Our Q&As are emailed in our Saturday Morning Report, find the answer to this question below.
Hi James, Could you suggest a few Hybrids one could add to a portfolio for a bit of income. Incidentally, I recall (as I had just sold them) you wrote or said quite some time ago "I don't know how anyone can make money out of Lend Lease!" Cheers, Mick.
Hi Mick,
A look at our Active Income Portfolio (here) will give you an excellent insight into our current thoughts towards Hybrids. We have also included a list of the major bank hybrids, their yield to first call and duration in another question today – lots of ideas there.
As for Lendlease (LLC), you are right insofar as we have thought for a long time that it was a poor business doing heaps of revenue but earning very little (low margins) and taking on lots of risk to do it. We have been patiently watching the construction giant fall more than 60% over the last five years before we have stepped up and bought the stock. The reason we have bought is twofold, the first of which is a credible strategy to grow margins by focusing on more commercially viable projects, & the second being an increase focus on funds management, which has better operating metrics than development. We think investors are still looking in the rear-view mirror and not looking forward, our estimation is they can more than double earnings in FY24 if they execute their plans well.
We’re up ¬7% on paper but obviously our target is significantly higher to warrant catching this particular falling knife.
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