Thanks for all of the responses and commiserations due to my short position going negative a few %.
Some very interesting conspiracy theories and comments amongst some good responses.
1. I'm arrogant. Well that is a subjective opinion. I do jump into positions with both feet whenever an opportunity arises, no matter what the consensus is.
2. I'm being deceptive by disclosing that I hold a position. No response necessary there.
3. Newbie expert shorter? I've been doing this for over ten years - funny that nobody complains when I am a longer of A2M!
4. Do I think holders panic based on what I write? Nope - the majority of people are watching the wrong thing - the share price rather than the information, and aren't evaluating the asymmetry of risks, or upside versus downside optionality. The SP is generally a lagging indicator after information is released, and this has worked for me nearly miraculously for a long time.
5. My posts are award winning ;-). Why thank you. I have noticed that the majority only want to see information that concurs with their pre-conceived notions. I was surprised over a decade ago that many people are investing and speculating in the same way they barrack for a football team, but I am no longer surprised.
6. Atwo only sold a small amount, so therefore it is misleading! It doesn't matter how much they sell now, it is how much they (and other evil A1 protein free infant formula manufacturers) sell in the future, how much they compete for supply etc etc, how they are a harbinger for everybody having a A1 protein free product soon, the A2 marketing messages getting drowned out, etc. The future margins and growth are what matters to A2, and this is critical with extremely high earnings multiples.
7. Good chance the NZ Herald writer was paid under the table by Nestle? lol - surely he received bitcoins, and a warehouse allocation of ivory tusks instead. (don't sue me NZ Herald - I'm definitely kidding)
Any of you who don't want to see opposing views should just put me on ignore. I really don't care at all about getting TUs, and would be very surprised if everybody agreed with me. Any of you who think my posts are arrogant
So let me put what I genuinely think a different way.
Positives for A2M are mostly factored in: An amazing growth rate, ANZ product, consumer acceptance, supply deal with Fonterra. Relative future positives are that US milk may face tariffs in China, and Organic IF dairy stockfeed sources aren't yet understood by most consumers, so organic could lose market share over time if this isn't addressed. Also higher A1 protein in general milk and IF due to A2 higher value to farmers.
Relative Negatives for A2M are the likely future at some stage: Lower margins per unit of sale due to competition for supply (Fonterra aligned farmers will seek the same price for "A2 milk" as they see other farmers getting at re-contracting time), more difficult for marketing to cut through competition noise now - so more cost for the same penetration. More options on the shelf for A1 protein free IF/milk consumers. More ANZ sourced IF products hitting the shelves. Likely greater tilt to lower margin product, i.e. non IF over time.
This doesn't necessarily mean the SP will go in any particular direction straight away, but it certainly sets the table for SP declines IMO.
Nuff said
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