The Sydney Airport (ASX: SYD) share price is pushing higher on Thursday morning.

At the time of writing, the airport operator’s shares are up 3% to a 52-week high of $8.59.

Why is the Sydney Airport share price rising?

The Sydney Airport share price was given a boost this morning from the release of an announcement relating to its $32 billion takeover.

According to the release, the Australian Competition and Consumer Commission (ACCC) has announced that it will not oppose the proposed acquisition of Sydney Airport by the Sydney Aviation Alliance.

In addition, the company notes that the European Commission has also approved the proposed acquisition under the EU Merger Regulation.

In light of this, the ACCC and European Union conditions contained in the Scheme Implementation Deed have now been satisfied.

What’s next?

While the above approvals are a positive, it’s not the end of the road. The implementation of the Scheme remains subject to a number of other conditions. This includes FIRB approval, the approval of Sydney Airport shareholders, and Court approval.

In respect to shareholders, the release reveals that they are expected to be given the opportunity to vote on the takeover in February. A Scheme booklet is expected to be issued to shareholders later this month.

Once again, the Sydney Airport Board recommends investors vote in favour of the $8.75 per share proposal.

It commented: “The Sydney Airport Board unanimously recommends that Sydney Airport Securityholders vote in favour of the Scheme at the Scheme meeting, in the absence of a Superior Proposal and subject to an independent expert concluding that the Scheme is in the best interests of Sydney Airport Securityholders (other than UniSuper). Subject to those same qualifications, each member of the Sydney Airport Board intends to vote, or cause to be voted, any Sydney Airport securities held or controlled by them in favour of the Scheme.”

The post Sydney Airport (ASX:SYD) share price lifts off after ACCC gives takeover green light appeared first on The Motley Fool Australia.

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• These 3 ASX 200 shares are topping the volume charts this Wednesday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Mainstream cryptocurrency exchange Coinbase Global (NASDAQ: COIN) is the largest and best-known marketplace. Over 73 million verified users and some 10,000 institutions use its platform for investing in and holding around 120 different cryptocurrencies.

The popular, easy-to-use interface has seen assets soar to $255 billion at the end of the third quarter, a seven-fold increase from the $36 billion it had one year ago. Despite the stellar gains, its stock hasn’t been quite a star performer, with shares down about 20% from their debut via a direct listing in April.

As a pick-and-shovel play on cryptocurrency, Coinbase has the potential to be a major winning investment, regardless of whether Bitcoin maintains its dominance or Solana or Cardano prove to be actual Ethereum killers.

However, it’s still a hardscrabble play that has yet to perform as well as expected, and for some very good reasons. Below, you can divide into the bear and bull case for whether this is the best time to buy this crypto marketplace for your portfolio.

The other side of the Coinbase

Rick Munarriz: There’s a lot to like about Coinbase as an investor — until you start to zoom in as a crypto trader. Coinbase is the mainstream name that even crypto outsiders know, and understandably so with $255 billion in assets on platform. Unfortunately, it’s more like crypto investing on training wheels. It’s a nest to chirp away in as a baby bird until you’re ready to fly. It’s the first person you date and ultimately leave when things start to get serious.

Crack open the hood, and you’ll see a platform with high trading fees, a history of iffy customer service when things go wrong, and limited options to generate passive income on your investments. You might think it’s great that you can earn 4.5% annually on your staked Ethereum, but that’s only if you lock it up until the world’s second-most-valuable digital currency completes its migration to proof of work. You can earn more than 4.5% on several smaller platforms without having to wait for an event with no actual date to regain access to your crypto. You would think that Coinbase would be the leader in yield on USD Coin (CRYPTO: USDC), the dollar-pegged stablecoin that it created. Nope. All you can earn is 0.15% a year, whereas you can earn yields topping 10% on other platforms.

Stock investors wooed by Coinbase and its high margins may want to take a closer look at the surprisingly low trailing earnings multiple. It’s padded with one-time gains and a perfect storm that is highly unlikely to be duplicated. Analysts see earnings roughly cut in half next year. The bottom line isn’t the only thing that is shrinking here. Monthly transacting users went from 8.8 million in the second quarter of this year to just 7.4 million in the third quarter. Trading volume in its latest report was lower than each of its two previous quarters. Cool nest. It’s time to flap those wings and fly. It’s not me. It’s you.      

Patience is still key to investing

Rich Duprey: Even in the crypto world, patience is an investor virtue. Even though Bitcoin has gone up 8 billion percent and Shiba Inu has rocketed 53 million percent higher just in 2021 alone, having a long-term outlook is justified when it comes to Coinbase despite it actually being down 38% from its high point. 

Volatility should be expected in the early days of crypto, let alone Coinbase, but such wild swings will impact its transaction revenue. As my colleague Rick notes, global trading volume for the third quarter was down 37% from the second quarter, leading to a 29% drop in Coinbase’s volume.

Even so, Coinbase was able to report having 7.4 million monthly transacting users helping it to generate $1.2 billion in revenue — the third straight quarter of over $1 billion generated. It reported $612 million in adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), giving it amazing profit margins of 50%.

So it’s clear the business is solid and on a firm foundation, though I don’t disagree with Rick that Coinbase can do some things better. Much better, even. Still, revenue is forecast to surge to over $8 billion by 2024 when adjusted EBITDA is expected to hit $2.8 billion.

Coinbase has been focused on achieving critical mass, and now as the preeminent crypto marketplace, it has the resources to further innovate in the space. This is a crypto name that has the potential to double, triple, or even become a ten-bagger for investors, so long as they have the patience to ride it out. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Coinbase stock: Bull vs. Bear appeared first on The Motley Fool Australia.

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Rich Duprey has no position in any of the stocks mentioned. Rick Munarriz owns shares of Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Bitcoin and Ethereum. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Australia and New Zealand Banking GrpLtd (ASX: ANZ) share price is edging lower on Thursday after being hit with a $25 million penalty.

In early trade, the banking giant’s shares are down 0.1% to $27.63.

What’s happening?

This morning ANZ acknowledged that the Australian Securities and Investments Commission (ASIC) has commenced a civil penalty proceeding. This relates to benefits including fee waivers and discounts not being applied under the bank’s Breakfree package, as well as system errors impacting offset account calculations.

The release notes that the proceeding primarily relates to issues raised during an ANZ case study at the 2018 Royal Commission.

What is ASIC alleging?

ASIC is alleging contraventions of certain misleading or deceptive conduct provisions of the ASIC Act and breaches of the general obligations owed by financial services licensees.

These include not all applicable benefits being applied under the Breakfree package, including home loan, transaction account and credit card fee waivers, home loan interest rate discounts, and optional additional benefits such as discounts on insurance premiums.

In respect to system errors, it is alleged that they were affecting the calculation of offset benefits in certain circumstances, including where customers made payments into their offset accounts on weekends or non-business days.

ANZ advised that it has enhanced its systems and processes to address these issues and is also undertaking remediation programs. Furthermore, the majority of payments to customers impacted are complete, with remaining payments expected to be made in 2022 and remediation for the optional additional benefits being completed over 2022-2023.

ANZ agrees to $25 million penalty

The release also explains that ANZ and ASIC have filed a statement of agreed facts and admissions with the Court.

This has seen ANZ admit to the contraventions and apologise to its customers who have been impacted. It also acknowledges that its conduct fell short of expectations and has co-operated fully with ASIC during its investigation.

The banking giant does not intend to contest the proceeding and will join ASIC in submitting a proposed penalty of $25 million to the Court. Positively, this remediation and the proposed penalty are covered by existing provisions.

The post ANZ (ASX:ANZ) share price lower amid $25 million penalty appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Vulcan Energy Resources Ltd (ASX: VUL) share price has been a strong performer on Thursday morning.

At the time of writing, the lithium developer’s shares are up a sizeable 12% to $10.89.

Why is the Vulcan Energy share price surging higher?

Investors have been bidding the Vulcan Energy share price higher today following the release of a positive announcement after the market close on Wednesday.

According to the release, the company has signed a binding lithium hydroxide offtake agreement with the world’s largest automaker, Volkswagen Group.

The release reveals that from 2026, Volkswagen will purchase a minimum of 34,000 tonnes and a maximum of 42,000 tonnes of battery grade lithium hydroxide over a five-year term. Pricing will be based on market prices on a take-or-pay basis.

In addition, Volkswagen has agreed to a first right of refusal to invest in additional capacity in the Zero Carbon Lithium Project. Conditions precedent include the successful start of commercial operations and full product qualification.

Vulcan’s Managing Director, Dr Francis Wedin, commented: “Through this agreement, Vulcan Energy’s Zero Carbon Lithium business will become a key enabler of Volkswagen’s world-leading target to produce carbon neutral EVs, including all the raw materials in the battery supply chain. We look forward to working closely together with Volkswagen, the world’s largest automaker by revenue and the largest company in Germany, to build sustainable, local lithium supply for the German and European automotive sector.”

This sentiment was echoed at Volkswagen, with the CEO of Volkswagen Group Components, Thomas Schmall, commenting: “Volkswagen is implementing its battery strategy very consistently and at a high pace. The Volkswagen unified cell must be at the forefront of performance, costs and sustainability right from the start. With our new partners, we are taking the next step closer to this goal. Together, we will approach key parts of the battery value chain and develop cutting-edge technologies.”

The post Vulcan Energy (ASX:VUL) share price shoots 12% higher on Volkswagen deal appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Brokers and analysts are always keeping an eye out for potential ASX share opportunities.

Share prices are changing every day and can change quite significantly over the weeks. So, potential ideas can open up pretty quickly.

There is a group of businesses that multiple brokers rate as buys, which may suggest there is an opportunity. Or perhaps all of those brokers are simultaneously wrong. Having said that, here are two ASX shares that are buy-rated by several analysts at the moment:

Elders Ltd (ASX: ELD)

Elders is a 180-year-old agribusiness which operates across several sectors including helping farmers with agricultural production, crop growth, financial planning, insurance, home loans and real estate.

It’s currently rated as a buy by at least three brokers including Citi which has a buy rating on the business with a price target of $13.75. The broker was pleased by the recent FY21 result, beating expectations, and notes the good outlook for FY22.

Elders reported in FY21 that sales revenue increased 22% to $2.55 billion, with underlying earnings before interest and tax (EBIT) rising 38% to $166.5 million and underlying profit after tax jumping 40% to $151.1 million. The total dividend per share for FY21 was increased by 91%.

The ASX share’s outlook was positive, with Elders saying that continued favourable seasonal conditions and high demand for agricultural commodities are expected to create “excellent” trading conditions in the first half of FY22.

Rural products’ outlook remains positive with the summer crop expected to drive strong demand in the first half of FY22, particularly for agricultural chemicals, fertiliser and seed. Global supply constraints are being actively managed through forward orders and diversifying the risk across suppliers, though higher costs are expected.

Cattle, sheep and farmland prices are expected to remain high. Elders could also make more acquisitions.

Goodman Group (ASX: GMG)

Goodman is a global industrial property business which is currently rated as a buy by at least four brokers, including Morgan Stanley which has a price target of $26.50 on the business.

The broker notes the ongoing positive environment for Goodman in the industrial property space, with an upgrade to profit expectations for FY22.

For the three months to September 2021, the ASX share said that the results of the deliberate positioning of its portfolio over the last decade to adapt to and leverage the changes in the digital economy are now being realised. The customer demand for high-quality properties close to consumers “has never been greater”.

That demand is resulting in rental growth, increased development activity, a stronger than expected performance from its partnerships and generally higher levels of profitability, leading to upgraded earnings guidance for FY22. It’s now expecting operating earnings per security (EPS) to grow by at least 15%.

It had $62 billion of total assets under management (AUM), with expectations of reaching around $70 billion by June 2022 thanks to valuation gains and significant rental growth. Across its partnerships, it saw 3.2% like for like net property income growth with a 98.4% occupancy rate.

The ASX’s share development work in progress has reached $12.7 billion with an annual production rate for the year expected to be approximately $6.8 billion. . These developments are driving “strong margins” and the yield on cost is currently 6.8%.

The post 2 market-leading ASX shares rated as strong buys by brokers appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Elders Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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With economic activity roaring in the post-COVID era and real estate prices running hot, it’s a great time to be in finance at the moment.

So it’s not a long bow to draw to suggest ASX shares in that industry have some optimism.

Sure, the big banks have hogged the limelight in recent months with their massive dividends and share buybacks.

But here are 3 smaller players that experts picked this week as a “buy”, which might have more room for growth:

These ASX shares are about to reverse their fortunes

Shares for Australian Finance Group Ltd (ASX: AFG) have disappointed this year, sinking more than 4%.

However, Marcus Today portfolio manager Thomas Wegner told TheBull that its business is actually expanding.

“This mortgage broking group lodged $24.1 billion in home loans in the first 3 months of financial year 2022 — a 33% increase on last year’s prior corresponding period.”

And as interest rates inevitably rise from the current historic low, it’ll only spur on AFG’s activities.

“We expect earnings growth in the near term to be supported by an underlying shift to higher-margin products,” he said.

“As interest rates start to rise, the role of a mortgage broker will become more important to borrowers.”

AFG shares dived 1.9% lower on Wednesday, to close at $2.58.

A classic ‘buy the dip’

The share price for Queensland business Suncorp Group Ltd (ASX: SUN) has taken a beating recently, losing 15% since mid-October.

Catapult Wealth portfolio manager Tim Haselum attributed the plunge to “an increase in natural disaster costs due to storms on the east coast”.

But that’s now provided a golden buying opportunity.

“Historically, Suncorp is at a point in the claims and premium increase cycle where investors can consider taking advantage of share price weakness,” he said.

“Offsetting higher costs are rising premiums and bond yields, which should lead to an increase in earnings in the absence of significantly more claims.”

JP Morgan agrees with Haselum, setting a price target of $13.30, as opposed to Wednesday’s closing price of $10.85.

2022 could be as great as 2021 for this ASX share

Pure insurance player QBE Insurance Group Ltd (ASX: QBE) has seen its shares rise more than 42% this year so far.

Fat Prophets chief executive Angus Geddes reckons it still has plenty of legs.

“This insurer has made substantial improvements to its business in recent years,” he said.

“Narrowing its focus has simplified the business and led to improving underwriting outcomes.”

The analysts at Morgans are in sync with Geddes, also rating the insurance giant as a “buy” with a price target of $13.70. That compares to the Wednesday closing price of $12.19.

Rising interest rates will benefit QBE, according to Geddes.

“The business should be a major beneficiary ahead of a steepening yield curve,” he said.

“The insurance pricing market has become more rational, and QBE’s premiums have firmed considerably, which should continue, in our view.”

The post 3 ASX finance shares to buy right now (hint: no big banks) appeared first on The Motley Fool Australia.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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November was a great month for Treasury Wine Estates Ltd (ASX: TWE) and its share price.

While there was only one price-sensitive announcement from the company, it was more than enough to excite the market.

Over the course of November, the Treasury Wine share price gained 5.03% to finish at $12.10.

For context, the S&P/ASX 200 Index (ASX: XJO) fell 0.92% over the same period.

Let’s take a look at what the winemaker and distributor announced last month.

What drove the Treasury Wine share price in November?

The first and only time the ASX heard price-sensitive news from Treasury Wine in November was when it announced its latest acquisition.

On 18 November, it told the market that it had agreed to purchase California’s Frank Family Vineyards for $432 million.

The Treasury Wine share price soared 2.5% on the back of the news. It also gained 4% the following day.

The acquisition is the latest step in the company’s strategy to grow its Treasury Americas portfolio.

In October it stated that its American growth strategy involves divesting non-priority brands and seeking out bolt-on acquisitions.

Speaking of divesting, the company’s new purchase was partly funded by the proceeds of its divestment strategy. It also forked out cash and debt to cover the $432 million bill.

The company’s purchase of Frank Family Vineyards will also see it offering consumers luxury chardonnay – covering a gap in Treasury Americas’ portfolio.

And in non-price sensitive news, the company’s renowned Penfolds brand launched a non-fungible token (NFT) last month.

Through a partnership with BlockBar, Penfolds offered a single NFT representing a barrel of vintage 2021 for US$130,000 in late November.

The NFT will be able to be traded until October 2022, when it will be ‘bottled’ alongside the physical barrel of wine it represents.

The bottles will be traded on BlockBar from then and can be redeemed for a bottle of Penfolds vintage from October 2023.

As of the end of November, the Treasury Wine share price was 26.4% higher than it was at the start of 2021.

The post How did the Treasury Wine (ASX:TWE) share price perform in November? appeared first on The Motley Fool Australia.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Treasury Wine Estates Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Cotton On has become well-known for its range of affordable clothing without compromising on quality. Founded by Nigel Austin in 1991, the company has gone from a single store operation out of Geelong to a global retailer spanning 1,300 stores.

Thirty years on from its humble beginnings, and there are whispers of the company making a public debut. Cotton On listing on the ASX might be a logical option considering nearly half of its stores are based in Australia. However, the company also holds a sizeable presence in the United States.

So, what has triggered market pundits to speculate on a potential Cotton On listing? Let’s delve deeper into the details.

Is Cotton On getting in shape for an ASX debut?

The speculation surrounding Australia’s largest global retailer has come to light after sources thumbed through the company’s latest financial accounts. According to the documents, Cotton On has been in the process of refining its organisational structure.

In its FY21 financials, the company explained it had commenced a three-phase strategy to ‘corporatise’ its entities on 24 November 2019. Prior to this, Cotton On had been sprawled out through a number of separate incorporated entities and unit trusts. These included Brandnine Pty Ltd, Cotton On Clothing Trust, Cotton On Body Unit Trust, and many others.

Additionally, the documents showed Cotton On had completed the second phase of its consolidation in May 2021. From here, the final stage is expected to occur in the next financial period. This has ignited speculation over whether Cotton On plans to make an ASX debut under the consolidated COGI Pty Ltd banner.

Importantly, the company’s finances appear to be in good order, which makes attracting investors for an initial public offering (IPO) much easier. In the last financial year, Cotton On grew its global sales by 25.7% to $1.32 billion. More impressively, net profit swung from an $11.4 million loss to a $69 million profit.

Furthermore, the company’s balance sheet is in reasonably good nick. At the end of the latest financial period, Cotton On is believed to have held $160 million in cash and $189 million in bank loans. In total, the retailer boasts $1.4 billion in assets.

Who would Cotton On be joining?

If Cotton On were to list on the ASX in the future, it would be joining a number of recognisable and formidable clothing retailers. These brands include City Chic Collective Ltd (ASX: CCX), Premier Investments Limited (ASX: PMV), and Best & Less Group Holdings Ltd (ASX: BST).

The most comparable ASX-listed company to Cotton On currently is likely Premier Investments. Both companies have similar revenues and operations. As such, if Cotton On were to fetch a similar market capitalisation, it would be eyeing off a valuation of around $5 billion.

The post Could Cotton On be gearing up for an ASX IPO soon? appeared first on The Motley Fool Australia.

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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Premier Investments Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Webjet Limited (ASX: WEB) share price has come under significant pressure again in recent weeks.

So much so, the online travel agent’s shares have lost 16% of their value since this time last month.

This has been driven partly by concerns that the Omicron variant of COVID-19 could derail the travel market.

Is the Webjet share price good value now?

While the weakness in the Webjet share price has been disappointing for shareholders, the analysts at Goldman Sachs appear to believe it could be a buying opportunity.

According to a note out of the investment bank, the broker has retained its buy rating but trimmed its price target slightly to $6.90.

Based on the current Webjet share price of $5.52, this suggests there is potential upside of 25% for investors.

What did the broker say?

Goldman was reasonably pleased with the company’s recent half year results release.

It commented: “The 1H22 results for WEB was slightly below GSe at the EBITDA level but positive in terms of cash generation and a few other qualitative markers that we look at as important for WEB through the recovery, including the Americas region.”

Looking ahead, the broker doesn’t appear concerned by the Omicron variant at this stage.

Its analysts explained: “We note that the Omicron variant has resulted in some border restrictions being reintroduced globally. However, given the limited exposure for WEB towards the Southern African regions, we make no changes to our estimates on this basis.”

In light of this, its analysts remain very positive on Webjet’s long term outlook and continue to see it as a reopening winner.

Goldman concluded: “Overall, WEB continues to make progress in the right direction through the reopening with the 20% cost savings target remaining intact for the Webbeds division. We continue to see a long term growth story in this business and view WEB as net beneficiaries of the post COVID recovery. We slightly lower our 12m Target Price to A$6.90 (vs. A$7.00 prior) and maintain our Buy rating on WEB.”

The post Goldman says Webjet (ASX:WEB) share price is a buy with 25% upside appeared first on The Motley Fool Australia.

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• Why is the Webjet (ASX:WEB) share price flying 4% higher today?
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Webjet Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The PolyNovo Ltd (ASX: PNV) share price has been well and truly out of form in 2021.

Since the start of the year, the medical device company’s shares have fallen a massive 63.5%.

This makes the PolyNovo share price one of the worst performers on the All Ordinaries this year.

Short seller delight

While shareholders will be very disappointed with PolyNovo share price performance this year, short sellers will be licking their lips.

At the last count, approximately 7.6% of the company’s shares were held by short sellers. These are investors that profit if the PolyNovo share price declines, rather than when it appreciates in value.

One of those short sellers could be Regal Funds Management. A touch over two years ago, the specialist alternatives investment manager’s Chief Investment Officer, Phil King, named PolyNovo as his top short idea at the 2019 conference.

On the day, 22 November 2019, the PolyNovo share price was trading at $1.92. Things didn’t get off to a great start for the pick, with the company’s shares soon rocketing higher after its NovoSorb BTM product was granted a certificate of conformance (CE Mark) approval for sale throughout UK/Ireland and the European Union.

In fact, before being caught up in the COVID-19 crash in February 2020, the PolyNovo share price had risen 61% since being picked to $3.09.

Things then get better for short sellers before they get worse…

It remains unknown whether Regal Funds held on during this time and wore the paper losses. If it did, it would have been pleased to see the company’s shares fall to $1.54 during the early stage of the COVID-induced market volatility in March 2020.

If the short seller closed their position at that point, it would have meant a return of 20% less carrying costs. Though, that is hardly an achievement given that if you went short on almost anything in February, you would have made huge returns in March after the market meltdown.

Unfortunately for any short sellers that didn’t sell at that point, the PolyNovo share price eventually found its legs and started its ascent soon after. It even managed to reach as high as $4.08 by December 2020. This is 112% higher than the price it was trading at when picked as a short around a year earlier.

All’s well that ends well

The good news for Regal Funds, if it is still shorting PolyNovo, is that this year has been horrendous for the company. Weaker than expected sales growth and the surprise exit of its CEO have all weighed heavily on the PolyNovo share price.

This has left it trading at $1.44 today, which is 25% lower than when nominated as a short pick. Though, after factoring in the carrying costs, one wonders whether it would have been worth all that volatility.

The post This fundie shorted Polynovo (ASX:PNV) shares in 2019. Here’s how much he would have made appeared first on The Motley Fool Australia.

More reading

• Why Appen, Cooper Energy, PolyNovo, and Sigma shares are falling
• These were the 5 worst performing ASX 200 shares in November
• Here’s why the PolyNovo (ASX:PNV) share price is attracting increased short interest
• These were the worst performing ASX 200 shares last week
• Why did the Polynovo (ASX:PNV) share price just hit an 18-month low?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended POLYNOVO FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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