I have said this before and will say it again, there are seasonal cyclical risks that exist within this business, which when coupled with the current situation with China and COVID impacts, the shorters see the likelihood of one coming to fruition creating a negative cycle event in which to buy back the stock and bank an easy 10-15%.
Tassal mostly reallocated production destined for the domestic wholesale market to export markets because of COVID and Victoria disruption hence the large increase in % of export revenue.
The thinking that the NOK price is directly relevant to Australian export prices is flawed. Export prices are not tied nor that strongly correlated with the NOK price, it is not the same as a gas contract using the oil price as the derivative price setting mechanism.
So what do the shorters see? Possibility of execution risk re prawns strategy (not proven to be commercially profitable yet in Australia at the scale pursued), a COVID outbreak causing a NSW lockdown disrupting domestic wholesale markets again, China escalation closing an export market isolating potential disrupted supply, warmer than normal seasonal water temperatures affecting salmon growth/increasing bio-security risk at a time when Tassal is leaving salmon in the water for longer.
Any combination of these risks may occur and yet they may not. All the shorters care about is one occurring allowing them to capitalize on the price action that follows.
