ATM - A2 Milk Corporation Limited

[Harrie]

In previous posts, I had mentioned that fund managers operate under an investment mandate to the effect that there is usually self imposed limits on exposure to any one listed security on the NZX. With Milford funds management having the highest exposure to ATM as a funds management group I searched their website to see if there was anything in their investment statements to that effect and could not find anything. I emailed them to find out and got this response:

"We do have a limit of a maximum of 7% in any one NZX listed company, however, this is not a hard and fast rule.

If we felt that a company held excellent growth opportunities that we wanted to take advantage of we could hold more than this, however, any such decision would be carefully considered and investigated by both our Investment Committee and our Risk and Compliance department."

In view of the fact, that in the absence of any disclosure representing a change of 1% of the company shares over the last few months, they hold over twice their own maximums, they would have to have shown significant confidence in ATM's growth path to both their investment and compliance committees to maitain their 15% exposure.
It was for this reason I suspected that Milford could have been a seller, and hence comment around timliness of disclosure under the relevant act.
I can immagine that given the above investment mandate, the risk committee have got their work cut out to sanction maintaing that exposure!

[NT001]

There are over a 100 scientific papers in support of a2 benefits that cannot be totally ignored, probably many papers that don't support it too.

Science in the lab is just that but if that is enough for some folk to believe, then there’s nothing wrong with that. It is only clinical trials on humans though that would provide any definitive proof, the science alone can’t do that, and I don’t think ATM should feel a need to do any trials to be honest.

Science is crucial to this whole debate. Otherwise the critics, doubters, commercial competitors and mainstream dairy industry will simply keep on saying there's no scientific proof, and anecdotal reports are just emotional garbage.

Consumers usually read the media before buying something new and controversial, and if the science doesn't support the product they're much less likely to try it - and if they don't try it they won't experience its benefits.

Some science can only be done in the lab, and should not be dismissed as merely "fine and hamless" for those who like to believe that kind of stuff. Lab science adds vitally to the overall understanding of the A1-A2 issue.

For example, when the European Food Safety Authority concluded there was no health benefit in A2 milk a primary reason it gave was that although BCM7 was dangerous it could not get into the human bloodstream and be carried to the brain where it could wreak havoc. This has since been disproved by lab tests of blood taken from human subjects. Without those lab tests, the EFSA's findings would stand intact, whereas they were fundamentally flawed.

Based on those lab tests, it is now possible to explain how BCM7 can be linked with conditions such as autism. No one is saying BCM7 is the sole cause of autism, but this knowledge helps inform health professionals why they are finding that some patients on the autistitic spectrum show remarkable improvement when they switch to A2. These professionals now have a scientific explanation, which is what they want, as to why this may occur.

Clinical trials on humans are also important because for years the critics have been saying "the only evidence you have is based on mice and rabbits - what about humans?" The Curtin trial was the first of its kind involving humans, and it has caused quite a shift in that aspect of the debate. It is no longer possible to say "there's no evidence that people drinking A2 have better outcomes than those who drink A1."

As regards the number of scientific papers for and against A2, a lot of the scientific papers on milk protein research don't actually analyse the health benefits of A2. What they analyse is the health dangers of A1 - that's where the big scientific interest lies. No one is saying if you drink A2 you won't get autism or diabetes or schizophrenia or tummyache. It's like the old smoking debate - no one claimed that if you didn't smoke you wouldn't get lung cancer.

Regarding papers not supporting the benefits of A2, let's put it this way: there has only been one peer-reviewed paper that concluded there was essentially no difference between drinking A1 and A2, and that paper has since been comprehensively shot down. It was based on a rodent trial that was subsequently admitted by Fonterra's chief scientist to have been a total cockup.

[Snoopy]

In previous posts, I had mentioned that fund managers operate under an investment mandate to the effect that there is usually self imposed limits on exposure to any one listed security on the NZX. With Milford funds management having the highest exposure to ATM as a funds management group I searched their website to see if there was anything in their investment statements to that effect and could not find anything. I emailed them to find out and got this response:

"We do have a limit of a maximum of 7% in any one NZX listed company, however, this is not a hard and fast rule.

If we felt that a company held excellent growth opportunities that we wanted to take advantage of we could hold more than this, however, any such decision would be carefully considered and investigated by both our Investment Committee and our Risk and Compliance department."

In view of the fact, that in the absence of any disclosure representing a change of 1% of the company shares over the last few months, they hold over twice their own maximums, they would have to have shown significant confidence in ATM's growth path to both their investment and compliance committees to maitain their 15% exposure.
It was for this reason I suspected that Milford could have been a seller, and hence comment around timliness of disclosure under the relevant act.
I can imagine that given the above investment mandate, the risk committee have got their work cut out to sanction maintaining that exposure!

Harrie, I suspect you have misinterpreted Milford's e-mail response to your question.

A fund manager limits risk by balancing the size of each investment in their total portfolio. A 7% limit would mean no particular investment of Milford's portfolio would be allowed to exceed 7% of the value of Milford's total investment in that fund. So if a company was relatively small (like ATM), Milford could easily hold a much bigger stake than 7% of the shares on issue in that company (in ATM for example), without going over the 7% ceiling of total value for one company in the underlying Milford fund.

SNOOPY

[Harrie]

Harrie, I suspect you have misinterpreted Milford's e-mail response to your question.

A fund manager limits risk by balancing the size of each investment in their total portfolio. A 7% limit would mean no particular investment of Milford's portfolio would be allowed to exceed 7% of the value of Milford's total investment in that fund. So if a company was relatively small (like ATM), Milford could easily hold a much bigger stake than 7% of the shares on issue in that company (in ATM for example), without going over the 7% ceiling of total value for one company in the underlying Milford fund.

SNOOPY

Fair interpretation Snoopy, I'll get that clarified. Its how Milford have interpreted my question. I can see that 7% of Milfords total funds under management would be quite different to 7% of ATM's shareholding

[MAC]

I’ve only read a small amount of research NT, it all seems well presented and reasoned at face value to me but I’m not a biochemist, I do have one in the family though who gives a2 milk a ‘why not’ endorsement and has her tea with a2.

http://www.betacasein.org/index.php?p=science-overview

For the lay public though, it’s try at home and word of mouth from there that does the real biso though wouldn’t you say. Who’s really to say why more prefer vegemite to marmite ?

I don’t drink a lot of milk, so I’m undecided if it’s giving me all the benefits, but what I do know is that it makes a dam fine cup of coffee, whether that’s the a2 protein or the jersey cows I don’t know, but it’s a good enough reason for me.

[winner69]

Fair interpretation Snoopy, I'll get that clarified. Its how Milford have interpreted my question. I can see that 7% of Milfords total funds under management would be quite different to 7% of ATM's shareholding

ATM is just over 2% of their Active Growth Fund

[winner69]

Do they hold it in any of the other funds?

(a) total number held in class: 97,877,776
(b) total in class: 660,066,979
(c) total percentage held in class: 14.83% (note, relevant interests held by the manager as follows):
Milford Active Growth Wholesale Fund (3.32%), (Custodian - TEA Custodians),
Milford Dynamic Wholesale Fund (2.51%), (Custodian - TEA Custodians),
NZ Equities Wholesale Fund (3.83%), (Custodian - TEA Custodians),
Waikato Community Trust (0.33%), (Custodian - TEA Custodians),
New Zealand Superannuation Fund (3.45%), (Custodian - New Zealand Superannuation Fund Nominees Limited)
Mercer Trans-Tasman Shares Trust (1.39%), (Custodian – BNP Paribas Securities Limited).

[NT001]

I’ve only read a small amount of research NT, it all seems well presented and reasoned at face value to me but I’m not a biochemist, I do have one in the family though who gives a2 milk a ‘why not’ endorsement and has her tea with a2. For the lay public though, it’s try at home and word of mouth from there that does the real biso though wouldn’t you say?

Thanks MAC. I'm not a biochemist either but the abstracts of a lot of papers give the guts - and Keith Woodford's book is my bible. I'm glad the biochemist in your family uses A2.

I totally agree with you that word of mouth and try-at-home are hugely important, but if the media are saying A2 is a dud and is unsupported by science, far fewer people will try it or recommend it, and fewer shops will stock it. Cheers

[nextbigthing]

Depth is currently looking terrible! Any lower and I might launch a takeover myself

[dingoNZ]

Depth is currently looking terrible! Any lower and I might launch a takeover myself

good things don't happen overnight, just tuck these shares away in the draw and check back in 5 years