New to this thread and a buyer at $10.80 but I thought I would...

New to this thread and a buyer at $10.80 but I thought I would throw my two cents in as well...

I have no idea why it is so heavily shorted but we can have a look at when the short interest increased and any news surrounding the time.

Having a look at the short chart shorts began to increase from Sep 2020 and began to increase rapidly from 26 Mar and 20 Apr 21. There was really only positive news shared by the company in Sep 20 or Mar 21 but in Apr 21 the company released a Business Update stating:

"In the three months to March 2021, customer demand fluctuated below the levels seen in the prior nine months to December 2020. As a result, the Company was required to store larger than expected levels of inventory — incurring high storage expenses and demurrage fees (which are expected to be finally resolved from May 2021). The Company has been progressively working towards optimising the inventory position to
reflect current market conditions by increasing its promotional activity"

So it was clearly the impact of inventory that lead to increased levels of shorting. It has dropped ~2.5% in short interest since its peak but as to why it has remained at high levels we can only speculate. One would have to assume that inventory costs will have been reduced as we continued to sell more stock from this inventory. At the same time, I believe Kogan sold a lot of stock at a discount to recycle inventory and therefore profit margins may not be as high as they could have been on the stock - I am not a CEO of a billion dollar company but I am sure they factored in all these considerations and determined that the best outcome financially was to sell on sale.

And despite the inventory factors, markets are forward looking so you would assume the instos shorting this would be looking past the inventory issues which one would assume will not be a large factor in 12-24 months time. In my opinion this means that instos are looking at other factors.

Maybe they believe the 'one off' costs are not in fact one off - which would be hard to believe for some as you would assume that the company would have rectified a large portion of the inventory levels and realistically, you can only take over Mighty Ape once. Maybe they are looking at Amazons entry into Australia or just the fact that people have bought a lot of large purchases over COVID. For example you would really only need to buy a new TV once every few years max.

I believe Kogan is trading at an adjusted PE of approximately 28x compared to the average on the Australian Market at roughly 25x. Maybe it was just a matter of the company being over valued and they believe it is still over valued.

I am still of the firm believe that this company will be a good buy for a long term hold 5+ years. Best of luck to all

My thoughts only.