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PME results / portfolio weightings

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Question asked 17/02/2024

PME results / portfolio weightings

Thoughts on PME after the recent pullback on HY24 and analyst downgrades flowing post. Been a long time observer and frustratingly continuously missed the boat. If they continue to push out 25-30% EPS growth rates over the next 3-5 years do you think this pull back is a worthwhile point to start building a position - say averaging in over a few months? Also on portfolio weightings how do you determine weightings? Say you choose to allocate a max portfolio weighting to a stock in a portfolio of 5-7% how would you approach allocations when 'accumulating' a stock - assuming your conviction means you would hold this for the medium to long term. Would you do in increments of 3-4 allocations over 6-12 months to build the position?

Answer

Hi Scott,

A late question on Friday night that we just squeezed in this week, so excuse the brevity. Friday Midday is the cut-off we generally roll with.

PME: We’ve previously flagged sub ~$90 as the level to accumulate PME and on Friday it got there with a miss to earnings on Thursday being the catalyst. When such a well owned stock that has done so well and is on such a high multiple misses, the selling can be aggressive which has been the case with PME. In instances like this, we generally apply a 3-day rule, meaning it takes 3 days for the selling to wash before we’d start to accumulate it – assuming we were adding it to the portfolio.

In terms of scaling positions, we’re more aggressive than that, buying in 1,2 or a max 3 traches to get to a predetermined portfolio weighting that takes into consideration the characteristics of the stock and the composition of the portfolio more broadly – a position such as PME would cap out at a max of 5% for us. We don’t generally set out to scale a position over 6-12 months – lots of things can change in that time frame.

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Pro Medicus (PME)

LAST UPDATED 17/02/2024 06:58

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