Australian Investment Blog

What Mattered Today

A good session for the market today with the index bouncing from key 5600 support, mainly dragged higher by the resource names while we also saw some good corporate news flow with a takeover in the Mining Services space - Cimic bidding for MacMahon (MAH), Bluescope (BSL) upgrading guidance highlighting the extremely strong momentum in that business (a good way to play infrastructure build in the States), Resmed (RMD) reported their December quarter numbers and rallied hard (+7.21%) while Brambles (BXB) wasn’t the disaster that it could have been today given overseas selling was pretty much inline with what we saw in Oz yesterday. We’re targeting ~$9.75 as our BUY level.

We bought two stocks today in the Market Matters portfolio, upweighting back into the banks with ANZ back in the portfolio - a 5% allocation while a more speculative play in Altium (ALU) was also added with a 4% weighting, Our cash levels were high and the ~4 % pullback too enticing.

From its Jan 9 high of 5827 the ASX 200 traded to a low 5604 yesterday, and we saw a reasonable bounce today to be back up to 5650.

Resources saw most love with the basket of RIO, BHP, WHC, S32 & FMG accounting for +17pts of today’s rally while the Banks failed to contribute. BHP & RIO trading at their highest points in more than 12 months today and have experienced some HUGE rallies since the resource sector was pronounced dead by many about 18 months ago. Fortescue & Whitehaven the two that really stand out and these were the ones that had extremely stretched balance sheets / piles of debt and a single commodity exposure. They’ve just happened to be exposed to commodities that have rallied strongly in the last 12 months and it’s given them the opportunity to address debt – now they have big free cash flow if commodity prices stay high…

The banks are now a mixed bag since coming back from their highs – CBA has been supported most given upcoming dividend in Feb, ANZ the weakest out of the BIG 4 from the highs, but strongest from the lows. BOQ has been a weak performer relative to Bendigo.

Overall we had a range of +/- 40 points, a high of 5653, a low of 5613 and a close of 5650, up +39pts or +0.70%. Volume was good given it was stock options expiry today – which is rare on a Tuesday but a result of Australia Day this Thursday.

ASX 200 Intra-Day Chart

ASX 200 Daily Chart

ANZ; We trimmed our banking exposure into recent strength and now find ourselves with only a 5% allocations to CBA. ANZ dropped ~8% from its highs and we used the weakness to take a position today in the Market Matters portfolio at $29.10.

ANZ Daily Chart

Altium; A high growth tech business listed on the ASX with a market capitalisation of around $1bn, and not typically a stock that Market Matters would hold in the portfolio. That said, we like the growth plans for the business and see their targets for $100m revenue in FY 17 jumping to $200m in FY20 are achievable. . For those that don’t know, and in very simple terms, they are a printed circuit board software provider, or in other words, they provide the smarts for companies to design and make the circuit boards that are used in connected devices, and we all understand the growth in devices and their complexity over recent times. We bought today ~$8
Altium (ALU) Daily Chart

Sectors

ASX 200 Movers

What Matters Overseas

Disclosure

Market Matters may hold stocks mentioned in this report. Subscribers can view a full list of holdings on the website by clicking here. Positions are updated each Friday.

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