Tag: stockmarket

Wry & Dry #36 FY-24 From the Murray to… “That would be the Euphrates”. Rats.

In the most flagrant breach of responsible government since that which caused then PM Whitlam to give Federal Treasurer Jim Cairns the DCM in 1975, Victorian Premier Allen has not given state Treasurer Tim Pallas the DCM.

And in abject bovine indifference, the financial media chewed the cud spewed out by the government’s PR machine and effectively said “Tut, tut. Must do better.”

Even the state opposition leader (err, bowler’s name?) couldn’t bring himself to ask for the head of Pallas to be impaled on a spike at the city gates.

2024: The year in review and looking ahead

As we expected at the beginning of the year 2024, it has been a good year for investing in markets around the world. Global equities, especially in the US, were the standout performers, but other markets, including Gold and Technology, had strong years.
The Australian economy held up reasonably well despite the sources of growth being driven by the government rather than business, households or investment. Inflation was more contained, but inflation remained higher than some economists and Reserve Banks are comfortable with.
We are excited about how the market is set up for calendar 2025; for the first time since 2019, we can see large and straightforward sector dispersion. Some sectors are more expensive than ever and others are relatively cheap, this provides us with an opportunity to profit from the inevitable rebalance.

Winding down the year, with a bit of RBA Christmas cheer

Investment Matters has noted over the years that markets for the past two decades have spent considerable time and resources parsing in detail small changes in statements made by central banks around the globe. 

Central banks understand this focus. And in turn are very careful with their language in both written statements and press conferences. The aim is to be clear, hold surprises to a minimum and use their status to influence markets expectations in a consistent fashion. 

Markets appreciate understanding which economic factors are being considered more closely than others.

Opportunities for reflection, celebration, caution and patience

Following a week’s hiatus, this week’s Investment Matters is chock full of topics relating to portfolio positions, the market overall and updates from the Australian Bureau of Statistics. 

Each topic highlights opportunities for reflection, celebration, caution and patience. 

In no particular order, the rundown is as follows: 

The announced takeover of a portfolio significant position, De Grey Mining. 

Promising AGM update from long-held portfolio position in EarlyPay 

A brief analysis of recent moves by famed US investor Warren Buffett and how that relates to both clients’ portfolio positions and the Australian market overall. 

Unfortunately a disappointing update from the small Alternatives position in Hemideina. 

ABS National Accounts – a sombre read for citizens but not all bad news for equities.

Nufarm – investment update

This week, Craig Shepherd does a deep dive into Nufarm after the FY-24 results were released last week. The results were good, and by yesterday the stock’s price had risen by 10%.
The market was especially cautious about the result given the company had downgraded its earnings expectations in August. But the result was at least as good as expected, and compositionally ahead of market expectations. The outlook the company provided, along with the details provided in the accompanying commentary, assurance for future profit growth.
In turn, in a related impact of this thematic, we have more recently added positions in pathology stocks (Healius and ACL) as well as a small position in the portfolio in NIB, one of Australia’s largest health insurers.
This week Craig Shepherd covers NIB a company that has a demonstrable track record of outperformance over the past 2 decades. The company has steadily grown policy holder numbers at a rate far exceeding that of the system.

NIB and the Health Insurance Sector

Healthcare in Australia

In recent missives, we have discussed our portfolio investments in businesses which have leveraged to the rising influence of Government spending. In part, this spending by Government reflects a need to support the infrastructure requirements of a rising population level in Australia.
In turn, in a related impact of this thematic, we have more recently added positions in pathology stocks (Healius and ACL) as well as a small position in the portfolio in NIB, one of Australia’s largest health insurers.
This week Craig Shepherd covers NIB a company that has a demonstrable track record of outperformance over the past 2 decades. The company has steadily grown policy holder numbers at a rate far exceeding that of the system.

US election – What to expect from the market

At recent First Samuel CIO Dinner events, the question of the US election was regularly raised. We responded that the market had built in the expectation of a Trump victory, with the downside risks relating to a combination of:

Harris victory
Extended uncertainty regarding the result
Any violence or social unrest relating to the election
The expected Trump victory already saw a rising longer-term outlook for higher inflation, one element leading to rising long-term bond yields.

Three days after the Trump victory, the analysis appeared confirmed.

Portfolio holdings – HMC Capital and Imdex

In this week’s Investment Matters, Craig Shepherd provides an update on two portfolio holdings: HMC Capital, which sits in the Property sub-portfolio, and Imdex, which forms part of the Australian Equities sub-portfolios.
The property sub-portfolio has, over the past 5 years, worked towards two critical goals
1. Create a set of investments in the sub-portfolio that represents a true diversification away from the remainder of the equity, income and alternatives sub-portfolios;
2. Invest in companies that benefit from the long-term trends in activity and profit growth from property without necessarily requiring asset price growth.

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

House connected to lithium battery

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 

wooden block representing portfolio diversification

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.

Is gold the new haven? The mystery behind the price surge

Pile of gold

This week’s Investment Matters will shed light on the surge in the price of gold and gold stocks in the past few months. 

We hold gold stocks in our clients’ sub-portfolios for several reasons. It is therefore useful to understand why increases in the gold price warrant special attention. 

The task for First Samuel is to profit from such price increases. 

In discussing this, I have split this week’s Investment Matters into two lengthy sections. I urge you not to skip straight to the second section (on how we profit from gold prices increases).

Optimistic optimism: strong returns to both Australian and global equities

This week’s Investment Matters will focus on different asset classes, their relative performance, and our broad thoughts on the implications of tactical asset allocation decisions. 

When we survey benchmark performance, we see that Australian and Global equities portfolios have delivered returns well above expected long-term returns for those asset classes this financial year. 

Revisiting takeovers

we’ve maintained higher weights in cash holdings within property sub-portfolios with an expectation that a significant rises in interest rates would necessitate an increase in cap rates (implied returns on property values), a resultant reduction in property book valuations and trigger a resultant slew of equity capital raises at discounted share prices in order to restore balance sheets to within bank funding covenants.

While the dull shine of copper comes in focus, we shed little light on BHP. Similarly, our focus this week on financial services dives deeper than the four major banks.

Profit Reporting Season – Stockland, Mirvac, Garda and Lendlease

laptop with the words property on it with small colourful illustrated houses

we’ve maintained higher weights in cash holdings within property sub-portfolios with an expectation that a significant rises in interest rates would necessitate an increase in cap rates (implied returns on property values), a resultant reduction in property book valuations and trigger a resultant slew of equity capital raises at discounted share prices in order to restore balance sheets to within bank funding covenants.

While the dull shine of copper comes in focus, we shed little light on BHP. Similarly, our focus this week on financial services dives deeper than the four major banks.

Profit Reporting Season – Sandfire, Perpetual and Judo Bank

This week’s Investment Matters will continue to focus on the recent reporting season.

While the dull shine of copper comes in focus, we shed little light on BHP. Similarly, our focus this week on financial services dives deeper than the four major banks.

Profit Reporting Season – Cleanaway, Emeco, ParagonCare and Worley

This week’s Investment Matters will concentrate on key company results as the reporting season winds down. On balance, market strategists have noted that earnings revisions have been neutral across the board, which is better than historical outcomes of net negative earnings revisions by optimistic investment banking equity analysts. 

Profit Reporting Season – Ventia, Johns Lyng, Earlypay and Nanosonics

Read key company results as the reporting season winds down. On balance, market strategists have noted that earnings revisions have been neutral across the board, which is a better than historic outcomes of net negative earnings revisions by optimistic investment banking equity analysts.

Early profit reporting season and news update

In last week’s Investment Matters we concentrated on the confession season, the period in which companies make early announcements to the market surrounding material changes to upcoming earnings.

This week’s Investment Matters will also concentrate on news flow and early reporting season results.

Confessions of a corporate earnings season

Most ASX-listed companies in Australia have a June fiscal/financial year-end. Accordingly, those with June and December balance days will tend to present their (half-year/annual) financial results to the market in each of the months of February and August.

Perpetual – finding a way to unlock value

In the past year, we have often commented that we’ll exhibit due patience as part of our investment approach. This is required as we often seek to invest in businesses that are significantly unloved and misunderstood and where assets may, therefore be mispriced.

Premier Investments – A deep dive into a new opportunity

In recent weeks, clients will have seen the addition of Premier Investments to their Australian equity sub-portfolios. Famously partly owned and operated (whether formally or informally) by Solomon Lew, Premier Investments is amongst the most successful discretionary retailers in Australian history.

Steadfast in its approach

© 2024 First Samuel Limited The Markets This week: ASX v Wall Street FYTD: ASX v Wall Street Steadfast Group Limited is an Australian insurance broking network that provides insurance broking services to businesses and individuals across Australia and New Zealand. The company was founded in 1991 and has become one of Australia’s largest insurance […]

Growing – in two very different ways

In recent weeks, we heard the mildly alarming statistics that the ASX had fallen to a low in October 2023 of 6703.2, lower than the levels seen in the broad market index at the close of October in 2007 (6770).

Inghams: laying golden eggs

Inghams is the dominant supplier of chicken products in Australia. It is also amongst the largest positions in client portfolios. In the past week, it delivered an update on progress within the business across the first half of the fiscal year.

Understanding the rise in mergers and acquisitions

Two people shaking hands with a light blue background

When the share-market does not see value or investment merit in a particular stock the stock’s share price will recede. This could be because the company’s earnings (i.e. profit) outlook is poor (e.g. Bega Cheese Ltd) or perhaps the industry in the which the company operates is struggling (e.g. ARN Media Limited).
But often someone or a company will see value where the share-market does not. The logical outcome of this is one of the more interesting aspects of investment: the merger or the acquisition. Or, in jargon: M&A.