ATM - A2 Milk Corporation Limited

[NT001]

yes looks like milford and nz super sold some and milford has transferred all there nz holdings to nz super be interesting to see what nz super do with all these extra shares in some companies.

It would actually be doing a great service to those of us who find these SSHs rather opaque if someone who is literate in these matters could explain exactly what they mean in layman's terms, with relevant figures and percentages. What's the net result? And is there a lot more such info to come? Presumably this is largely due to recent revelations about Milford?

A quick look at the Milford statement suggests that during the period covered (up till December), that company bought and sold roughly equal numbers of ATM shares, something over 8m each way. So on the face of it, it was neither a big net buyer or seller.

[blobbles]

I imagine they would ship in product into teh USA from NZ/Oz initially to get things started? While local suppliers are signed up?

No, they will source the milk from USA, according to the company. They can quite quickly and easily test and separate A2 only producing cows from any dairy herd. Farmers have an incentive to do so due to the increased premium A2 pays for little added cost to the farmer. In fact I remember reading that ATM already has some suppliers lined up from there last foray into the states.

Ideally, I think you are right. But supermarket chains don't have shelf space to waste on a punt. I suspect signing up one supermarket chain might be harder than driving four vans around the country. I imagine there would have to be quite a bit of point of sale promotion to get things moving. But I don't know. As you said Nt001, I'm speculating.

SNOOPY

Supermarkets are already "wasting space on a punt" in the USA. A2 will be sold in West Coast Kroger, Safeway and Wholefoods this month, according to this: http://www.foodnavigator-usa.com/Man...ornia-in-April

So... really there is nothing standing in the way of their success in terms of signing contracts.

[blobbles]

It sounds to me like Milford sold ~23m shares, lowering their holdings from 97m to 74m. NZ Super appears to have taken over the shares previously held by Milford? They state "On 31 March 2015, the Guardians of New Zealand Superannuation determined to become the manager of securities previously held for it by Milford Asset Management Limited pursuant to an investment management agreement"

[NT001]

No, they will source the milk from USA, according to the company. (And) A2 will be sold in West Coast Kroger, Safeway and Wholefoods this month, according to this: http://www.foodnavigator-usa.com/Man...ornia-in-April. So... really there is nothing standing in the way of success in terms of signing contracts.

Thanks for that, Blobbles. I knew I'd seen it somewhere. But Snoopy's next question might well be, assuming it takes a year or three for the California operation to generate decent profits, how is the company going to fund a rapid expansion across the US? Good question. It can't just sit around, so will this require a new capital raising?

My guess is that if the California operation succeeds, as seems probable, other operators across the US may be interested in replicating it in other areas. Regions such as Chicago, the Northeast and the Gulf states come to mind as being prime target markets. And as Blobbles says, procuring A2 milk won't be a problem, nor will finding outlets. The challenge will be to get the milk processed and packaged (not difficult in itself) and distributed and marketed by people who understand those markets and have the right infrastructure.

My guess is that a2MC might revert to its original sales strategy of licensing other operators with established track records in such regions to use the "A2" label and relevant IP, and just take a percentage on sales. No need to raise new capital or build facilities or employ a huge staff. OK, the company had some bad experiences with that formula in the past but will have learned from them. And the ex-Pepsi man should be able to put some good deals together, ensuring there isn't a big delay in expanding to other parts of the US. Just thinking.

[Xerof]

Well, there's clearly some serious **** going down with Milford - a whole bunch of SSH notices released after market close before a very long weekend. It's clear they have lost the mandate to manage part of the Cullen Fund. With some of the notices, they appear to have also sold a few more than just those transferred back to the fund - this could be to cover client withdrawals/switches out of their other funds/kiwisaver, or just be part of normal portfolio management.......


Oh, I see the financial press have latched on to the mandate suspension story - NBR and Herald have shallow, minimalist reports online

[Baa_Baa]

Indeed there is, **** hitting the fan. The tarnished brand falling from grace, in this industry it's guilty until proven innocent, or so it seems. Judge Super has decided, passed down it's verdict and to heck with the FMA. Perception is everything, Milford moving to damage control. Are we on the correct thread?

Quiet day on A2M, some bewildered punters wondering why the stock went backwards. Check hotcopper for psychology insights, plenty there who bought knowing nothing, expecting a big pop. Good buying? Who knows, this is fickle and fraught, confusion reigns.

Well, there's clearly some serious **** going down with Milford - a whole bunch of SSH notices released after market close before a very long weekend. It's clear they have lost the mandate to manage part of the Cullen Fund. With some of the notices, they appear to have also sold a few more than just those transferred back to the fund - this could be to cover client withdrawals/switches out of their other funds/kiwisaver, or just be part of normal portfolio management.......


Oh, I see the financial press have latched on to the mandate suspension story - NBR and Herald have shallow, minimalist reports online

[Jasemc]

it will explain price drop i presume

[blobbles]

Indeed there is, **** hitting the fan. The tarnished brand falling from grace, in this industry it's guilty until proven innocent, or so it seems. Judge Super has decided, passed down it's verdict and to heck with the FMA. Perception is everything, Milford moving to damage control. Are we on the correct thread?

Quiet day on A2M, some bewildered punters wondering why the stock went backwards. Check hotcopper for psychology insights, plenty there who bought knowing nothing, expecting a big pop. Good buying? Who knows, this is fickle and fraught, confusion reigns.

Milford have proved themselves to be a team that can make a lot of money, but whether it is ethical or even legal is questionable. The minimalist reporting may be the government in damage control mode, moving funds away before the story breaks big time. They are certainly privy to more information than we are (having the FMA onside), so there could be a big story about to hit the papers. Looks good for them if they are out before the s hits the f.

[Harrie]

Milford could lose its KS status like hulitch in which case funds will be distributed to default providers. Most would sell a2...too speculative. They wait until success is proven then buy after everyone else has. Xero is at good example. Most bought around the $30 mark

[drcjp]

I tend to think positively here. Despite the deliberate downward pressure from two frustrated and stressed insto sellers, A2M still rose 10% this week on a ~2% turnover of shares.

As for Milford, I'm not surprised.