ATM - A2 Milk Corporation Limited

[flyinglizard]

What is the motivation for insiders selling?

Lots of things during the period needed to be reviewed regards to that forecast report.

- meeting minutes
- communication records with corporate daigou, retail daigou during the period
- Company marketing strategy changes if any during the period, marketing expense or any promotion
- Any account payable & receivable, cash flow changes in terms of period, policy or something else during the period, which may be not compliance with long term pattern.
- The original spreadsheet or work of forecast numbers in the report , how many drafts they had, any significant changes from draft to the final one, who authorized for the change.
- Any anonymous current or ex-staff leak some info?

[Bjauck]

I think its going to come down to what was the main thrust of what they had to say. For what its worth i thought they had a heck of a lot to say about
BUILDING FROM STRENGTH….

…always read the small print too. However, I agree. They will have to show that the report was not misleading at the time it was published and that continuous disclosure obligations were subsequently met.

[Beagle]

So how many are contemplating to join the class action suit against ATM ?

Need to be eligible as per the guidelines .

I can certainly think of one former prominent poster on here that was buying around the time the insiders were selling down and has since suffered huge losses.

I had a look at the share price action between the day before the FY20 announcement (18/8/2020) and when the insiders sold and what makes this case interesting is that the market reached a very clear peak the day before the announcement on 18/8/2020 and never recovered those heights despite the relatively bullish outlook statement. Its hard to make a case that the bullish outlook statement had any material positive impact on the share price either on the day of the announcement or in the near term thereafter. That said it's interesting to note that Peter Nathan became eligible for the issuance of 800,000 shares as a result of exercising options on 19/08/2020 at 63 cents and then on 24/08, 25/08 and 26/08/2020 almost immediately sold almost all of them. Many other insiders also sold substantial stakes at that time.
https://www.nzx.com/announcements/358806 so the question has to be asked, if the outlook commentary wasn't stated to be so robust would the shares have still been ~ $20 ?

Anyway...good luck to shareholders joining this class action. It reminds me of the sales job done on Feltex shareholders when that was floated and look how long that went through the courts and the poor result for shareholders ! More than 13 years and no satisfaction ! https://www.simpsongrierson.com/arti...ally-at-an-end

[Balance]

I can certainly think of one former prominent poster on here that was buying around the time the insiders were selling down and has since suffered huge losses.

I had a look at the share price action between the day before the FY20 announcement (18/8/2020) and when the insiders sold and what makes this case interesting is that the market reached a very clear peak the day before the announcement on 18/8/2020 and never recovered those heights despite the relatively bullish outlook statement. Its hard to make a case that the bullish outlook statement had any material positive impact on the share price either on the day of the announcement or in the near term thereafter. That said it's interesting to note that Peter Nathan became eligible for the issuance of 800,000 shares as a result of exercising options on 19/08/2020 at 63 cents and then on 24/08, 25/08 and 26/08/2020 almost immediately sold almost all of them. Many other insiders also sold substantial stakes at that time.
https://www.nzx.com/announcements/358806 so the question has to be asked, if the outlook commentary wasn't stated to be so robust would the shares have still been ~ $20 ?

Anyway...good luck to shareholders joining this class action. It reminds me of the sales job done on Feltex shareholders when that was floated and look how long that went through the courts and the poor result for shareholders ! More than 13 years and no satisfaction ! https://www.simpsongrierson.com/arti...ally-at-an-end

Something stinks to high heavens and it certainly is not the expired infant formula!

Feltex - key different between ATM & Feltex is that ATM is principally owned by institutional shareholders with deep pockets whiles Feltex was owned by almost all retail shareholders save around 10% by institutions.

Sounds like some shareholders initiated the investigation by S&G?

"According to the report in the AFR, Slater and Gordon is investigating a possible class action claim on behalf of investors who bought shares over a nine-month period between 19 August 2020 and 7 May 7 2021.

During this time, the infant formula company posted four downgrades, leading to a bitterly disappointing 62% decline in its share price. Also occurring during these dates and before the downgrades began were a series of insider sales by executives comprising millions of dollars’ worth of a2 Milk shares.

The report reveals that Slater and Gordon alleges a2 Milk may have engaged in misleading or deceptive conduct in breach of the Corporations Act. It may also have possibly breached continuous disclosure rules.

The law firm stated: “There may be basis to allege that by no later than August 19, 2020, a2 Milk was or ought to have been aware the full-year 2021 guidance did not adequately take into account a number of factors which would impact the company’s financial performance.”

“Earlier last year, the company seemed to be talking about COVID-related impacts that have affected its business. But when there was this fourth downgrade, that started revealing information about more systemic and structural problems that seem to exist in the business, which triggered us to go back and look through not only the most recent downgrade but what’s happened over the last nine months.”“

“Our investigation is considering whether or not all of the information that’s been dripped out by the company over the last nine months was actually not in the company in August when they gave that initial full-year guidance,” it added.

[Leemsip]

Won't go anywhere IMHO. Covid put a lot of uncertainty in the forecasts. Would be an easy out for management.

[winner69]

Won't go anywhere IMHO. Covid put a lot of uncertainty in the forecasts. Would be an easy out for management.

Caveat emptor as they say

[Balance]

Won't go anywhere IMHO. Covid put a lot of uncertainty in the forecasts. Would be an easy out for management.

Would have been but for the fact that they went into an orgy of share sales a month before the first downgrade.

[Beagle]

Do Slater and Gordon work on a no win, no fee contingency basis where they get a third of any winnings ?
A multi billion dollar law suit might be enough to put the fear of God into the directors and solicit a settlement offer in the tens of millions ?

[Balance]

Do Slater and Gordon work on a no win, no fee contingency basis where they get a third of any winnings ?
A multi billion dollar law suit might be enough to put the fear of God into the directors and solicit a settlement offer in the tens of millions ?

Directors will want to settle if they have any concerns about the discovery process unearthing untoward behaviour when they sold their shares, or gross incompetence & mismanagement.

When you think about it, it is either one or the other but could be both.

ATM is the ideal company for G&S to take a class action against - $500m in the bank to pay for damages.

https://www.slatergordon.com.au/class-actions

Fees
Our Class Action cases are usually run on a No Win - No Fee* arrangement. Slater and Gordon, or a litigation funder, usually bear the costs and the risks associated with running the case.

[Baa_Baa]

Interesting development, hope their premiums are paid up for PI, PL, D&O. Doubt it’ll get legs but an interesting sideshow.