Macquarie Group (MQG) and ANZ Group (ANZ)
I'm a long-time holder of ANZ and was thinking of selling these and buying into Macquarie Bank. I would be grateful for your thoughts on these two banks.
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Answer
Hi Judy,
An excellent well-timed question with Macquarie down more than 7% at Friday lunchtime. Their respective performance over recent months has been dramatic – Year-to-date ANZ is +29% and MQG -7% with most of the outperformance by ANZ unfolding since September when it surged to new highs while MQG made fresh 6-month lows on Friday. Let’s consider what has unfolded at the two banks:
ANZ: new CEO Nuno Matos has laid out a very encouraging path forward for ANZ and it remains our preference amongst the “Big Four” but it’s expensive trading 20-25% above its average valuation over recent years.
MQG: delivered another disappointing report on Friday with the commodities division the biggest drag. The market was bracing for a miss, but not a ~11% miss with the dividend coming in lower than expected. Even an extension of its $2bn buyback failed to support the stock.
Our concern is the new “miss” trend emerging at the silver doughnut and while the bank isn’t expensive compared to previous years it doesn’t deserve to be. Even as the local “Big Four” look fully priced, we not considering switching to MQG at this stage. Also, as a side note if we see further “risk off” unfolding over the coming months MQG is likely to continue to underperform the majors.
NB We would be more likely to switch our WBC holding into MQG than ANZ, but we’re not there on either at this stage.
