MM’s view on PointsBet (PBH) & a2 Milk (A2M)

Hi John,

Two very different businesses which have certainly endured a tough time post COVID:

a2 Milk (A2M) $4.76 : A2M has bounced over the last few weeks around optimism towards Chinese-Australian relations post the election and the increasing shortage of baby formula in the US – this week saw Washington do a deal with Bubs Australia  (BUB) to help relieve their shortage, a great read through for A2M hence even though we hold no position a decent squeeze towards $6 wouldn’t surprise, especially as almost 5% of the stock is held short. i.e. If we still held, we would hold it for a further squeeze higher.

PointsBet (PBH) $2.73 – Investors are even more bearish PBH holding a 7.6% short position, the stocks showing no clear signs of bouncing with the wagering business clearly needing a catalyst of positive news to gain some friends. We still think the operating business is cheap around $2.73, we’ll get another update shortly however at the end of Dec they had $570m is cash while their market cap is just $723m – although they would have burnt some over the past 6 months in the highly competitive market. Following its 80% plunge from its 2021 we aren’t considering increasing our position until a catalyst emerges, however we do view the stock as both cheap and a potential takeover target.

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a2 Milk (A2M)

LAST UPDATED 03/06/2022 16:06

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a2 Milk (A2M)

LAST UPDATED 03/06/2022 16:06