Wry & Dry #28 of FY-24. Gender Equality. Nuclear. Spies.
The rest of the world: focused on Gaza, Ukraine and/or the Trumpster’s latest rambling monologue to bovine masses.
The Australian media: transfixed by the results of the most read survey since Publius Sulpicius Quirinius carried out a census in Judea in 6 AD. That survey (not the one by Quirinius) was by the Workplace Gender Equality Agency (WGEA). It’s a shocker.
Wry & Dry #22 FY-24. Emeritus Chairman Dan’s resume. Hamas: making money. GDP per capita falls.
It was feeding time at the media zoo on Wednesday. Hot on the heels of the PISA report showing that 26% of Victorian 15-year-olds’ educational proficiency was too low “to enable them to participate effectively and productively in life,” the long-awaited Ombudsman’s report into the Victorian public service under Emeritus Chairman Dan Andrews was fed to the salivating media mouths.
There was more than enough for indigestion. Victoria’s public service, the Ombudsman’s massive report said, is “ruled at the highest level by a culture of fear.” No subtlety there.
Wry & Dry #21 FY-24. Heaven: a busy week. Dubai: COP that. US: Haley’s comet.
It’s been a busy week at the Members’ Entrance to the pearly gates to heaven.
On Tuesday Charlie Munger arrived in a limmo longer than a bus. Charlie was Warren Buffett’s conservative investment alter ego. He arrived and immediately began arguing with St Peter about heaven’s recent investments (remembering that time doesn’t matter in heaven): “That St Peter’s Basilica property development in Rome was a waste of money.”
Wry & Dry #1, FY-24: Some of it was cricket. Foster country. Headhunters.
It is a truth universally acknowledged that a batsman who is unhappy with the method of his dismissal will cry that it wasn’t “in the spirit of the game.”
And so it came to pass that in a recent cricket Test match, English batsman Bairstow was silly enough to leave his crease when the ball was still in play. He was correctly dismissed (“stumped”).
An outburst of outrage not seen at Lord’s since the Great Pimm’s Shortfall Crisis of 1926 then arose.
Profit Reporting Season Concludes – Steadfast, Johns Lyng, Healius/ACL and Bapcore
This week, the Q2 ABS National Accounts data were released on Wednesday. Although a little backward-looking, the National Accounts can provide corroborative evidence of the trends we see from the company reporting season.
In this week’s Investment Matters, we will briefly discuss interesting trends from the reporting season and outline the results for Steadfast Group (SDF), Bapcor Group (BAP), and the new portfolio positions in Healius (HLS) and Australian Clinical Labs (ACL).
Reporting season continues – Worley, Inghams, Earlypay, Ventia and Woolworths
The BlueScope results clearly distinguished between short-term operating conditions and medium-term value creation. Like the Seek result discussed last week, we have been pleased to build a position in this company at a reasonable price when short-term conditions are challenging while the company invests in long-term improvements.
Read this week’s Investment Matters as Craig explains reporting season results from Bluescope, Judo Bank, Reliance Worldwide and Cleanaway.
Reporting season continues – BlueScope, Judo Bank, Reliance Worldwide, Cleanaway
The BlueScope results clearly distinguished between short-term operating conditions and medium-term value creation. Like the Seek result discussed last week, we have been pleased to build a position in this company at a reasonable price when short-term conditions are challenging while the company invests in long-term improvements.
Read this week’s Investment Matters as Craig explains reporting season results from Bluescope, Judo Bank, Reliance Worldwide and Cleanaway.
Reporting season continues – Seek, Seven Group Holdings, Beach Energy and Nufarm
Most companies who have an accounting year-end date in June, select August as the month to report their full year results. We’ll provide updates in Investment Matters over the course of the next few weeks. Here’s a snapshot of results reported in the week just past for stocks held within client portfolios.
A weak US employment report on Friday 2nd August added to the level of uncertainty.
For market participants the principal task was determining whether the level of dislocation was indicative of sharp changes in a relatively narrow set of conditions, or whether concerns were much broader and more permanent.
By the end of the week the outlook was much clearer and markets across the globe recovered much of their losses. This was especially the case in Australia where the markets are now only slightly down a year-to-date basis. More importantly measures of uncertainty such as the US VIX index of volatility had fallen 60 per cent from the highs of Monday.
Quick Return to Stability
Global equity, currency and bond markets experience some gyrations over the past week. Headline movements in Japanese equities, large moves in currencies and sharp falls in equities markets in Australia and the US hinted at significant changes in either positioning or fundamentals.
A weak US employment report on Friday 2nd August added to the level of uncertainty.
For market participants the principal task was determining whether the level of dislocation was indicative of sharp changes in a relatively narrow set of conditions, or whether concerns were much broader and more permanent.
By the end of the week the outlook was much clearer and markets across the globe recovered much of their losses. This was especially the case in Australia where the markets are now only slightly down a year-to-date basis. More importantly measures of uncertainty such as the US VIX index of volatility had fallen 60 per cent from the highs of Monday.
Critical CPI print reduces risks of policy error
this week’s fascinating Investment Matters as Craig explains the trepidations surrounding Wednesday’s release of the estimate for the Q2 Consumer Price Index.
The market responded positively this week to an encouraging reduction in inflation in Australia. The direction and scale of the response can be readily understood – moving from the risk of higher interest rates to the opportunity of lower rates is a positive for Australian companies.
New Financial Year, New Opportunities Part II – Energy sector
Beach Energy, is a leading Australian independent oil and gas exploration and production company. While the energy sector is subject to volatility given underlying commodity prices, Beach Energy’s strategic positioning, future cashflow outlook and growth prospects make it an attractive investment within the sector.
Read this week’s Investment Matters as Craig explains why we think Beach Energy presents a prospective investment opportunity. Many investment banks’ Energy-sector experts see excellent value in Beach Energy at current prices.
Read why we are predominantly interested in owning exposure to movements in the price of gold, both as an insurance policy against global uncertainty or conflict and as a hedge against inflation. Plus, Craig explains why we suspect that the Mining Services and Industrials sector is likely to continue to outperform despite tough conditions.
New Financial Year, New Opportunities – Pathology and Healthcare
Part four of the year-end stocktake will outline our exposure to a final basket of stocks, the gold basket, our mining services exposure, three large industrial companies and two long-held smaller companies.
Read why we are predominantly interested in owning exposure to movements in the price of gold, both as an insurance policy against global uncertainty or conflict and as a hedge against inflation. Plus, Craig explains why we suspect that the Mining Services and Industrials sector is likely to continue to outperform despite tough conditions.
Year-end stocktake part 4: Gold, Mining and Industrial companies
Part four of the year-end stocktake will outline our exposure to a final basket of stocks, the gold basket, our mining services exposure, three large industrial companies and two long-held smaller companies.
Read why we are predominantly interested in owning exposure to movements in the price of gold, both as an insurance policy against global uncertainty or conflict and as a hedge against inflation. Plus, Craig explains why we suspect that the Mining Services and Industrials sector is likely to continue to outperform despite tough conditions.
Year-end stocktake part 3: Non-bank financials and technology
Part Three of the year-end stocktake will outline our exposure to non-bank financial stocks and several technology and medical device companies our clients own.
Discover why we have chosen to invest in areas of the non-bank financial sector, including business banking, global and domestic insurance, invoice financing, and insurance.
Year-end stocktake part 2: Lithium and Domestic economy
This week’s investment sought to highlight the logic and investment fundamentals we are creating in our lithium basket. Once again, the impact of baskets is to increase the number of stocks clients see in their portfolio, from a purely numeric perspective, but not from a thematic perspective.
The stocktake also highlights the economic outlook for our domestic economy exposure by referencing how current conditions mix with the type of management and asset features we are looking for to create an overall exposure.
Understanding Portfolio Diversification: a year-end stocktake
Each week in Investment Matters, we discuss the types of thematics that are crucial in building portfolios. We aim to combine these thematics with thorough bottom-up company research to create a well-diversified portfolio that can outperform in the medium term.
Over the next four weeks, leading into the end of the financial year, we will go towards a more detailed level, looking at individual positions. We will present an update on the portfolio companies, a year-end stocktake.
Company Profit Reporting Season: Peak Week
The ‘peak’ week of company reporting season has just gone by. We provide some of the more relevant company-result takeaways.
Company Profit ‘Reporting Season’
The second substantive week of company reporting season kicked off last week. We provide some of the more relevant company result takeaways.
Company Profit ‘Reporting Season’
The first substantive week of company reporting season kicked off last week. We provide some of the more relevant company result takeaways.
Company Profit ‘Reporting Season’ preview
It’s an intense time of year for equity market professionals. But one that is welcomed because of the opportunity to review financial data, hear about company strategy, assess management and operational performance, and to review one’s own stock selection and analytical prowess.
Lull before company profit reporting season
Late July is when there is a lull in company news, as industrial companies are in communication lockdown before company profit reporting in August. Mining companies are busy releasing production reports and not much else, also ahead of profit reporting.
Out with the old, in with the new
There has been a significant period of de-equitisation in the Australian equity markets in the past couple of years. Our portfolios, and performance, have been the beneficiaries of this phenomenon. Several stocks we own are subject to takeover bids:
Selectivity and Productivity
This week we discuss two major topics. Japan and why we are more heavily invested than global benchmarks and Productivity: why is this a problem for Australia and how does it impact returns?
Going, Going, Gone – the de-equitization of the Australian Equities Market
Two of our investments, Costa Group and United Malt, received confirmation relating to takeover bids this week.
Both takeovers provided support for our investment strategy. This strategy concentrates on finding opportunities where the market fails to price either the long-run asset or the franchise-based value of a company, and instead focuses on short-term earnings fluctuations. In such cases it is often an external party, via a takeover, that unlocks the value.
A deep dive and a frustrating ACCC rejection
This week, we have decided to present a (a) deep-dive on a company we have held for several years and (b) a comment on failed takeover.
Some interesting introductions
We’re always looking for new ideas to introduce into the investment portfolios. A spate of recent takeovers within the portfolio (think Newcrest, Origin, United Malt, Pushpay, Eildon Capital) has accelerated the need for fresh ideas to replenish building cash positions.