ATM - A2 Milk Corporation Limited

[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/manufa...0200911-p55unw

[sb9]

here geoffs latest

New formula needed for soured China relationship: a2 Milk boss


https://www.afr.com/companies/manufa...0200911-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-new...hallenging-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/pro...ue-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/manufa...0200911-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!