There’s always a time lag on Shortman.com.au, so the current chart does not show further capitulation on the CFO announcement (24/03/2024). My guess is that the short positions have moved even higher than the 3 year chart below, which shows 13.3% of the stock shorted on the 21/03/2024.
IDP Education has moved to take 3rd position on the most shorted stocks on the ASX. It could get worse than this.
The only reason these punters would be taking out short positions is to make a profit. They make a profit by buying back their short positions at a lower price. So the punters are thinking the share price will go lower still. Of course technical analysts are the shorters best friends. I don’t think you’d find a single chartist who would be calling IDP Education a buy at the moment. It would be a huge AVOID / SELL! Chartist say the market is driven by sentiment and charts, not fundamentals.
I think the chartists are absolutely right…short term! If you are short term investor you should heed what the shorters and the technical analysts are saying/doing, and head for the hills!
However, for a time horizon investor we are trying to look past the short term headwinds (one year is short term for me) and share price volatility, into the future of the business (2 years plus).
Benjamin Graham said “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” For long horizon investors shorters are our “best friends”. When Polynovo was trading under $1.00, David Williams (the Chairman) said shorters are our “best friends”. I didn’t quite understand what he was saying at the time, but I get it now.
So if shorters are your “best friends”, chartists are your second best friends because they help to perpetuate the downward share price cycle and leading it to capitulation. It’s not great if you own it!
We shouldn’t ignore our “best friends” though. They influence the market by destroying sentiment and they appear to be “right” for a long time. It’s extremely risky betting against these guys with a short term horizon in mind. However, if you have a long term fundamental point of view (two years plus), shorters and chartists are indeed your “best friends”. Why? Because they convince the market to do irrational things and serve you up “once in a lifetime” bargains. Although, taking up these bargains is an extremely lonely place to be. No one else is doing it which is precisely why you are getting a bargain.
So don’t expect anyone to back your call. You’re all alone here! Of course your long term fundamental thesis needs to be right, or things will turn very sour, both in the short term and the long term.
So we must listen to what the our “best friends” are saying, watch the charts and try to pick an entry point that delivers the least amount of pain as possible. A point where the downside starts to appear limited. That’s easier said than done. It’s not a great feeling arriving too early only to see the stock go down another 20% to 30%.
Matt Joass has some really great thoughts about this in his article on The Hidden Power of Inflexion Points
Adding to the UBS share price target of $25.30 shared by @Jimmy today, I’ve included consensus views from 15 analysts supplied by Simply Wall Street. Share price targets have been tracked against the current share price for the last 2 years in the chart below.
Source: Simply Wall Street
The first thing that strikes me about this chart is how the 12 month price target follows the share price down. It doesn’t give you a lot of confidence in the target if the share price tracks down even further.
The other concern is the low level of agreement amongst analysts on the 12 month share price target with a dispersion of 15%. The highest price target is $29.47 and the lowest is $17.00. The consensus share price target is $23.84.
If the most bearish of the 15 analysts turned out to be correct and we bought IDP Education shares today at 3 year lows of $17.18, we would be down 1% in 12 months time. If we included 40 cps in dividends (77% franked, 53 cps gross), we would be up 2% on our investment in 12 months time. That’s not a great outcome, but if that’s the down side I’d be happy to cop that.
If the upside is analyst consensus of $23.84 we could be up over 40% in 12 months time, including the dividends.
Of course all 15 analysts could turn out to be wrong, and the shorters might be correct. During the COVID 19 pandemic IDP Education fell to a low of $10.89, so it’s possible for the share price to fall even further.
However, all these opinions are based on a 12 month horizon, and I’m more interested in how IDP Education will be performing in 2 to 3 years from now.
Source: Simply Wall Street
It seems shorters of IDP Education (IEL) are looking for any excuse to put further downward pressure on the share price.
Today, IEL announced the appointment of Kate Koch to replace Murray Walton who is stepping down at the end of this week (31st March, 2024).
Kate comes with excellent experience and credentials, previously holding CFO roles at SEEK, RMIT, Tesco and Peason (London). Kate seems like a perfect fit for the role with her experience in the education and technology sectors.
The only issue is there is a 6 month delay between Murray Walton finishing in the role and Kate commencing with IEL (by October 2024). In the interim period the CFO responsibilities will be shared by the Finance Leadership Team, other members of the Global Leadership team and the CEO.
I don’t see this as a problem, but the shorters are having a field day using it as an excuse to drive the share price down another 4% in this mornings trade.
Short positions are now the highest on record with 12.85% of the stock now shorted (Shortman.com.au, 15/03/24).
For patient investors with a long time horizon (2 to 3 years), I think IEL is a tremendous buying opportunity at today’s prices. At least I am excited by the opportunity and have filled up my shopping trolley this morning. Now I just need to be patient for a few years!
Held IRL (7.9%), SM (13%)
Kate Koch to join IDP Education as Chief Financial Officer
Following an extensive global search, IDP Education Limited (ASX:IEL) is pleased to announce that Kate Koch has been appointed to the role of Chief Financial Officer.
Kate is an accomplished senior finance executive with broad international experience, including in the education and technology sectors. Kate will join IDP from SEEK Limited where she has held the role of CFO since June 2021.
Prior to SEEK, Kate was CFO at RMIT University and held senior finance leadership roles at Tesco Plc and Pearson Plc in London. Through these experiences, she developed a deep understanding of the needs of international students and educational institutions, as well as leading global teams, including large shared services functions. Kate’s extensive and well-rounded experience supports a successful transition to IDP.
Tennealle O’Shannessy said “The IDP Board is delighted to have Kate join the team. Her commitment to purpose driven organisations and her passion for developing people align fully with IDP’s values. We feel fortunate to have identified someone with Kate’s unique experience of our industry, outstanding financial and commercial skills, as well as her exposure to complex international operating environments. Her appetite for creating transformative experiences for customers using technology has shone through.”
Kate’s appointment follows Murray Walton’s decision to step down from the CFO role, effective 31 March 2024, as was previously announced in December 2023. Kate will join IDP’s Global Leadership Team and report to Tennealle O’Shannessy. Kate will commence with IDP by October 2024. In the interim period between 1 April 2024 and Kate commencing with IDP, the CFO responsibilities will be shared by the Finance Leadership Team, other members of the Global Leadership team and our CEO.
-ENDS-