Market finishes up for the month
The market was a prism of strength today despite closing pretty much flat after a very weak open courtesy of selling primarily amongst the commodity stocks, however banks were also targeted post open – before buyers stepped into the fray from lunchtime onwards. The index continues to push up against recent highs however we remain on the sell side in aggregate at current levels, thinking that a combination of options expiry (yesterday), and end of month today could have provided some synthetic support for the main index driving stocks higher like the banks.
Today we made the (no doubt) controversial call to sell our holding Commonwealth Bank (CBA) however we also up weighted our position in BHP by another 2.5%. Selling strength and buying weakness is clearly one of the metrics we’ve spoken about often in recent times and today was an example of just that. More on the portfolio amendments below.
On the broader market today, we had reasonable range of +/- 30 points, a high of 5950, a low of 5894 and a close of 5924, up +2pts or +0.04%. For the month of April the market finished up +1.01% which is clearly positive, however underwhelming in terms of average April performance.
ASX 200 Intra-Day Chart
ASX 200 Daily Chart
Commonwealth Bank (CBA) – we took a +20% profit in CBA today which is one of those difficult calls to make. There’s no other stock on the ASX that polarises investors as much as CBA, although it’s worth noting that Telstra used to be like that as well! We’re not negative the banks yet, however given seasonal weakness in May and recent strength + optimism now obvious in the banks, we thought it prudent to reduce our exposure by 5.5%, and increase our cash levels overall. We still hold CYB, NAB and ANZ as direct banking exposure plus a number of other financials.
Commonwealth Bank (CBA) Daily Chart
We also added to our position in BHP today, adding to our existing 5% holding which we acquired just under $24. Today BHP opened down 2% around $24.40 and we were buyers, and it was pleasing to see the stock rally from the lows back to $23.72. We remain medium-term bullish the stock, believing it to be undervalued within both the sector and market. The stock is currently paying a 3% fully franked yield with the potential for positive buybacks in the near future as the stock evolves into a "cash cow".
BHP Billiton (BHP) Daily Chart
On the flip side, Platinum Asset Management (PTM) was weak today, dropping by -6.61% to close at $4.66. This is a stock that was very strong yesterday and started to look good technically, but dropped off the perch today. They announced plans to lower their fee structures which is clearly a reaction to competitive pressures. This is a negative to earnings, however only in so far as it’s not offset by an increase in FUM flow. Lower fees on more FUM is neutral however lower fees on the same FUM is negative. At this stage, the mkt pricing the later and the stock subsequently drops. There is a buy back in place that can be used, and we hope it is however the stocks clearly looks negative on the charts. One we will cover further in the weekend report tomorrow.
Platinum Asset Management (PTM)
Have a great night, and watch out for the Weekend report on Sunday
The Market Matters Team
Disclosure
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