ATM - A2 Milk Corporation Limited

[MAC]

Where are you getting the retail premium of 50% from? What i've seen in my local Countdown is 10% premium on regular milk. I cannot believe they are paying 50% more and selling for lower margin.

I haven’t a more recent plot but a2 is still trucking along unwaveringly at a top shelf price of $5 per bottle http://shop.coles.com.au/online/nati...cream-9760091p

A2retail.jpg

“Since inception, a2™ brand milk has retailed at the top end of branded milks, and from early 2011 has been at a c.150% premium over generic milks”

http://thea2milkcompany.com/wp-conte...-Plan-2012.pdf

Unlike Australia and the UK, the piddling New Zealand market at 0.11% of revenues, is controlled by a company called Fresha that supplies, markets, distributes and retails a2 under a licensing agreement. It is Fresha's business as to what they charge for their milk here not ATM's.

[MAC]

No problem with any of that MAC, just a matter of the market cluing on to it I suspect.

No wonder it begs for speculation Harrie, there’s been the big seller, the big shorter and the takeover talk, could of course be any or all of those things, but someone said to me a few days ago, not someone from ST from elsewhere, that there are still a lot of XRO margin calls firing.

Since we have not seen any SSH’s it’s led me to consider that perhaps all we are really seeing is one, possibly more than one, medium size but really quite desperate sellers having to cash up quick to settle their over extensions on XRO.

As the say on ebay, those who bought XRO also bought PEB and ATM and lux liquid, anyway, a YTD overlay of XRO and ATM tells the tale.

PEB may have broken the correlation after an AGM and a couple of analyst reports created enough buying pressure to offset the XRO losers, no such luck for ATM just yet.

But when one keeps stretching an elastic band tighter, tighter, tighter, well ……………………..

[nextbigthing]

I'm not 100% sure but I thought I read that ATM will always pay farmers 8% more than the going rate to reward them for having an a2 herd and to ensure supply.

[Harrie]

No wonder it begs for speculation Harrie, there’s been the big seller, the big shorter and the takeover talk, could of course be any or all of those things, but someone said to me a few days ago, not someone from ST from elsewhere, that there are still a lot of XRO margin calls firing.

Since we have not seen any SSH’s it’s led me to consider that perhaps all we are really seeing is one, possibly more than one, medium size but really quite desperate sellers having to cash up quick to settle their over extensions on XRO.

As the say on ebay, those who bought XRO also bought PEB and ATM and lux liquid, anyway, a YTD overlay of XRO and ATM tells the tale.

PEB may have broken the correlation after an AGM and a couple of analyst reports created enough buying pressure to offset the XRO losers, no such luck for ATM just yet.

But when one keeps stretching an elastic band tighter, tighter, tighter, well ……………………..

Seems like a more logical explanation for the trading irregularities to me MAC. I am highly sceptical that anyone would adopt the high risk strategy of shorting ATM by "borrowing" and buying back when the market for ATM is relatively thin. Get caught short I this stock and you would be utterly screwed

[BFG]

Others have probably said this .... shorting is very common. I believe for example that significant short positions were taken last year in DIL. I would personally be surprised if there had not been numerous short positions taken on many of New Zealand's more liquid "growth" companies over the six months or so.

None other than Morgan Stanley took a >5% short position in DIL during the drama. I remember Sparky calling it a great announcement... until we read further and saw the "borrowed stock repaid" lines later on!

[NT001]

I'm coming round to the view that at least part of the ATM selling is coming from investors who over-extended during the big peak early this year.

I've just been looking back through this thread between mid-December and mid-January and noticed that there was puzzlement among members, since there were no announcements or fundamentals that seemed to justify the sudden big rise except for the Forsyth Barr tip that ATM was a share to watch in 2014 and looked like a takeover prospect. The shares could have got a bit of extra stimulation from the announcement in early January that A2 Milk had gone on sale in a large number of UK supermarkets, but the sharp climb had already begun by then.

It looks like the FB speculation, which was widely reported, was probably the main trigger and might have lured a few gungho investors into over-extending, especially with some other high-profile shares (XRO) also looking good at that time. Some traders will have taken their ATM profits and got out quickly but I'm sure others hung on and are probably now being forced to reassess their holdings, especially if they have also invested in the energy SOEs and the raft of recent new software floats.

[Harrie]

Others have probably said this .... shorting is very common. I believe for example that significant short positions were taken last year in DIL. I would personally be surprised if there had not been numerous short positions taken on many of New Zealand's more liquid "growth" companies over the six months or so.

I am not saying shorting a stock does not happen Black Knat, more that it is unlikely to happen in a reasonably illiquid stock, unless you have some "inside" knowledge, because the risk/return factor does not stack up.
In this stock, one positive bit of news released to the market could send the price up by 10% or more given that unless its a reasonably significant announcement it would not be released. Caught on a short, especially if its a leveraged one would be an unhappy experience.
The proposition of traders needing liquidity to cover shorts in XRO or other speculative stock IMHO seems to make more sense to me.

[MAC]

I am not saying shorting a stock does not happen Black Knat, more that it is unlikely to happen in a reasonably illiquid stock, unless you have some "inside" knowledge, because the risk/return factor does not stack up.
In this stock, one positive bit of news released to the market could send the price up by 10% or more given that unless its a reasonably significant announcement it would not be released. Caught on a short, especially if its a leveraged one would be an unhappy experience.
The proposition of traders needing liquidity to cover shorts in XRO or other speculative stock IMHO seems to make more sense to me.

There’s been a total of $3,572M dollars wiped off XRO’s market cap since its peak thus far, yep I had to calculate that twice, couldn't believe it initially.

Much of that would have been salvaged from elsewhere, and many XRO investors were probably predisposed to investing heavily within the SciTech sector also. It’s no wonder stocks like ATM and PEB have been so very heavily beaten up in that context.

But, that just serves to provide absolute bargain basement prices for both growth and value investors about here. At 55c ATM is a half price discount sale as far as I’m concerned.

It’s been an interesting one, I don’t think very many at all back in March would have anticipated precisely that a single stock sell down like XRO could have had so much impact on others.

[mayday]

I am not saying shorting a stock does not happen Black Knat, more that it is unlikely to happen in a reasonably illiquid stock, unless you have some "inside" knowledge, because the risk/return factor does not stack up.
In this stock, one positive bit of news released to the market could send the price up by 10% or more given that unless its a reasonably significant announcement it would not be released. Caught on a short, especially if its a leveraged one would be an unhappy experience.
The proposition of traders needing liquidity to cover shorts in XRO or other speculative stock IMHO seems to make more sense to me.

If anyone has been shorting ATM, doesn't seem he's gonna make too much profit out of this stock. Although the cap looks slight high, FA still looks positive and most of shareholders seems to be willing to hold rather than sell.

Looking forward to the annual meeting in Nov.

Disc: holding

[MAC]

AGM is just a month away now, top of my list is;

It would be quite nice if ATM can provide a better sound bite to the media than “the first patent expires in 2015”, that’s more than just a bit misleading to those whom are not patent lawyers.

The other on my list relates to the habitual misunderstanding by some as to the extent of reinvestment and earnings sacrifice for growth. Virtually all free cashflow’s are going into growth and that will continue for at least another three years whist ATM are expanding into the US market.

I want to know if ATM would also consider reporting ‘underlying profit from ongoing operations’

That would much better clarify for some the efficacy of the business and perhaps also provide an anticipation of what should be expected from the potential of the new markets also.