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  1. #9571
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    The efforts of Bull and Peter are appreciated in terms of giving some rationality to the debate and sharing their valuations/ideas/positions.

    My current position is probably similar to many others on this site. I bought <$1, sold a few (too early) and the remainder are a 'free-carry'. I'm looking at long-term, and not especially worried about TA - but not in a position to add any further. Haven't traded, as scared would get caught out (as would have up until the last few months) - but bought and held.

    Wrongly, I haven't really looked too hard at valuations - mainly growth rates and what that means to PE's, and also their cashflows/cash position etc. They have traditionally under-promised and over-delivered, make smart decisions, and believe there is still much in the pipeline - especially with some traction with Fonterra, developments in US, UK, Korea etc (Yuhan in Korea are definitely the real deal, and good alignment for A2). Growth is naturally going to slow as they get bigger, because hard to double in size when a billion turnover compared to being a $50m turnover. The competition is also coming, many with deep pockets - so that marketing spend does have to increase - but likely that growing competition will also grow the market and awareness of A2.

    I am totally aware that there is obviously some emotion/bias/subjectivity to A2 on my part - as easily the most profitable share investment I've made and made a meaningful difference to our family's financial position. Perhaps should be paying more time/attention to valuations - but again, I think there would be definitely others here who could put there hand up on this also.....and regardless remain a believer in the A2 story.

  2. #9572
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    Only charts I bother with these days are equi volume as the only thing that really matters is price and volume, and virtually all the indicators people use are just derived from price anyway. As an investor rather than short term trader I just look for the big days. Here is a Two year chart of A2 which shows very simply that only a couple of days are really important.
    It is obvious that the stock is defined by whatever happened on the 21st of February while the massive box on the 22nd of Feb is a clear gamechanger, huge volume that day and a clear top which was confirmed when price fell below that box. Nothing in the last Two years comes close to the significance of those Two days. In hindsight looks like the smart money was getting out.

    a2m.jpg
    Last edited by ratkin; 20-07-2018 at 09:44 AM.

  3. #9573
    Speedy Az winner69's Avatar
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    Quote Originally Posted by ratkin View Post
    Only charts I bother with these days are equi volume as the only thing that really matters is price and volume, and virtually all the indicators people use are just derived from price anyway. As an investor rather than short term trader I just look for the big days. Here is a Two year chart of A2 which shows very simply that only a couple of days are really important.
    It is obvious that the stock is defined by whatever happened on the 21st of February while the massive box on the 22nd of Feb is a clear gamechanger, huge volume that day and a clear top which was confirmed when price fell below that box. Nothing in the last Two years comes close to the significance of those Two days. In hindsight looks like the smart money was getting out.

    a2m.jpg
    “exhaustion gap" and a "climax top" make for interesting study

    That’s what happened around February 22nd

    Might be some time before the share price gets back to that level
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  4. #9574
    Speedy Az winner69's Avatar
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    Ratkin, that’s a cool chart you posted

    Yes does suggest that’s when the “smart money” got out
    “ At the top of every bubble, everyone is convinced it's not yet a bubble.”

  5. #9575
    ShareTrader Legend bull....'s Avatar
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    Quote Originally Posted by peat View Post
    Just for the record:

    I dont see that drawing of divergence as being correct. It is exaggerated. Strictly speaking there is only divergence when the price moves in the opposite direction to the RSI which means that line of divergence you've drawn should be much shorter and should stop at the all time price high. Sure there is some divergence at that point - but from thereon price and RSI are convergent as they both move in the same direction.
    the divergence is from late 2017 - feb 2018 on the weekly i forgot to draw the line on the weekly. its exxaggerated by the spike up in price which ratkins chart shows was more than likely used by some to take profits.
    one step ahead of the herd

  6. #9576
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    Quote Originally Posted by bull.... View Post
    its exxaggerated by the spike up in price
    thats not what I meant. the length of the divergence line on the RSI should be much shorter meaning there was a briefer period of divergence than your chart suggested.
    For clarity, nothing I say is advice....

  7. #9577
    ShareTrader Legend bull....'s Avatar
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    Quote Originally Posted by BlackPeter View Post
    Cheers bull - great post and thanks that you did show us what you see. Keep it up!

    Not sure I consider myself a "fundamentalist" more a "balanced" person ... but hey - here is in a nutshell what I see from a fundamental perspective:

    forward PE: (at 10.75 and based on 4 traders analyst consensus): 29; Obviously a risk if & when PE contraction starts (some say it did already);

    CAGR: huge, but hard to capture given the immense jumps. Lets take 50 as backward (revenue) CAGR. EPS CAGR is still ways higher, but clearly not sustainable, i.e. in my view just describing the past.

    The big issue here is that we can't really use these numbers for any future projections - given that they describe the agility of a small antelope (which ATM used to be), but not the future movements of a elephant turning into a mammoth. Elephants don't gallop .

    FY16 growth 127%
    FY17 growth 56%
    FY18 growth 67%
    FY19 growth (predicted): 34%
    FY20 growth (predicted): 23%


    Anybody noticing the trend?

    Looks like the 50% CAGR is history as well. So - big question is - what would be a sensible assumption for future long term growth?

    Get this number right - and your fundamental assessment will be spot on

    If we take the growth out of the equation, than the share would be worth something like 10 PE - $3.71; Obviously - we do have growth, so halt your flogging and take this just as a base number.

    If we take Rogers modified Graham formula and assume 10% sustainable growth, than the share value would be $7.42;

    Still too conservative? Make it 15% sustained growth: $9.27

    And for the optimists - here is the result based on the original Graham formula and 15% growth: $14.28;

    Given the huge unknowns about future market growth, competition (margins shrinking) and the science around A2 did I not bother to do a DCF. Garbage in - garbage out.

    From experience - if a share is priced close to its Graham value, than there is not that much upside potential left but obviously - increase the growth assumptions and the sky is the limit.

    Still - if I may says so - the bears have in my view a bigger chance of winning this contest ... despite A2 being a good company.

    Discl: not holding and cancelled my buy order at $9.50. Analysis is good.
    good stuff i did a 2 stage fcff valuation and got some figures like yours , depended so much on how the growth rate i attributed to stable growth made such a difference to figures spouted out. why i prefer to use both t/a and f/a as charts suppossedly contains all known info other than the short term.
    one step ahead of the herd

  8. #9578
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    Quote Originally Posted by winner69 View Post
    “exhaustion gap" and a "climax top" make for interesting study

    That’s what happened around February 22nd

    Might be some time before the share price gets back to that level
    There’s usually an exhaustion gap after I climax top aswell.

  9. #9579
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    Quote Originally Posted by James108 View Post
    There’s usually an exhaustion gap after I climax top aswell.
    Double entendre. LOL

  10. #9580
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    Tony Alexander saying this week that their is a net short bet on the $Kiwi of about $2.7 billion by N.Z. Business's. Small business confidence hit a nine year low this week according to ANZ small business confidence survey out yesterday. Pessimism has never been worse since the very depths of the GFC in March 2009. I expect there's a very good chance that this economy is headed for extremely low growth or a recession and that the Kiwi is probably headed lower. Good thing for ATM with the vast majority of its sales overseas and not dependent on domestic demand. I think the $Kiwi will be lower and therefore margins higher than consensus analyst view. I'm also more bullish on sales estimates. I'm with Craigs and see the distinct possibility of $1.4b, consensus view is about $1.28b last time I looked. Could be even higher in $Kiwi terms if we head down to the low 60's U.S.
    Last edited by Beagle; 21-07-2018 at 11:21 AM.
    Ecclesiastes 11:2: “Divide your portion to seven, or even to eight, for you do not know what misfortune may occur on the earth.
    Ben Graham - In the short run the market is a voting machine but in the long run the market is a weighing machine

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