With all of the vitriol directed towards short sellers, I decided to try and analyse what might be going on in their minds, which led me to conclude that they are likely quite rational in their approach to ASM, probably thinking the odds are weighted towards the quarterly not fully answering the questions that shareholders have.
The five month gap in announcements about the progress of the KMP has created questions about it that may be viewed either positively or negatively, depending upon your bias.
-Viewed positively, there is no need for a progress report because the pilot plant proved the capability of the process. Furthermore, it may be strategically important for ASM to firmly cement themselves as being first to market with a full production capability of the new greener lower carbon/energy process. This will allow them to gain market share well before any competitors can copy or slightly vary the process.
Additionally, ASM has a large internal shareholding within management, who would know where progress is actually up to, so the view may be that those who need to know - do know.
Viewed negatively, the five month lack of progress reporting on how the plant build and production from it is going creates uncertainty on a few fronts.
* Does the pilot plant process scale successfully as expected, or are there either teething problems, or potential even larger problems?
* Has the project build been delayed (global supply chain issues, and labour problems), and that is why there has been no news?
After all, most retail holders would think that progress reporting would support the market price of the company, which is what companies presumably want.
Those who believe the truth is biased towards negative possibilities, would be encouraged to short the stock for entirely valid reasons. i.e. ASM is not worth what true believers think it is.
Even if the quarterly report is strongly positive, and metal revenue has been received, short sellers may still be acting legitimately - because the Consortium of conditional funding for the larger Dubbo project would most likely require proven metal production of a contractually listed group of metals before the funding becomes unconditional. They probably have some sort of benchmark cost hurdle for these metals relative to Kroll process metals. ASM has stated that the plant build will continue through (and potentially past) the end of this financial year - and so Consortium based Dubbo funding contracts are unlikely to be unconditional till next financial year. Once the consortium funding is unconditional, ASM must still negotiate the remainder of the funding, which will require further time.
This appears to give short sellers a full three months to close their positions, which they may view as plenty of time.
My reasoning may be faulty - and I would welcome responses that show why.
Cheers and good luck to all
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