It's like watching a train wreck in slow motion... and yet I can't stop eating popcorn.
I mentioned the short HUO / long TGR trade. I don't understand how we find ourselves being #1 Shorted stock on ASX. Huon has basically halved since pre-Covid ($4.60 to $2.40), and arguably while their results aren't out the market briefing was pretty telling - they are looking at potential losses of around ~$1-1.5kg according to my estimates. Meanwhile, TGR reported it sailed through Covid impacts with ~60% of earnings secured, has some potential big upswings in the next 4 quarters, yet is down 25% and retains the #1 for most shorted. Go figure.
If I was a shorter I'd be looking at the downside vs potential upside. I can see why they may discount the upside particularly in the very short term. But the downside opportunity as a shorter, how far can they really expect it to drop and on what basis? Even lower salmon prices (already bottomed)? Continued logistic challenges (air transport reopening, go look at SYD or AIA share prices)? Trade war with China (really not a big portion of TGR's revenue, and alternative markets exist)? So what is it?
Happily accumulating in the dips, and bought another 10% at $3.17. Unfortunately there is a saying that the market can remain irrational longer than I may remain solvent.
TGR Price at posting:
$3.38 Sentiment: Buy Disclosure: Held
