Doing that will likely lead to poor investment decisions, and relatively poor outcomes for you as a shareholder. If the US was a zombie market that A2 were in the process of withdrawing from then your approach would be fine. But the truth is quite the opposite. The US is still down as a major growth engine for A2 into the future.

SNOOPY

You better watch out now Couta1, the Beagle's are launching a pack attack and a Moose has joined in support :D Go hard or go home...maybe its time to go home :p

Well said Snoopy.

[Snow Leopard]

Yeah...I finally got a well thought through response, (by email from a former member) to the question I posed - Has the growth rate slowed....

Your day attempting to troll this thread has ended pretty pathetically when you are reduced to claiming that something from the Moose is 'well thought through'.

Really? :lol:

[JeremyALD]

Jeremy, a company can choose its equity structure (the balance between equity and debt) and choose what markets it operates in. The equity structure is what the operational business is built on. The operational business in the case of A2 milk consists of both fresh milk and value added product, of which infant formula is the headline high value add item.

You could 'adjust for cash' if the company had committed you to paying out the cash as a special dividend. But A2 has not done that. AFAIK A2 milk plan to use the cash to develop their markets and supply chain. So if you 'adjust for cash' you are also taking out the future business development that the cash is ear-marked to fund. You may think the company can run on less cash. But the company has chosen to retain a significant cash balance for reasons that you or I may not fully appreciate, and we have to accept that this is how management has chosen to run the business. Put this way and in this circumstance, I hope you can see that 'adjusting for cash' in these circumstances is not an acceptable valuation technique, because the company will be unable to execute their growth strategy if you do this.

Now on the subject of geographic market losses. A2 has pulled out of the U.K. So it would be legitimate and desirable when making an earnings comparison with a previously comparable period and constructing an historical earnings profile to remove any UK market losses from the company earnings history. However, in the USA as I understand it A2 are doubling down on their investment and pushing hard to getting critical mass and earnings momentum. There is the cost of establishing in new markets. All successful growth companies will make a loss when first establishing in a new market. Losses in the establishment phase cannot be avoided. I put it to you that by excluding US market losses in your valuation you are modelling the A2 business in a way that is not real. Doing that will likely lead to poor investment decisions, and relatively poor outcomes for you as a shareholder. If the US was a zombie market that A2 were in the process of withdrawing from then your approach would be fine. But the truth is quite the opposite. The US is still down as a major growth engine for A2 into the future.

SNOOPY

Thanks Snoopy, but I was just pointing out where I see value and the fact that A2 milk has a substantial amount of cash to me, makes it more attractive that if the business had no cash and was using debt to fund their growth. It also opens up new opportunities for further acquisitions.

Loss making businesses chasing growth are often given higher valuations so there is also some merit in separating US losses IMO, however I agree it's obviously not a great way to valuate a company.

Aside from all that, even at the curent MC the PE is 34 which in the context of the New Zealand Market and growth rates can hardly be considered expensive?

[Beagle]

Your day attempting to troll this thread has ended pretty pathetically when you are reduced to claiming that something from the Moose is 'well thought through'.

Really? :lol:

Here's an idea just for a refreshing change. What about actually posting a meaningful rebuttal rather than your usual pithy meow.

[Hello123]

Here's an idea just for a refreshing change. What about actually posting a meaningful rebuttal rather than your usual pithy meow.

https://media.tenor.com/images/23b875bff0290d88431de8cb75a161c3/tenor.gif

[Mr Slothbear]

Jeremy, a company can choose its equity structure (the balance between equity and debt) and choose what markets it operates in. The equity structure is what the operational business is built on. The operational business in the case of A2 milk consists of both fresh milk and value added product, of which infant formula is the headline high value add item.

You could 'adjust for cash' if the company had committed you to paying out the cash as a special dividend. But A2 has not done that. AFAIK A2 milk plan to use the cash to develop their markets and supply chain. So if you 'adjust for cash' you are also taking out the future business development that the cash is ear-marked to fund. You may think the company can run on less cash. But the company has chosen to retain a significant cash balance for reasons that you or I may not fully appreciate, and we have to accept that this is how management has chosen to run the business. Put this way and in this circumstance, I hope you can see that 'adjusting for cash' in these circumstances is not an acceptable valuation technique, because the company will be unable to execute their growth strategy if you do this.

Now on the subject of geographic market losses. A2 has pulled out of the U.K. So it would be legitimate and desirable when making an earnings comparison with a previously comparable period and constructing an historical earnings profile to remove any UK market losses from the company earnings history. However, in the USA as I understand it A2 are doubling down on their investment and pushing hard to getting critical mass and earnings momentum. There is the cost of establishing in new markets. All successful growth companies will make a loss when first establishing in a new market. Losses in the establishment phase cannot be avoided. I put it to you that by excluding US market losses in your valuation you are modelling the A2 business in a way that is not real. Doing that will likely lead to poor investment decisions, and relatively poor outcomes for you as a shareholder. If the US was a zombie market that A2 were in the process of withdrawing from then your approach would be fine. But the truth is quite the opposite. The US is still down as a major growth engine for A2 into the future.

SNOOPY


Snoopy, similar to Sees candy, A2 needs Hardly any cash investment to maintain strong growth. Check its ROIC and ROE. All their ‘investment’ via marketing, promotion, store activation etc is wonderfully allowed to be deducted before tax as business costs. Therefore all after tax cash in the bank can be used on projects such as Mataura valley where A2 will extract much higher margins or profits via JV essentially in addition to their big organic growth or alternatively as dividends / buybacks.


so yes I think you can absolutely use cash in their bank as part of valuation or deduct cash on hand per share from the shareprice.

just my 2c

edit; i know you like your free cashflow tables and I firmly believe the vast majority of ATM EPS to be free cashflow ripe for shareholders or reinvestment by the company. They have hardly spent a dime from their warchest the last few years, just look at it grow and yet growth has continued to be stellar. There is all the evidence you need

[aperitif]

"There have been five times when a2 Milk’s share price fell 20% or more. And on two occasions the shares fell by 30% or more. To enjoy the monstrous gains to date shareholders needed to avoid giving in to fear and selling during those troughs of despair. Those shareholders also needed to avoid the temptation to lock in a profit when the shares were up 30%, 100%, 500%, or even 1,000%".

[FONT=Lato, sans-serif][SIZE=4][COLOR=#444444]Loving all these non-holders coming up with reasons to sell, go and do your research FFS. This is an agile company that is always two steps ahead.

[Snoopy]

Snoopy, similar to Sees candy, A2 needs Hardly any cash investment to maintain strong growth. Check its ROIC and ROE.


Mr Slothbear, I take your point about the higher ROE you have the higher ROE you have effectively you get more 'bang for your buck'. Or put another way you get higher growth for a given amount of cash spent compared to a company with lower ROE and lower ROIC. However, saying 'hardly any cash' needs to be spent is a judgement call for management to make. I wouldn't attempt to tell management how much they need to spend. What we do know is that management deem it prudent to hold onto the amount of cash they have. If they didn't need it, the directors have a fiduciary duty to return it to shareholders via a dividend, share buyback or share cancellation. The fact that they haven't done this would suggest that they consider the amount of cash they have it is necessary to keep. They may have specific growth plans that shareholders are currently unaware of that require this cash.



All their ‘investment’ via marketing, promotion, store activation etc is wonderfully allowed to be deducted before tax as business costs. Therefore all after tax cash in the bank can be used on projects such as Mataura valley where A2 will extract much higher margins or profits via JV essentially in addition to their big organic growth or alternatively as dividends / buybacks.


Expenses deductible for business costs are not 'cost free'. In NZ a company must pay 72% of its business deductible expenses in cold hard cash. So you are quite wrong to suggest all cash is free to use on other projects. Putting money into a Mataura Joint Venture processing project is unlikely to earn the company a higher return. But it might improve the security of product supply, which might be a more important medium term goal than dialing up the best short term return. And they definitely need cash to achieve this, so the cash isn't surplus.

If A2 were considering dividends or buybacks then you could deduct the cash earmarked for that off the company operating assets. But they aren't, so you can't.



i know you like your free cashflow tables and I firmly believe the vast majority of ATM EPS to be free cashflow ripe for shareholders or reinvestment by the company. They have hardly spent a dime from their war chest the last few years, just look at it grow and yet growth has continued to be stellar. There is all the evidence you need


The evidence you need that the company needs the cash is that they have retained it. The fact that alternative management could have (say) signed up water tight supply contracts with the likes of Mataura and not bought into the joint venture and so returned that 'investment cash' to shareholders is irrelevant. Because alternative management are not in charge.

SNOOPY

[Snoopy]

Thanks Snoopy, but I was just pointing out where I see value and the fact that A2 milk has a substantial amount of cash to me, makes it more attractive that if the business had no cash and was using debt to fund their growth. It also opens up new opportunities for further acquisitions.


That is all very true Jeremy. But if the cash is returned to you then it is not there for future acquisitions. And if the cash is used for a future acquisition it is not there to return to you. What you are proposing by 'adjusting for for cash' is to 'double count' the cash.

I don't agree that funding all growth with cash is necessarily the most capital efficient way to go either. But no doubt A2 have their own reasons for funding their growth the way they choose to do it.



Aside from all that, even at the curent MC the PE is 34 which in the context of the New Zealand Market and growth rates can hardly be considered expensive?


I am not going to agree or disagree with that. I would want a good measuring stick to make a really good guess at valuing ATM today and this is something I don't claim to have.

SNOOPY

[Waltzing]

15.60 is a big buy if the numbers are in line with growth..

[longy]

It seems nobody is prepared to have a mature conversation about whether this company has matured into a slower growing blue chip company. My time here is obviously wasted.

Hear Hear. Slowing down is due to Covid right? If so could be short live. Other threat of course is the political leaders between Stats, OZ and China are nibbling at each other at the moment. Uncertainty is what I don't like.

[couta1]

Hear Hear. Slowing down is due to Covid right? If so could be short live. Other threat of course is the political leaders between Stats, OZ and China are nibbling at each other at the moment. Uncertainty is what I don't like. Uncertainty is the only certainty. PS-Remember A2 is a NZ company not an Aussie one.

[couta1]

It seems nobody is prepared to have a mature conversation about whether this company has matured into a slower growing blue chip company. My time here is obviously wasted. It certainly is, too many staunch visionary holders over here, you'd better find another axe to grind.

[bull....]

should be another good day for a2 today , on the downside

[Leftfield]

Your day attempting to troll this thread has ended pretty pathetically when you are reduced to claiming that something from the Moose is 'well thought through'.

Really? :lol:


Interestingly those insto's that own the majority of ATM stock constantly sending out their hyenas for short raids with their BORROWED computer assisted algorithm trading. Taking the largest feast once the tree shake damage is done the goal to "keep increasing that pot-of-gold" All part of the a2 cycle now for years with brokers using low ball valuations or fake news to create doubt among holders as without them they have nothing.

Normally flick a few shares out yearly but this time decided to hold.


"There have been five times when a2 Milk’s share price fell 20% or more. And on two occasions the shares fell by 30% or more. To enjoy the monstrous gains to date shareholders needed to avoid giving in to fear and selling during those troughs of despair. Those shareholders also needed to avoid the temptation to lock in a profit when the shares were up 30%, 100%, 500%, or even 1,000%".

Loving all these non-holders coming up with reasons to sell, go and do your research FFS. This is an agile company that is always two steps ahead.

https://mattjoass.com/2019/09/23/how-to-catch-monsters/


It certainly is, too many staunch visionary holders over here, you'd better find another axe to grind.

........well done folks.

[sb9]

Forgive me I feel the below shows the trend more accurately.

100,001 shares or more

No of holders 290 571,102,053 1 august 17
No of holders 232 575,517,122 1 august 18
No of holders 191 618,338,672 1 august 19
No of holders 142 643,520,013 1 august 20

I'm relatively new to investing, but that feels like proof of tree shaking YOY.

Less holders, holding more shares. What will 1 Aug 2021 look like? I bet you Citi have more shares then.

That's some fascinating information and numbers, big players sure are taking cheap shares off reef fish.

[Beagle]

........well done folks.

I think the sarcasm clearly evident in your post is probably lost on most of those posters and they probably think they have done well :eek2: I was looking for a really good intelligent rational debate on the slowing growth question I posed...I needn't have bothered :ohmy: The irony was that the former poster who was banned (Moosie) had by far the most intelligent response of anyone. What a HUGE LOSS to this forum his banning was.

[sb9]

I think the sarcasm clearly evident in your post is probably lost on most of those posters. I was looking for a really good intelligent rational debate on the slowing growth question I posed...I needn't have bothered :ohmy: The irony was that the former poster who was banned (Moosie) had by far the most intelligent response of anyone. What a HUGE LOSS to this forum his banning was.

C'mon Beagle, don't beat yourself up.

You only have to reference to latest Investor Presentation provide by the company at time FY results to figure out that question if its still a growth company or not.

Peter Nathan has time and again in many post results interview suggested what they haven't even scratched the potential that lies ahead in China and their investment into more MBS channel. And this also to tackle the disappearance of the retail daigou and they have what he calls multi channel offering into that market to meet demand.

Investment into new plant of Mataura Valley Milk is another example of what kind of growth they're envisaging in years to come and also to diversify reliance single operation in current Synlait.

Continuous growing market share in Aus fresh milk market.

And lastly, US operations going strong as evidenced by reported numbers in FY report with growing awareness and recent venture into Canada.

I'm probably very biased as holder from 58c days but the fact that I still hold more than 90% of my holdings is a testimony to what I believe is there's still massive growth and potential that lies ahead for this company.

[dreamcatcher]

I was looking for a really good intelligent rational debate on the slowing growth question I posed

REALLY.........as a non-holder why would you bother? should you not perhaps have that rational debate with stocks you HOLD!

[dobby41]

REALLY.........as a non-holder why would you bother? should you not perhaps have that rational debate with stocks you HOLD!

He's looking for affirmation from the team for not holding.

[Beagle]

Was looking for a good rational intelligent debate but...

My final post on this thread for a while. I'm a numbers man so I'll simply let the numbers do the talking.

EPS Growth historical and the average forecasted by analysts from market screener.

FY17 189%
FY18 112%
FY19 45%
FY20 33% (Includes pantry stocking for Covid)
FY21 17%
FY22 18%
FY23 12%

Is growth slowing ?...if you can't see it...

[jimdog31]

Was looking for a good rational intelligent debate but that's obviously far beyond many on here.

My final post on this thread for a while. I'm a numbers man so I'll simply let the numbers do the talking and if people can't see the trend that's not my problem.

EPS Growth historical and the average forecasted by analysts from market screener.
FY17 189%
FY18 112%
FY19 45%
FY20 33% (Includes pantry stocking for Covid)
FY21 17%
FY22 18%
FY23 12%

Is growth slowing, I believe I have answered my own question.

With all respect to you Beagle (as Im as fresh as a daisy when it comes to investing) would you happen to know what analysts forecasted FY17, 18, 19 & 20? Just so i can work out how much they undershot the previous years?

[Enrix]

https://www.interest.co.nz/rural-news/107005/block-international-travel-has-hit-daigou-trade-hard-and-provided-surpercharged

[bull....]

a2 just about the worst performing stock last mth down 13%

[winner69]

Was looking for a good rational intelligent debate but that's obviously far beyond many on here.

My final post on this thread for a while. I'm a numbers man so I'll simply let the numbers do the talking and if people can't see the trend that's not my problem.

EPS Growth historical and the average forecasted by analysts from market screener.
FY17 189%
FY18 112%
FY19 45%
FY20 33% (Includes pantry stocking for Covid)
FY21 17%
FY22 18%
FY23 12%

Is growth slowing, I believe I have answered my own question.

There is such a thing as 'growth rate decay'. As Moosie alluded the bigger a company becomes the harder (impossible) to maintain historical growth rates.

Yes growth is slowing....but still growing. Don't think anyway is arguing otherwise.

A2 is moving from a very high growth company to just a high growth company and one day to just a growth company. A combination of growing size and to some extent a sign of becoming a 'mature blue chip' (think that is what you said)

No doubt your question was a hint that A2 is over priced and will struggle to see a shareprice of say $25.

Maybe A2 is becoming a bit like FPH with consistently good solid earnings growth with exceptional returns on capital. Those are the sort of companies that market rewards with high valuations.

Yes, A2 growth is slowing but still a high growth company....and the share price will continue to prosper

Only concern is that with this strategic move into investing in factories that one day they might own these capital intensive outfits and become bloated and end up like another Fonterra .... hopefully that won't happen but if it does happen there will be early warning bells

[Baa_Baa]

Growth % by itself isn't as meaningful as showing growth % of $ size. i.e. 100% growth of f'all is nothing compared to 10% growth of a huge number.

[couta1]

a2 just about the worst performing stock last mth down 13% With your continued daily trolling comments it's no wonder a lot of people can't be bothered posting anymore, near the end of my ski holiday now but I feel another forum holiday coming up, I'm going to have to get my wife to change my password again.Lol

[bull....]

lol to much snow stuck between your ears hows stating facts trolling

[Leftfield]

C'mon Beagle, don't beat yourself up.

You only have to reference to latest Investor Presentation provide by the company at time FY results to figure out that question if its still a growth company or not.

Peter Nathan has time and again in many post results interview suggested what they haven't even scratched the potential that lies ahead in China and their investment into more MBS channel. And this also to tackle the disappearance of the retail daigou and they have what he calls multi channel offering into that market to meet demand.

Investment into new plant of Mataura Valley Milk is another example of what kind of growth they're envisaging in years to come and also to diversify reliance single operation in current Synlait.

Continuous growing market share in Aus fresh milk market.

And lastly, US operations going strong as evidenced by reported numbers in FY report with growing awareness and recent venture into Canada.

I'm probably very biased as holder from 58c days but the fact that I still hold more than 90% of my holdings is a testimony to what I believe is there's still massive growth and potential that lies ahead for this company.


There is such a thing as 'growth rate decay'. As guru Moosie alluded the bigger a company becomes the harder (impossible) to maintain historical growth rates.

Yes growth is slowing....but still growing. Don't think anyway is arguing otherwise.

A2 is moving from a very high growth company to just a high growth company and one day to just a growth company. A combination of growing size and to some extent a sign of becoming a 'mature blue chip' (think that is what you said)

No doubt your question was a hint that A2 is over priced and will struggle to see a shareprice of say $25.

Maybe A2 is becoming a bit like FPH with consistently good solid earnings growth with exceptional returns on capital. Those are the sort of companies that market rewards with high valuations.

Yes, A2 growth is slowing but still a high growth company....and the share price will continue to prosper

Only concern is that with this strategic move into investing in factories that one day they might own these capital intensive outfits and become bloated and end up like another Fonterra .... hopefully that won't happen but if it does happen there will be early warning bells

Well said folks. Thank you...... and I hope that answers Beagle's call for 'debate' on the growth of ATM. Time to move on IMHO.

[couta1]

lol to much snow stuck between your ears hows stating facts trolling It's all about your motives, what are you trying to achieve with you continued daily negativity?

[bull....]

im having intellectual discussions about why a2 not so hot know for various reasons.

did you know when they become more manufacturing based we will have to value them on a lower pe because that the way it is

[mfd]

Was looking for a good rational intelligent debate but...

My final post on this thread for a while. I'm a numbers man so I'll simply let the numbers do the talking.

EPS Growth historical and the average forecasted by analysts from market screener.

FY17 189%
FY18 112%
FY19 45%
FY20 33% (Includes pantry stocking for Covid)
FY21 17%
FY22 18%
FY23 12%

Is growth slowing ?...if you can't see it...

Of course growth with slow from the early incredible numbers. An interesting figure in the latest results, their Australian fresh milk sales grew at 14.1%. This is faster growth than recent years, in their most mature market. Incredible result. I would be very surprised if the next few years EPS growth only just match the current growth of their most mature market.

Fully agree not to overextend into a moderately risky company, especially if China gets any more difficult to deal with. But as a little chunk of my portfolio, I'm very happy to stay invested.

[Ted2]

im having intellectual discussions about why a2 not so hot know for various reasons.

did you know when they become more manufacturing based we will have to value them on a lower pe because that the way it is

Excellent! I'm glad we all now know and thanks so much for the enlightenment. You can now move on and provide your deep wisdom to holders of some other stocks.

[bull....]

Excellent! I'm glad we all now know and thanks so much for the enlightenment. You can now move on and provide your deep wisdom to holders of some other stocks.

one is always alone when ahead of the herd

[winner69]

one is always alone when ahead of the herd

Sometimes better to be behind when the herd goes over the cliff

[BlackPeter]

I'm in the top 100 with you Couta but somehow I don't feel as though I have any power to shift the dial!

Well, you would need to use the dial to change the SP! Just holding does not change it, you either need to buy more or sell them ;):

[BlackPeter]

Your day attempting to troll this thread has ended pretty pathetically when you are reduced to claiming that something from the Moose is 'well thought through'.

Really? :lol:

Hmm - with all due respect for the reincarnated paper tiger, I think this attack against Moosie and Beagle was uncalled for.

Still axes to grind before reaching your final stage of reincarnation? Try meditation ...

[bull....]

bollingers need a stretch on the hourlies , looks good for a big drop to 17 ... hopefully

[LEMON]

Sometimes better to be behind when the herd goes over the cliff

Well played sir. Lol

[Blue Skies]

Compared to what?
In the current environment, shouldn't we be recalibrating expected annual earnings growth across all companies?
Many companies are/will be struggling to make any headway & virtually just treading water is regarded as some kind of achievement.
If ATM's annual growth stays anywhere near 30% let alone increase, I'ld be quite happy.

Just to add, my high flying Chinese neighbour recently commented, people here really can't comprehend the size of the Chinese market, it is massive & NZ products have a good reputation. ATM have hardly dented the market, go for it.
DYOR

[dreamcatcher]

my high flying Chinese neighbour recently commented, people here really can't comprehend the size of the Chinese market, it is massive & NZ products have a good reputation. ATM have hardly dented the market, go for it.

Your neighbour is so correct about market been huge as I lived there for short period. Great experience for this Kiwi Kid who took his desktop computer to connect to outside world. Learnt new hand communication skills as unable to speak a word of Chinese but survived for 6 months.

Did lose about 9 kilos :p

[Jiggs]

Simply Wall St website says on the 27th of August, CEO Peter Nathan sold 750,000 ATM shares for $20.15 while on the same day Chairman David Hearn sold a mere 250,000, just before these shares dropped 10%. I assume this is accurate information. Does this indicate that these gentlemen knew that ATM had reached its peak price?

Or were they just selling a small number of the total ATM shares they own in order to buy dirt-cheap SML shares? :)

[sampson]

Directors have sold large amounts regularly in the past and it never indicated it's peak price then? Anyway, hope you're wrong as I got back in yesterday after a hiatus since the march crash! Hoping that it's bottomed out a bit now but prepared to hold long term regardless.

[Beagle]

Of course growth with slow from the early incredible numbers. An interesting figure in the latest results, their Australian fresh milk sales grew at 14.1%. This is faster growth than recent years, in their most mature market. Incredible result. I would be very surprised if the next few years EPS growth only just match the current growth of their most mature market.

Fully agree not to overextend into a moderately risky company, especially if China gets any more difficult to deal with. But as a little chunk of my portfolio, I'm very happy to stay invested.

Nicely said and I appreciate others who made a genuine effort to answer the question as well. At somewhere around the current price being mindful of their current cash position, (worth just over $1 a share) there is a case to be made for this one as part of a well diversified portfolio. I am content to wait for TA to confirm an entry point as TA currently looks quite discouraging. (Breakdown of the 100 day MA in the past 5 years has been a reliable indicator of the best time to be out).

[Baa_Baa]

I am content to wait for TA to confirm an entry point as TA currently looks quite discouraging. (Breakdown of the 100 day MA in the past 5 years has been a reliable indicator of the best time to be out).

Speaking to the TA, 100MA leaves about $1.70 on the table if it recovered to there today, the 100MA is declining though. ATM has found three supports in confluence, the horizontal support from July 2019 high, the 200MA, and the 0.382 FIB retrace. The last 5 days ATM probed below the 200MA and closed on or above it. RSI has also turned up as has the MACD crossing up and the histogram crossing up through zero.

Despite ATM having previously gone well below the 200MA, at present notwithstanding some external shock, it looks to have price support which could turn into another up leg. This is not advice, just an observation for anyone who takes TA into account and see's the downside risk as less than the upside opportunity.

[winner69]

ATM still on track to reach $25 sometime next year

Love these charts showing share price and EPS - nice simple picture over time

Does show market gets rather excited at times (new highs) which causes a bit of a sell off -- in the big picture of things some nice but traders love those times -- but love that steady uptrend, cool as

[tomm]

ATM still on track to reach $25 sometime next year

Love these charts showing share price and EPS - nice simple picture over time

Does show market gets rather excited at times (new highs) which causes a bit of a sell off -- in the big picture of things some nice but traders love those times -- but love that steady uptrend, cool as

Great chart, thanks for sharing .

[couta1]

ATM still on track to reach $25 sometime next year

Love these charts showing share price and EPS - nice simple picture over time

Does show market gets rather excited at times (new highs) which causes a bit of a sell off -- in the big picture of things some nice but traders love those times -- but love that steady uptrend, cool as Yep downrampers and non holders conveniently forget where this stock has come from and lack vision to see where its heading to, of course as you have kindly pointed out we know that is $25.

[Beagle]

Speaking to the TA, 100MA leaves about $1.70 on the table if it recovered to there today, the 100MA is declining though. ATM has found three supports in confluence, the horizontal support from July 2019 high, the 200MA, and the 0.382 FIB retrace. The last 5 days ATM probed below the 200MA and closed on or above it. RSI has also turned up as has the MACD crossing up and the histogram crossing up through zero.

Despite ATM having previously gone well below the 200MA, at present notwithstanding some external shock, it looks to have price support which could turn into another up leg. This is not advice, just an observation for anyone who takes TA into account and see's the downside risk as less than the upside opportunity.

Thanks Baa Baa.

[Sideshow Bob]

ATM still on track to reach $25 sometime next year

Love these charts showing share price and EPS - nice simple picture over time

Does show market gets rather excited at times (new highs) which causes a bit of a sell off -- in the big picture of things some nice but traders love those times -- but love that steady uptrend, cool as

That my friend, is a thing of beauty! :cool:

As long as you think the steps are going to keep going!!

[BlackPeter]

That my friend, is a thing of beauty! :cool:

As long as you think the steps are going to keep going!!

Good points. Obviously - nobody can foresee the future ... and if for some reason their biggest market (China) decides to discriminate against NZ product (as they currently do against US and Australian product), then EPS (and with it share price) trend well might take a dip.

Not saying this is going to happen, but just one risk shareholders need to be aware of. A2M is a classical high risk - high reward story.

[bull....]

short going good still , consolidating at lows at the moment .

nearly 20 million shorts put on since the breakdown .... hammertime indeed

[couta1]

Good points. Obviously - nobody can foresee the future ... and if for some reason their biggest market (China) decides to discriminate against NZ product (as they currently do against US and Australian product), then EPS (and with it share price) trend well might take a dip.

Not saying this is going to happen, but just one risk shareholders need to be aware of. A2M is a classical high risk - high reward story. With A2 being the future of milk i don't classify it as high risk, two men looked out through prison bars, one saw mud and one saw stars.

[jimdog31]

https://www.a2nutrition.cn/find

23822 Mother and baby stores. Do we really think that the loss of diagou is going to stop A2 distributing their product?

Will keep an eye on this page and post as i see this number increase.

[Blue Skies]

Lot of downward pressure at the moment, just as it looks like it might recover, down it goes again. Might go on like this for a while, last year the low point wasn't reached until early November & with so much uncertainty & turmoil in the US I suspect October could be pretty flat.

[couta1]

Lot of downward pressure at the moment, just as it looks like it might recover, down it goes again. Might go on like this for a while, last year the low point wasn't reached until early November & with so much uncertainty & turmoil in the US I suspect October could be pretty flat. Options expiry today and futures expiry next week plus quarterly index rebalance tomorrow adding to the downward pressure. PS-Im happy selling lots for a loss and buying back more shares and lowering my avg buy price, its never boring with this stock.

[Jiggs]

Might go on like this for a while, last year the low point wasn't reached until early November & with so much uncertainty & turmoil in the US I suspect October could be pretty flat.
Thanks Blue Skies - I hadn't noticed that the up-two-down-one share price movement was an annual event for ATM for whatever reasons.
I might try "Buy after Labour Day, sell after Easter" as a rough guide with it.

[bull....]

Options expiry today and futures expiry next week plus quarterly index rebalance tomorrow adding to the downward pressure. PS-Im happy selling lots for a loss and buying back more shares and lowering my avg buy price, its never boring with this stock.

thats a funny strategy selling lots for a loss? to buy back again more? ( how do you buy more when yourve lost heaps of money )
for someone thats so pro a2 why you sell shouldnt you just hold? strange anyways here geoffs latest

New formula needed for soured China relationship: a2 Milk boss
https://www.afr.com/companies/manufacturing/new-formula-needed-for-soured-china-relationship-a2-milk-boss-20200911-p55unw

[sb9]

here geoffs latest

New formula needed for soured China relationship: a2 Milk boss


https://www.afr.com/companies/manufacturing/new-formula-needed-for-soured-china-relationship-a2-milk-boss-20200911-p55unw

Just to put this into perspective he's referring to escalating sour political relationship between China and Aus rather than from A2 specific.

[Beagle]

I got chatting with a client this week about the situation with Gold Kiwifruit and China's abuse of intellectual property norms. With Zespri Gold license now around $500K per hectare the real concern is that in the years to come Zespri's ability to try and enforce their intellectual property rights in China will be undermined by China's drive to be as self sufficient as possible.
Whilst Zespri are extremely tough on policing the amount of Gold Kiwifruit in production here, including regular site audit's of growers plantings, the concern is their enforcement against Chinese growers will become almost practically impossible going forward.
What can Zespri do about the 4,000 hectares of Gold that's already underway into production in China and who is to say this won't become 400,000 hectares in the future ?

There are rising tensions on the geopolitical and trade fronts and the abuse of intellectual property is rampant and quite probably getting much worse.
I think any analysis of ATM needs to include an assessment of the deteriorating geopolitical, trade and IP situation and consider that this company is very heavily reliant on the Chinese market for its current profitability and future growth.

The problem is one could easily be forgiven for thinking the Chinese translation of copyright is "we have the right to copy what you've done"
For years ATM trumpeted the robustness of its its IP. Then we learn that essentially there is no IP and any company in any country can start producing it.
Whatever happened to the much trumpeted Fonterra partnership ?
The huge dollars they have sunk down the Synlait rat hole look pretty curdled to me too.

Lastly looking again at the TA. ATM has been underperforming the index since March 2018 when I sold out at ~ $13 (as previously mentioned).
Its been badly underperforming the index in the last 3 months, down 12% against the NZX50 index which is up 4%, a quite considerable 16% underperformance.

With the CEO taking a cautionary note regarding pantry destocking in Q1 I think on the balance of probabilities there is no real hurry for me to get back into this one.
I'm also noting a breakdown through the 100 day MA of FPH. One wonders if there is a rotation away from the big names that performed well in the early part of the Covid crisis.

Anyway...I don't want to start something, (was a pretty sour tone on this thread last week). Just sharing my thoughts...for what they're worth and if you think that's not much, that's fine with me.

[mfd]

On your Fonterra question, there's a good answer in this article:

https://www.interest.co.nz/rural-news/106688/new-dira-settings-give-fonterra-what-it-wanted-make-life-much-more-challenging-any

Essentially, the agreement between A2 and Fonterra has succeeded in trying Fonterra's hands behind their back and they are unable to supply A2s competitors. That alone is a huge win for the company, let alone any money they make from the agreement itself.

As for the kiwifruit comparison, there are big differences between planting out a field of kiwifruit compared to establishing a large herd of proven A2 producers, and setting up a parallel production process so it never mixes with A1 contaminated milk.

[Beagle]

Fair enough but it takes 5 years for a Kiwifruit orchard to reach full production too.

Anecdotally on the whole ATM stomach bloating and digestion front thing, (which appears to be the main benefit ATM promote) the curious thing Mrs B and I found during lockdown is that while we have some issue with normal A1 milk we have no issues when the milk is made from Milk powder. We are still working through the pantry destocking process with the milk powder we brought for Covid and we find the https://www.paknsaveonline.co.nz/product/5001714_ea_000pns?name=blue-milk-powder has excellent taste, consistency and smoothness and no stomach bloating or digestion issues.

When we were buying this in bulk we were getting it for $10 a Kg, which makes 10 liters $1 a liter. Fresh ATM at our local supermarket is over $3 a liter and you have to keep restocking it regularly whereas milk powder lasts 2 years.

All I am saying is that for us there is a way around the stomach bloating and digestion thing that's less than one third of the cost of buying fresh A2 milk.

[couta1]

thats a funny strategy selling lots for a loss? to buy back again more? ( how do you buy more when yourve lost heaps of money )
for someone thats so pro a2 why you sell shouldnt you just hold? strange anyways here geoffs latest

New formula needed for soured China relationship: a2 Milk boss


https://www.afr.com/companies/manufacturing/new-formula-needed-for-soured-china-relationship-a2-milk-boss-20200911-p55unw So it is possible to teach an old bull new tricks, sure you can just hold and wait until the price comes back to your avg buy in price or you can be proactive and end up with more shares once it does come back up, every extra 100 shares equals 2 grand approx, you have gained money because you end up holding more shares than you originally had.

[mfd]

Bloating and other digestive issues are the main issues used to advertise, especially for Asian markets. However, there's good evidence out there of a link between A1 milk and diabetes, heart disease, autism, dementia etc. Enough to keep me away from regular milk, and I don't think milk powder removes any of those risks. The good news is cheese doesn't seem to be implicated, so you can still go nuts there.

The trials to finally prove any of those links would be tricky, but the epidemiological evidence is plenty strong enough for me to be cautious. I'd certainly go with A2 for children.

[Cyclical]

thats a funny strategy selling lots for a loss? to buy back again more? ( how do you buy more when yourve lost heaps of money )
for someone thats so pro a2 why you sell shouldnt you just hold? strange anyways...

It's effectively another form of shorting is it not, something that you seem to be the master of. I've done it on the odd occasion myself, although usually I get the timing completely wrong and it comes with regret!

[Cyclical]

Good points. Obviously - nobody can foresee the future ... and if for some reason their biggest market (China) decides to discriminate against NZ product (as they currently do against US and Australian product), then EPS (and with it share price) trend well might take a dip.

Not saying this is going to happen, but just one risk shareholders need to be aware of. A2M is a classical high risk - high reward story.

Some Aussies seem to think it's theirs anyway (the dangers of being on the ASX). Hopefully the Chinese are able to discriminate (the differentiate meaning of the word of course ;) ).

[couta1]

It's effectively another form of shorting is it not, something that you seem to be the master of. I've done it on the odd occasion myself, although usually I get the timing completely wrong and it comes with regret! Exactly, its basically shorting your own shares, done in a controlled manner it is an excellent strategy and a good way to stay positive during difficult times.

[Cyclical]

Exactly, its basically shorting your own shares, done in a controlled manner it is an excellent strategy and a good way to stay positive during difficult times.

Umm, noob question here...it's something I've been struggling to find the answer on but keen to know. From a tax perspective, and I know it's very grey in NZ, but your strategy there could potentially realise a loss on the books, which would be mean less tax to pay (assuming you're classified as a trader) come return time, which would be a nice little bonus to such a strategy (especially if you manage to buy back in at a lower price). But would tax be calculated on the realised gain/loss only, or are we supposed to work it out on capital gain too, or are there different options for calculating, or is it all just too grey?

Sorry for the deviation from topic.

[couta1]

Umm, noob question here...it's something I've been struggling to find the answer on but keen to know. From a tax perspective, and I know it's very grey in NZ, but your strategy there could potentially realise a loss on the books, which would be mean less tax to pay (assuming you're classified as a trader) come return time, which would be a nice little bonus to such a strategy (especially if you manage to buy back in at a lower price). But would tax be calculated on the realised gain/loss only, or are we supposed to work it out on capital gain too, or are there different options for calculating, or is it all just too grey?

Sorry for the deviation from topic. Tax would only be payable on any realised trading gain and yes a loss on the books means less or no tax to pay, capital gains are not taxable if there is no sole profit intent upon purchase, our current system is however as you say grey.

[bull....]

So it is possible to teach an old bull new tricks, sure you can just hold and wait until the price comes back to your avg buy in price or you can be proactive and end up with more shares once it does come back up, every extra 100 shares equals 2 grand approx, you have gained money because you end up holding more shares than you originally had.

eh so your buy more shares after selling them for a loss and hope like hell they go up because if they go down after your brought more then your just be making more big losses with those extra shares. sounds very risky you must be very good at timing the market to make this work.

i would think a better strategy would be to own the stock and short it with cfd's in another account .
if you think its going to decline that way you protect your capital position. take off the short when you think its going to go back up and wohoo not only have you lost nothing but your enjoy even more gains on the way up. of course if it continued to go up you would lose. so no strategy is without risks to some degree

[Cyclical]

eh so your buy more shares after selling them for a loss and hope like hell they go up because if they go down after your brought more then your just be making more big losses with those extra shares. sounds very risky you must be very good at timing the market to make this work.

i would think a better strategy would be to own the stock and short it with cfd's in another account .
if you think its going to decline that way you protect your capital position. take off the short when you think its going to go back up and wohoo not only have you lost nothing but your enjoy even more gains on the way up. of course if it continued to go up you would lose. so no strategy is without risks to some degree

He's hoping to sell at ~$18, then spend the same amount of money to buy ~5% more shares at ~$17. I'm not sure how that is hard to understand. Sure there's risk, it might bump back up and he has to buy back in at ~$19 and effectively have ~5% less shares for the same money. But no more or less risky than shorting as far as I can see. Plus a potential tax advantage as discussed above.

[bull....]

He's hoping to sell at ~$18, then spend the same amount of money to buy ~5% more shares at ~$17. I'm not sure how that is hard to understand. Sure there's risk, it might bump back up and he has to buy back in at ~$19 and effectively have ~5% less shares for the same money. But no more or less risky than shorting as far as I can see. Plus a potential tax advantage as discussed above.

being able to claim a tax loss is not something i would consider good because it means you actually lost a lot more capital. i would rather pay tax

[jimdog31]

According to AFR

"Bortolussi will take up the top job early in 2021, just as Babidge prepares for the delivery of his new motor cruiser boat. Babidge also recently purchased a home in the NSW Southern Highlands, where he will spend time with family, although it might be a while until his son, daughter-in-law and two grandchildren can visit from New York City.

Seems like a legit reason to cash in some shares......

[Cyclical]

being able to claim a tax loss is not something i would consider good because it means you actually lost a lot more capital. i would rather pay tax

Let's say you've been busy trading since April the 1st and in that time you'd realised a $100k gain (we'll run with easy numbers for argument's sake). You're in the top tax bracket, so you're currently staring down the barrel of a $33k tax bill for your trading efforts. You've got $1m worth of ATM stock with an average buy of $20/share. It pulls back to $18, you sell, booking a loss of $100k. You buy back in tomorrow at about the same price. You've still got the same assets (capital) as you had the day before, plus you won't be paying a $33k tax bill next year. Meanwhile the shares are at $25 come March 31 next year, but you won't be selling them, so still no tax.

Have I got that right, Couta? Beagle, you're our resident accountant, no? Am I off the mark?

[couta1]

Let's say you've been busy trading since April the 1st and in that time you'd realised a $100k gain (we'll run with easy numbers for argument's sake). You're in the top tax bracket, so you're currently staring down the barrel of a $33k tax bill for your trading efforts. You've got $1m worth of ATM stock with an average buy of $20/share. It pulls back to $18, you sell, booking a loss of $100k. You buy back in tomorrow at about the same price. You've still got the same assets (capital) as you had the day before, plus you won't be paying a $33k tax bill next year. Meanwhile the shares are at $25 come March 31 next year, but you won't be selling them, so still no tax.

Have I got that right, Couta? Beagle, you're our resident accountant, no? Am I off the mark? You understand.

[sampson]

Exactly, its basically shorting your own shares, done in a controlled manner it is an excellent strategy and a good way to stay positive during difficult times.

So how can you take this approach and continually call out shorters as being immoral etc. as you have done multiple times on this thread. You're still causing the same selling pressure on the way down right? Not giving you stick, just genuinely interested.

[couta1]

So how can you take this approach and continually call out shorters as being immoral etc. as you have done multiple times on this thread. You're still causing the same selling pressure on the way down right? Not giving you stick, just genuinely interested. Shorting your own shares is not the same as the likes of Citi or UBS loaning out many millions of shares with the sole purpose of manipulating the market, the number of shares im selling daily has no effect on the market but I take your point ,however its blatant manipulation combined with downgrading /downramping which I call immoral.

[bull....]

So how can you take this approach and continually call out shorters as being immoral etc. as you have done multiple times on this thread. You're still causing the same selling pressure on the way down right? Not giving you stick, just genuinely interested.

exactly , was always quick to slap down shorters and hello now we know the truth he was forcing the price down himself.
all the while deceiving the people on here that he was the white knight who would save them from the big bad bull shorting the stock lol.

probably short now for all we know

[bull....]

Let's say you've been busy trading since April the 1st and in that time you'd realised a $100k gain (we'll run with easy numbers for argument's sake). You're in the top tax bracket, so you're currently staring down the barrel of a $33k tax bill for your trading efforts. You've got $1m worth of ATM stock with an average buy of $20/share. It pulls back to $18, you sell, booking a loss of $100k. You buy back in tomorrow at about the same price. You've still got the same assets (capital) as you had the day before, plus you won't be paying a $33k tax bill next year. Meanwhile the shares are at $25 come March 31 next year, but you won't be selling them, so still no tax.

Have I got that right, Couta? Beagle, you're our resident accountant, no? Am I off the mark?

you still would have to pay tax at some stage , just in a different year and it would be more tax than your 33k example cause you made more. so its all relative. unless your claiming tax losses and then not declaring your tax on the gain. that would be naughty.

[couta1]

exactly , was always quick to slap down shorters and hello now we know the truth he was forcing the price down himself.
all the while deceiving the people on here that he was the white knight who would save them from the big bad bull shorting the stock lol Your so full of it bull, 1.2 mill A2 shares have sold on the NZX today and I sold 2k, even in your wildest imagination you couldn't call that forcing the price down, the difference between us bull is I'm straight up with no hidden motives or agendas.

[dreamcatcher]

I don't trade but recently set up a third account for that purpose. My understanding of trading is you pay trade on any capital gain off set by any losses and while some say if I don't sell the gains then NO TAX. But eventually you will sell booking a gain then pay tax......... simply put one can use a yearly starting cash profit/loss balance for holdings and pay/refund tax accordingly?

[couta1]

I don't trade but recently set up a third account for that purpose. My understanding of trading is you pay trade on any capital gain off set by any losses and while some say if I don't sell the gains then NO TAX. But eventually you will sell booking a gain then pay tax......... simply put one can use a yearly starting cash profit/loss balance for holdings and pay/refund tax accordingly? Probably best this topic is taken to the off market section but as an aside you are confusing trading profit with capital gain on a long term hold, the latter is not taxable under current NZ law.

[bull....]

Probably best this topic is taken to the off market section but as an aside you are confusing trading profit with capital gain on a long term hold, the latter is not taxable under current NZ law.

if your a trader your a trader no matter the lenght of time held unless i believe separate entities are used and kept that way. so your pay tax no matter what.

[dreamcatcher]

Probably best this topic is taken to the off market section but as an aside you are confusing trading profit with capital gain on a long term hold, the latter is not taxable under current NZ law.

Currently using three accounts so as not to confuse holdings........ but correct its off-topic here.

[Blue Skies]

Yep downrampers and non holders conveniently forget where this stock has come from and lack vision to see where its heading to, of course as you have kindly pointed out we know that is $25.


2 days ago you sounded pretty enthusiastic about where the SP was heading, & critical of those expressing caution.
Doesn't quite square up with what it appears you were actually thinking, i.e. the reverse, expecting the price to drop (& therefore selling & rebuying at a lower price).
Or have I missed something?

[couta1]

2 days ago you sounded pretty enthusiastic about where the SP was heading, & critical of those expressing caution.
Doesn't quite square up with what it appears you were actually thinking, i.e. the reverse, expecting the price to drop (& therefore selling & rebuying at a lower price).
Or have I missed something? I'm still enthusiastic about the long term trajectory of the sp hence why I'm actually holding more shares than I did last week, selling and rebuying more is a bullish strategy from my perspective.

[Cyclical]

Yeah, we might be off topic here, but it's quite relevant to what one or two of us are up to with this stock...


you still would have to pay tax at some stage , just in a different year and it would be more tax than your 33k example cause you made more. so its all relative. unless your claiming tax losses and then not declaring your tax on the gain. that would be naughty.

Not necessarily. It would be prudent to use caution so as not to appear as blatant tax avoidance, however, at this point in time you may consider yourself as a trader (and let's face it, most of us have probably been doing a fair bit of trading this FY given the market turmoil, for whatever personal reasons) and you're up significantly while you've been swapping in and out of shares deciding where to put your funds long term... As things settle down, you dial back on the trading, realise some losses here and there that negate the previously realised gains. And then you might think, right, ATM looks like a good long term prospect and you think they'll be paying a dividend in the coming years, I'll buy a shed load at about the same price I sold them for the other day, but sit on them for the years ahead and quit "trading" at that point. Does that mean you pay tax on capital gains in the years ahead?


I don't trade but recently set up a third account for that purpose. My understanding of trading is you pay trade on any capital gain off set by any losses and while some say if I don't sell the gains then NO TAX. But eventually you will sell booking a gain then pay tax......... simply put one can use a yearly starting cash profit/loss balance for holdings and pay/refund tax accordingly?


Probably best this topic is taken to the off market section but as an aside you are confusing trading profit with capital gain on a long term hold, the latter is not taxable under current NZ law.

I'll run with that until I learn otherwise.


if your a trader your a trader no matter the lenght of time held unless i believe separate entities are used and kept that way. so your pay tax no matter what.

Once a trader, never an investor? So because the kid traded a few shares with his paper round money back in '87, he's tainted forever as a trader and will be treated as such for tax purposes for the remainder of his life? Seems rough.

ATM's looking good to short ;-)

[bull....]

Yeah, we might be off topic here, but it's quite relevant to what one or two of us are up to with this stock...



Not necessarily. It would be prudent to use caution so as not to appear as blatant tax avoidance, however, at this point in time you may consider yourself as a trader (and let's face it, most of us have probably been doing a fair bit of trading this FY given the market turmoil, for whatever personal reasons) and you're up significantly while you've been swapping in and out of shares deciding where to put your funds long term... As things settle down, you dial back on the trading, realise some losses here and there that negate the previously realised gains. And then you might think, right, ATM looks like a good long term prospect and you think they'll be paying a dividend in the coming years, I'll buy a shed load at about the same price I sold them for the other day, but sit on them for the years ahead and quit "trading" at that point. Does that mean you pay tax on capital gains in the years ahead?





I'll run with that until I learn otherwise.



Once a trader, never an investor? So because the kid traded a few shares with his paper round money back in '87, he's tainted forever as a trader and will be treated as such for tax purposes for the remainder of his life? Seems rough.

ATM's looking good to short ;-)

thats why you need different entities to separate your intentions. anyway couta and I should start chanting hammertime since hes shorting now

[dreamcatcher]

thats why you need different entities to separate your intentions. anyway couta and I should start chanting hammertime since hes shorting now

Haha. A chanting Mr bull with a slight difference to couta who OWNS his shorted shares :(

[dreamcatcher]

Trading profit and capital gain is the same thing its upwards SP momentum except 'Traders' pay tax on any profit offset by their losses but can buy/sell daily without any limits.

'Investors' buy and hold for longer then a year. Cannot offset losses but any capital appreciation becomes tax free.

Agree with @bull regarding two unquestionable separate accounts.

[couta1]

Haha. A chanting Mr bull with a slight difference to couta who OWNS his shorted shares :( Glad you noticed the difference and my OWN shares are the only ones I will ever short.

[winner69]

Trading profit and capital gain is the same thing its upwards SP momentum except 'Traders' pay tax on any profit offset by their losses but can buy/sell daily without any limits.

'Investors' buy and hold for longer then a year. Cannot offset losses but any capital appreciation becomes tax free.

Agree with @bull regarding two unquestionable separate accounts.

But doesn’t the taxman look at ‘Dreamcatcher Trading’ and ‘Dreamcatcher Buy and Hold’ just as one (not 2) Mr Dreamcatcher and class him a trader

My first ‘discussion’ with IRD re trading was that they noticed I had 2 stocks that had never and were never likely to pay a dividend so claimed I was only in for trading gains (I gather they trawled through a couple of share registers). I was forced to disclose other ‘investing activities’ and was deemed a trader and a told once a trader always a trader etc etc.

[Blue Skies]

I'm still enthusiastic about the long term trajectory of the sp hence why I'm actually holding more shares than I did last week, selling and rebuying more is a bullish strategy from my perspective.


Cheers Couta, just checking you hadn't lost confidence in the co outlook or anything like that.
Using the opportunity for small top ups myself but not sure how long & much lower it will go before resuming heading north.

[couta1]

But doesn’t the taxman look at ‘Dreamcatcher Trading’ and ‘Dreamcatcher Buy and Hold’ just as one (not 2) Mr Dreamcatcher and class him a trader

My first ‘discussion’ with IRD re trading was that they noticed I had 2 stocks that had never and were never likely to pay a dividend so claimed I was only in for trading gains (I gather they trawled through a couple of share registers). I was forced to disclose other ‘investing activities’ and was deemed a trader and a told once a trader always a trader etc etc. As you say I doubt 2 separate accounts means a lot, its all about frequency of trading and history etc, because we don't have a CGT and the current trading rules are grey they should just introduce a brightline test like they do with property but lessen the timeframe. Those that trade full time as a job wouldn't come under the brightline test so no probs.

[dreamcatcher]

But doesn’t the taxman look at ‘Dreamcatcher Trading’ and ‘Dreamcatcher Buy and Hold’ just as one (not 2) Mr Dreamcatcher and class him a trader .

As my LTH investment portfolio goes back years and cannot be used for trading.

Hence "Dreamcatcher Trading" a totally separate account which always 'pays tax' whether it buys/sells/holds its status never changes its sole purpose to make profit. Clear as mud I believe imo.

[see weed]

So it is possible to teach an old bull new tricks, sure you can just hold and wait until the price comes back to your avg buy in price or you can be proactive and end up with more shares once it does come back up, every extra 100 shares equals 2 grand approx, you have gained money because you end up holding more shares than you originally had.
Have been doing something similar to that in the last few years. been getting tax refunds every year. This year getting back about 6k.

[see weed]

Have been doing something similar to that in the last few years. been getting tax refunds every year. This year getting back about 6k. ps sell your losses before 31 March every year and sell your gains on or after the 1 April every year. If I make 30k profit in first couple of months, then will work on making a 30k loss, but make sure I get it back in dividends. ie CEN just sent me a 20k div. and have sold all those shares since, so am not too concerned if I make a 20k loss. Can not sell a2 because it is too far in profit, but did sell 4000 a while back making 47k profit. So now will buy into a company paying a div, as long as I can get a 47k div, then I don't mind making a 47k loss after the div. Have locked in 136k profit so far this year so have the rest of the year to make a 136k loss as long as I get it back in div I am happy. The only problem sometimes I make a profit on the div shares as I did on CEN, so have to quickly buy into another company and try and make another loss. All in all am laughing all the way to the bank. And have a very good and understanding accountant:t_up:.
Am finding it very hard to loose money. Any body got some good tips.

[winner69]

As my LTH investment portfolio goes back years and cannot be used for trading.

Hence "Dreamcatcher Trading" a totally separate account which always 'pays tax' whether it buys/sells/holds its status never changes its sole purpose to make profit. Clear as mud I believe imo.

But does IRD know about the secret Dreamcatcher LTH?

that essentially was what got me into trouble once

[bull....]

Have been doing something similar to that in the last few years. been getting tax refunds every year. This year getting back about 6k.

seems like a lot of trouble to make a loss + all the brokerage you must pay. wouldnt just buying stocks for the dividend and holding produce the same result? of no tax to pay and your save all the brokerage. + you need a significant amount more in $ to purchase enough stock to make it up in dividends to offset your trading gains.

[Dotbond]

Have to say this is a very interesting conversation the past few pages regarding A2 and shares in general. Everyones perspective is quite a learning experience for me. Thanks couta1 and bull... and seeweed etc. Some very opposing views. I like it.

[dobby41]

But does IRD know about the secret Dreamcatcher LTH?

that essentially was what got me into trouble once

Anything purchased prior to starting trading would be fine.
Anything done after, long term or not, could be deemed as trading as you are tainted.

[couta1]

Am finding it very hard to loose money. Any body got some good tips. The answer is right under your nose see weed, you know those A2 shares of yours which are too far in profit to sell.:cool:

[longy]

Anything purchased prior to starting trading would be fine.
Anything done after, long term or not, could be deemed as trading as you are tainted.

What if the wife to have a long term holding account and the husband do the tradings on his account? So essentially two separate entities.... I am wondering if her shares are tainted too and would IRD to deem her as trader as well?

[dreamcatcher]

But does IRD know about the secret Dreamcatcher LTH?

that essentially was what got me into trouble once

Off course they know as each identity has its own IRD number and both files returns through same accountant.

(Shares are never intermixed).

[couta1]

What if the wife to have a long term holding account and the husband do the tradings on his account? So essentially two separate entities.... I am wondering if her shares are tainted too and would IRD to deem her as trader as well? LOL a large research paper produced a few yrs ago by Auckkand Uni showed just how grey the current system really is, there were pure investors getting pinged as traders when selling and traders who were denied losses and deemed investors.