Energy stocks flare up again!
What Mattered Today
Energy the standout again on the market today following developments over the weekend from non-OPEC countries agreeing to cut production + the Saudis will cut more than previously advised...this put a decent bid tone under the Oils with Santos (STO) the big winner up +5%...while our position in Origin Energy (ORG) continues to please adding another +3.66% to $6.79.
Ansell (ANN) also had a good day rallying +2.08% to close at $25.06, the level we’ve targeted since entering the stock below $22 at the end of October. We took the opportunity to SELL the holding and lock in a ~14% profit. That takes our cash weighting back up to 16% however we are stalking a few stocks that may come back to our targeted levels over coming days…
Ansell (ANN) Daily Chart
Bellamy’s (BAL) went into a trading halt today pending the release of an updated announcement of the impact of trading conditions on their financial performance, or in other words, they’re about to shock the market for the 2nd time in the past 12 days…something clearly smells here! On the 2nd December they said that changes to regulation in China was crimping sales, and the stock dropped from above $12 to below $7. On the 6th December the ASX queried them regarding disclosure and the company responded on the 8th. They’ve now entered a trading halt and unfortunately for holders (not us) this will more likely than not be bad news. Share in BAL last traded at $6.68…As we’ve said before, all too hard for Bellamy’s at the moment
Bellamy’s (BAL) Daily Chart
Estia (EHE) also went into a trading halt before trade today confirming they’ll raise $137m via an underwritten deal with Macquarie. It’s a 1 for 3 accelerated rights issue at $2.10 a share, so for those holding to stock, you’ll have the opportunity to buy 1 new share for every 3 you hold at $2.10 versus the last traded price of $2.68. The stock will likely drop when it starts trading again in the next day or so, but will likely trade above the $2.10 level given they confirmed guidance, plus they cut their dividend which (although this seems strange) will be liked by the market given their current gearing. We’ve been targeting a BUY on EHE nearer to ~$2.00 and hopefully this will give us our chance
Estia Health (EHE) Daily Chart
Flight Centre (FLT) dropped today, by about ~7% on a broker downgrade – Morgan Stanley reckon it’s worth $25 a share versus $30.46 close today. The issue is around the companies guidance, which has been reasonably upbeat however with a big 2nd half skew. Some companies naturally have an earnings skew in the second half, but historically FLT’s hasn’t been big, or as big as guidance is now implying. FLT is cheap, has a pretty good track record but it’s simply struggled for the last few years. Is bricks and mortar travel retailing in structural decline and how can FLT compete with online only operators? Simply, we’re not sure, they might be able to muddle through, but it’s hard to have conviction either way. We’re high conviction investors so we’ll stand aside from this one…
Here’s the Broker Calls on the stock which shows big variance in expectations…Too hard for us!
Source; Bloomberg
On the market today, we had a range of +/- 31 points, a high of 5583, a low of 5552 and a close of 5562, up +2pts or +0.04%.
ASX 200 Intra-Day Chart
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