Managed Discrestionary Accounts – Sale of Bluescope Steel (BSL)
Wednesday, February 23rd, 2011
Good afternoon,
On Monday we made the decision to sell our position in Bluescope Steel at $2.27, at a profit of just over 4%. The move was prompted by a lower-than-expected 1H net loss of $55M against an expected loss of $30M. Further, the company has forecasted a break-even second half which effectively bundled in a downgrade with the results announcement.
All in all, the result was weak and since then the stock has continued to fall, trading at $2.19 as I write. The position made a net positive contribution to the portfolio, and the sale leaves us just 20% invested in the market.
Looking forward, with the continued uncertainty in the Middle East there will likely be some excellent buying opportunities coming up very shortly for the managed accounts. Whilst the world economy is still getting back on track we view any weakness at this stage to be temporary and would look to aggressively buy those names that have already reported well and that have solid outlooks.
If you would like to speak with me about anything, please call the desk.
Talk soon,
Posted in Managed Account Investment Notifications, Managed Account Investment Notifications, Managed Discretionary Accounts, Managed Funds
Managed Discretionary Accounts – Sale of Westpac (WBC)
Friday, February 18th, 2011
Good Afternoon,
Today we made the decision to sell our position in Westpac Bank for the managed discretionary accounts portolfio. This was precipitated by a Q1 trading update out from another Big Bank the ANZ. The sale at $24.29 represents a trading profit of 4.5% however we have also collected a dividend of 74c back in December which increases the total gross profit to 7.8% over 18 weeks. WBC is also trading at or near 9 month highs.
While the overall trading updates from Australia’s banks have been quite good, they could also be described as in-line with expectations given the rise in most bank’s share prices. ANZ reported today something that was certainly in line with expectations but even so the share price is now down 70c or 2.73% as I write. Macquarie Bank is another casualty of the market, trading down around $2 or 4% after their market update and actually puts them in a range where they’re starting to look quite cheap.
However it’s now fair to say that after a solid rise in share prices across the board, many of these (and other) stocks are reaching prices that reflect a full and fair valuation. Things may change and may change quickly and at that point we’d re-evaluate how aggressive we want to be in a market nearing 5,000 points. For now, we would like to see how things progress and there is certainly a possibility that WBC and other banks are tarred with the same brush as ANZ and MQG have been.
We have a comfortable 35% of the portfolio now exposed to the market and 65% in the cash account.
If you would like to speak with us about anything at all, please call the desk.
Posted in Managed Account Investment Notifications, Managed Account Investment Notifications, Managed Discretionary Accounts, Managed Funds, Share Trading Recommendations
Managed Discretionary Accounts – Sale of AMP and AIO
Thursday, February 10th, 2011
Good morning,
Monday this week our holdings in AMP and AIO were sold at a profit of 8% and 10% respectively, adding a gross 2.7% to the value of the overall portfolio. The market generally has had a Jan/Feb rally so far of 3% and for these two positions alone to make nearly that percentage is a reflection of how undervalued they were at their share price lows.
The sales leave the portfolio 50% invested with remaining holdings in WBC, WPL, QHL and BSL.
Of those holdings, QHL announced the successful signing of the much-anticipated Long Term Agreement with Northrup Grumman on February 2nd, resulting in a brief spike in the share price to 55c before settling around the pre-announcement price. We believe that many shareholders had been waiting for this announcement to sell their shares because the shares have not resumed their upward trend as yet.
However, there are many positives that these holders have missed. The revenue that will begin in 2012 underpins Quickstep’s business for up to 25 years. Further contracts that the company will now more than likely win will add to the size of a business that will certainly have excess capacity after the move to the old Boeing premises in Sydney. In any case, the Northrop contract values the business at around 65c per share alone. Also, from comments made by the CEO during broker presentations, the company is confident of being able to make it through from now until revenue is generated without going to the market to raise further capital.
For what it’s worth, new research by State One Stockbroking values Quickstep at 85c per share and they rate it as a buy. We see the share price at or above 65c within the next few months, and would look for an exit around those levels.
Otherwise, overall we are bullish on the market and as usual we plan to buy dips in quality stocks when they are available. Westpac is performing very well and trading near the top of its current range, also close to a profitable exit. BSL and WPL are still yet to make a significant move however in both cases continued strength in the market will result in eventual strength in both of these holdings.
If you would like to speak with us about your managed discretionary account, please call the desk.
Talk soon,
Shawn Uldridge and Hayden Kerr.
Posted in Managed Account Investment Notifications, Managed Account Investment Notifications, Managed Discretionary Accounts, Managed Funds, Share Trading Recommendations
Managed Discretionary Accounts – Purchase of AIO
Wednesday, January 12th, 2011
Good afternoon
Today a purchase has been made in Asciano (AIO) shares for 15% of the portfolio at $1.525 per share. AIO is Australia’s largest port and rail operator with operations that include Pacific National and Patricks container terminal business.
As many of you will remember, we have invested in AIO a few times since the bottom of the market two years ago when AIO raised capital to restructure its balance sheet (and we participated in). Since that time, AIO shares have traded a range of $1.50 to around $1.90, with value being perceived at $1.50 and any time spent below this level is very brief.
The market has sold down the shares of AIO (and QR National) due to concern over delays to trains and damage to coal mines caused by the devastating QLD floods. We view selling in shares of long term assets such as AIO’s businesses as opportunities, especially when the cause of the selling is short term. Of course, these floods will have an impact on AIO’s revenue this year and the company has flagged this to the market. The uncertainty around just how big this impact will be is exacerbating the selling pressure; we believe the selling would be much lighter if the market could put a dollar value on it.
The major impact on revenue will be from delays with coal supplies from mines that have been forced to shut down temporarily, and from delays by trains that are backed up due to rail lines being underwater. We feel strongly that it is worth maintaining some perspective – the flood waters will recede, mines will dry out and rail will be required as always to transport everything, including building materials to repair areas that have seen damage.
Over the short to medium term, there should be a 10% profit in this investment and given the asset backed nature of the shareholding we view it as low risk.
As a side note, quarterly reports for the managed discretionary accounts have been sent out in today’s mail, if you do not receive yours within a week, please contact us for a replacement.
As always, if you would like to talk to me about anything at all, please call the desk.
Tags: Buy Shares, Managed Accounts, Managed Discretionary Accounts, Managed Funds, managed investments, Share Trading Recommendations
Posted in Managed Account Investment Notifications, Managed Discretionary Accounts, Managed Funds, Share Trading Recommendations
William Shaw contributes to the Bull Stock Market Newsletter
Tuesday, December 7th, 2010
Click here to read the latest stock picks from Shawn Uldridge
Posted in Managed Account Investment Notifications, Managed Funds, Share Trading Recommendations
Managed Accounts Investment Notification – Purchase of AMP
Monday, November 22nd, 2010
Good afternoon,
On Friday afternoon we purchased AMP to the value of 15% of the portfolio, at $5.11 per share for the Managed Discretionary Accounts. AMP is a changing story – the renewed bid for AXA Asia Pacific changes the playing field for the company, again.
For control of AXA, AMP will pay the same price as the previously-accepted NAB bid (but which was blocked by the ACCC). 0.73 AMP shares will be issued per AXA share plus $455m in cash, which means no capital raising or meaningful additional debt will be required to complete the transaction.
The upshot of the merged entity for us is this: AMP will get access to a far greater share of the Australian wealth management industry; with their 17% share being combined with AXA’s 6% share they will control nearly a QUARTER of retail Superannuation.
As you’re all aware, this is one of the very few industries that, all other things being equal, will grow each year due to legislated savings through Super contributions. And because of the tax benefits of Super, many people contribute more than the base 9% rather than try to save it themselves.
It’s an attractive proposition from that perspective. On consensus figures, the merger will be earnings accretive by year two, and by 2012, at the price we paid, AMP will be on a PE of 12 times and a dividend yield of nearly 8%. The first reaction by the market after the announcement of the merger agreement was to buy the AMP share price higher – in fact it leapt to an intraday high of $5.60 before closing at $5.45.
However the merger terms appear to benefit AXA shareholders with more cash if the AMP share price stays below $5.60 (but higher than $4.50) during the pricing period (10 days VWAP* from the effective date of the scheme). The total consideration will stay the same, however to compensate shareholders for a lower ‘effective’ price for their shares if the AMP share price falls, the cash component paid by AXA to minority AXA shareholders will grow. We are now more than likely seeing some of these shareholders dumping some of their shares to keep the share price low and get more for their remaining stake.
For those not already shareholders such as ourselves, these opportunities to buy don’t come around every day. However they are the ones we like to take advantage of when they do, similar to the recent BHP-Potash bid scenario. Artificial selling in a quality name at a time when there should be net buying will, far more often than not, result in a great profit when the market prices correctly again.
Target for this trade is around $5.80 within 10 weeks.
*VWAP stands for Volume Weighted Average Price
Tags: Buy Shares, Buying Shares, Managed Accounts, Managed Discretionary Accounts, Managed Funds, Share Trading Recommendations, Stock Brokers
Posted in Managed Account Investment Notifications, Managed Funds, Share Trading Recommendations
Managed Discretionary Accounts – Purchase of BSL and Market Update
Thursday, October 14th, 2010
Herd mentality… EVERYONE’S thinking the same thing
I’m sure any of you who have read the newspaper lately have read about the impending second round of Quantative easing (QE2) from the US Federal Reserve, which the market would have you believe will happen any day. It would seem that ‘the market’ also believes that this will be catalyst for the next leg up in equities. As a result equities have been very buoyant in anticipation of QE2, even in the face of poor-ish jobs numbers in the US.
Our experience of ‘the market’ is the herd is rarely right. When was the last time ‘everyone’ in the market believed something was going to happen and it actually did? Perhaps you can remember a time, but we can’t. What we are cautious of now is being caught up in the herd of bulls, who are running hard; there is now amazingly little talk of the problems that have plagued our markets for the last two years and all this is (apparently) being sustained on the back of the US Fed printing even MORE money! A solution which didn’t work the first time ’round however is being wheeled out for a second go.
We’re not outright bearish right now though, far from it. However as we commonly say, markets go up and down, and right now the market has been going up for quite some time.
I wanted to propose a couple of ‘what if’ scenarios just to get you thinking.
What would happen if the Fed decides, at the end of this month, that reporting season has been surprisingly strong and that they are going to hold off on QE2? It’s the final weapon in their financial arsenal, and they want to hang on to it and use it at just the right time.
The second thing to consider is that EVERYONE also believes in the continuing de-valuation of the USD against every other major currency. By way of illustration, net SHORT positions in the USD increased by US$16 Billion in the last 2 weeks alone, an increase of 144%. That brings the total short USD position to US $30 Billion dollars.
The one thing about short positions is that, at some point, they must be covered. If the Fed delays QE2 or announces perhaps a smaller program than the market expects (perhaps on the back of stronger economic data) then that might just be the catalyst for a short covering rally in the USD.
Given that we are holding a large proportion of cash in the managed discretionary accounts we have been actively seeking places to deploy capital; needless to say we have really struggled to find value at these levels in the market.
We discovered one large cap stock which has been lagging in the current rally, and which is trading just off the bottom of its current range. That stock is BSL. Given it is slightly more volatile than the overall market we invested 10% of the portfolio in the stock at yesterday’s intra-day low of $2.16. Much like the USD, BSL has been a favourite of short sellers and we believe that should the USD strengthen, BSL will look more attractive and the short sellers will look to cover their positions in BSL quite quickly.
We are actively watching quite a number of stocks for a level which we feel represents value. In this market we still plan to be a little more aggressive, especially given the exceptional local economy strength. In the meantime we are well positioned should the market continue to run and we are holding stocks that should benefit from sector rotation and USD strength should the market start to ease off.
As always, if you would like to discuss the portfolio please call the desk.
Cheers,
Hayden Kerr and Shawn Uldridge.
Tags: Buy Shares, Buying Shares, Managed Accounts, Managed Discretionary Accounts, Managed Funds, Share Trading Recommendations, Stock Broker, Stock Brokers, stockbroker
Posted in Managed Account Investment Notifications, Managed Account Investment Notifications, Managed Funds, Share Trading Recommendations, Trading Updates
Managed Discretionary Accounts – Sale of BHP and Purchase of WBC
Monday, October 11th, 2010
Good afternoon,
Thursday last week we made two transactions for the managed discretionary accounts, a sale of BHP and a re-purchase of WBC shares that effectively brought the account back to 20% invested.
With approximately 16% of the account in BHP, the investment returned (including dividend) a gross profit of $3.50 or a 1.48% gain on the overall portfolio in six weeks. BHP had run back up to near highs since the purchase date in the face of a rising Australian Dollar and the continued uncertainty around their bid for Potash of Saskatchewan. Overall BHP reached our target profit of 10% and as it was nearing the top of its current trading range we decided it was a good idea to take the profit.
On the purchase of WBC, the stock pulled back from our sale price of $23.90 to $23.15 during a period of strength in the overall market. The prevailing mood of the market is strong, with slight weakness in the share price, WBC still represents value and we made the decision to add it back to the portfolio with a view to adding positions more aggressively on any stock-specific and overall market weakness.
As always should you have any questions please call the office.
Cheers
Hayden and Shawn
Tags: Buy Shares, Managed Accounts, Managed Discretionary Accounts, Managed Funds, Managed Share Investments, Share Trading Recommendations, Stock Brokers
Posted in Managed Account Investment Notifications, Share Trading Recommendations
End of Quarter Managed Discretionary Account Update
Friday, October 1st, 2010
Good afternoon,
Today being the 1st of October marks the end of another quarter for 2010. All in all it was a very positive quarter for the managed discretionary accounts, which increased 4.8% in value for the period.
As some of you will no doubt have noticed we locked in profits on both WBC and WPL (profits of 7.72% and 6.17% respectively) earlier in the week. We felt that given the huge rally across the board in September it was prudent to lock in the profits. In hindsight that has turned out to be an excellent decision as the market has fallen since we exited the positions.
We are now holding a significant amount of cash, BHP and QHL as well as some index puts in the portfolio. We will look for further opportunities to deploy cash as the market falls.
We intend to continue to take a cautious and active approach to investing in the current market. There is yet another developing debt situation surrounding the Irish banking system that could prove to be the catalyst for a downward move in the market. As we have seen many times this year already, volatility creates opportunity and we now have cash available to deploy when those opportunities present.
As it is the end of the quarter we will be preparing your end of quarter tax reports and expect to have them out to you sometime in the next 2 weeks.
As always if you have any questions or would like to discuss our thoughts on the market in more detail, please contact us at any time.
Posted in Managed Account Investment Notifications, Share Trading Recommendations, Share Trading Recommendations, Trading Updates
Our latest contribution to www.thebull.com.au
Wednesday, September 29th, 2010
Afternoon everyone,
As you all know from time to time we are asked to contribute to the financial news site www.thebull.com.au
Each time we are asked to give 6 share trading recommendations, 2 buy, 2 hold and 2 sell. The full article if availble to read here
http://www.thebull.com.au/articles/a/14455-18-share-tips—27-september-2010.html
Some of these shares are ones that we hold in our Managed Accounts, others are different stocks that we may have been following or have an interest in.
Enjoy!
Tags: Buy Shares, Buying Shares, managed investments, Options Trading, sell shares, share brokers, Share Trading Recommendations, Stock Brokers, Stock Trading, Stockbroking
Posted in Uncategorized
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