ATM - A2 Milk Corporation Limited

[Beagle]

FEAR and Greed the two greatest motivators. Stock was $13.38 when I made (thankfully just a small) a top up last Thursday, (not even one week ago).
We are down $3 in less than a week and the decline has been very steep and swift. I think there's a LOT of fear out there and a lot of holders have moved to lock in profits or stem losses. Could just as easily turn on a dime tomorrow. Fundamental's at this level look very attractive but I agree the chart looks pretty bad.
Disc: Holding for long term growth.

[winner69]

Say a guru fundie like Harbour Asset lent heaps of their A2 to shorters at say $13

They’ve collected a few % by way if a fee

But their fund is down heaps at the moment ...heaps more than the fees they have collected

So by aiding and abetting these horrible shorters they’ve damaged their own returns eh

Probably justify their decision to do this by saying it’s improved liquidity

[ratkin]

Well, it depends on which time window you look at. However - stock is still well above EMA200, the uptrend is not broken ...

True enough, the 2 year chart does not look quite so bad, for long term investors at least. They may as well hang in there and hope that average is not broken.

[JeremyALD]

Feb 20 the SP was $9.20 so it wasn't that long ago it was around thsi level.

[hardt]

If I have understood this table correctly the total shorts represent a small fraction of daily turnover. If so they are noise as they could be cleared very quickly. On Wed. Shorts increased by about 230k or 1% of the volume traded that day. The other 99% is not shorts related.

Having a 1/4 of the trades be shorts is a large number... on par with some of the most heavily shorted stocks on the ASX
2.5-3% of A2 is short currently and the more that number grows the more damaging the squeeze will be... like what we saw in Feb.

Just about every sizeable movement down has been accompanied by a smaller increase in total shorts than what we have seen this past week.
A2M Shorts.JPG

[Scrunch]

I think you need to look into the last column (shorts as percentage of volume), and this number is higher. Shorts as percentage of capital (the small numbers) is quite irrelevant for short covering later on - unless the shorters have access to the total market cap (which they obviously haven't).

If volume goes down over the next couple of days many of these shorter's will be in the proverbial ...

But doesn't the last column simply say that on the daily volumes traded, 100% of the shorted volume could be cleared and still only represent 20-30% of daily turnover. If say a third of the shorted volume was to clear tomorrow, this would create buying demand of 1m shares. Thats nothing for A2M given the size of the market.

[Scrunch]

Having a 1/4 of the trades be shorts is a large number... on par with some of the most heavily shorted stocks on the ASX
2.5-3% of A2 is short currently and the more that number grows the more damaging the squeeze will be... like what we saw in Feb.

Just about every sizeable movement down has been accompanied by a smaller increase in total shorts than what we have seen this past week.
A2M Shorts.JPG

Oh,

I had been mislreading the chart as total shorts not new shorts established. Yes that's quite a bit of new shorting, but the graph shows that participants had previously established shorts equivalent to 4-8% of capital and have only re-established shorts equivalent to just over 2%. This may make it heavily shorted relative to other stocks, but lightly shorted relative to past experience.

[waterboy]

Here is what i think will happen in the next week.
Price will drop to somewhere in the 9.50 to $10 region because:
a) that is the point where the trend line prior to the feb jump would intersect
b) the gap in feb will be filled
c) it roughly coincides with the end of may when msci kicks in (4 trading days left)
d) the pe is not too high
e) the machines/shorters run out of borrowed shares (maybe). They have done their job for the big boys to get in cheaper.

Would be interesting if anyone has looked at what happening with other stocks perhaps on asx that are being included in index to see if they have had the same treatment.



should have sold and bought back in at much lower price but would not have believed this would happen from a slightly lower forecast

[winner69]

I don't think the shorters will ever go away from ATM ....or at least while its trading at outrageous PE multiples.

Shorters love stocks that are priced to more than perfection where there are significant known risks that could cause a dramatic slow down in growth

We have to get used to their presence ...why worry about them on a day to day business

One thing about shorters though (more so the big ones shorting with conviction rather than traders) is that they are often right in their judgment of the company and hang in there until they think the price has fallen to a more realistic level.

[hardt]

I don't think the shorters will ever go away from ATM ....or at least while its trading at outrageous PE multiples.

Shorters love stocks that are priced to more than perfection where there are significant known risks that could cause a dramatic slow down in growth

We have to get used to their presence ...why worry about them on a day to day business

One thing about shorters though (more so the big ones shorting with conviction rather than traders) is that they are often right in their judgment of the company and hang in there until they think the price has fallen to a more realistic level.

Shorters have had some terrible times with A2... 8% was the baseline for most of 2016-2017, then settled around 3-4% for the last 6 months and hit essentially 0.05% in march after the latest squeeze... this quiet period after the update is the perfect opportunity to short without risk of a repeat burn.