The Tassal Group Limited (ASX: TGR) share price is one of the better performers on the ASX boards today. Tassal shares are, at the time of writing, up 5.43% to $3.7. Yesterday, the Tassal share price close at $3.50 a share yesterday afternoon. It's a new 2021 high for Tassal, which hasn't seen the levels we see today since December last year. Since finding a new 52-week low of $3.16 a share back on 19 February, Tassal is now up around 15%. Even so, the company remains more than 10% off of the highs we saw in June last year when the company was over $4 a share.
So who is Tassal? And why are Tassal shares on the move today?
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A Tassalating story
Tassal is a rather unique company on the ASX as it is the largest producer of Tasmanian Atlantic salmon in the country. It also has a growing prawn operation. It was founded in 1986 and listed on the ASX back in 2003. Tassal farms its salmon on various sites throughout Tasmania. It sells its fresh, canned, smoked and marinated salmon. These products are branded under the Tassal, Superior Sold, Tasmanian Smokehouse and De Costi Seafoods brands around the country. Its prawns are sold under the Tropic Co brand.
The company has been hit hard by the coronavirus pandemic in recent times. This was on full display in February. Tassal reported its earnings for the 6 months ending 31 December on 16 February, and it was a mixed bag. The company reported a statutory net profit after tax of $27.6 million for the period. That was down from the $40.8 million that was reported for the previous year. Earnings before interest, tax, depreciation and amortisation (EBITDA) fell 4.3% to $77.5 million, which allowed Tassal to pay an interim dividend of 7 cents per share on 30 March. That was down from 202's interim dividend of 9 cents per share.
Why are Tassal shares rising today?
Well, there has been no major official news or announcements out of the company today, so we can put that aside. But there have been some interesting developments for Tassal of late that might help explain its share price movements today.
Firstly, Tassal was kicked out of the S&P/ASX 200 Index (ASX: XJO) last month. The ASX 200 is rebalanced every quarter. This ensures only the 200 largest companies are represented in the index. Tassal's share price woes last year resulted in the company being overtaken. This generally results in significant selling pressure seeing as index funds that track the ASX 200 all have to dump their Tassal positions over a relatively small window. Now that this rebalancing is complete, we could be seeing some price stabilising going on. There might also be some entrepreneurial investors betting that Tassal could once again play musical chairs and rejoin the index if its fortunes improve sometime in the next year.
Further, Tassal is one of the most short-sold shares on the ASX, as my Fool colleague James Mickleboro frequently covers. If a share is heavily shorted, a price gain could see some investors cover their short position. Consequently, this results in more buying pressure. So it's possible that if Tassal rises say 2%, it could trigger some short covering which then helps the Tassal share price rise another 2—3%. That could be what we are seeing today.
Either way, Tassal shareholders will no doubt be celebrating today. At the current share price, Tassal has a market capitalisation of $778.77 million and a price-to-earnings (P/E) ratio of 13.83
