Viewpoint: Bullish
Spent much of the last week in a trading halt as the wagering business launched a $400m equity raise. The raise comes in a few sections – the first being a $215.1m placement to institutions at $10/sh. The second, completed yesterday, was the $81m institutional entitlement offer with 78% of eligible holders taking up their rights at $8/sh, with the remainder sold…
BOQ fits nicely into our macro-economic view plus it brings with it the outside possibility of some M&A activity – the bank is due to pay a solid fully franked dividend in November.
Copper like most key commodities is highly correlated to the $US hence if it does indeed take another leg higher MM would expect the industrial metal to fall another ~10% hence our initial relatively small purchase of OZ Minerals (OZL) for our Flagship Growth Portfolio.
The $US continues to rotate in the 92-93 area with any upside creating a headwind for commodity prices and vice versa. At this stage MM is 50-50 whether we get another spike up towards 94-95 but importantly if we do we want the flexibility to increase our exposure to the resources sector into likely weakness.
Its not just the ASX and Dow Jones which are powering to new all-time highs, the Indian Nifty 50 closed above 16,000 for the first time ever yesterday buoyed by global stimulus prompting increasing appetite for risk i.e. stocks. The broad picture is the same for this major subcontinent index i.e. its bullish and pullbacks should be bought.
We believe as M&A gathers momentum the smaller tech stocks will play some performance catch up on their big brothers such as Apple (AAPL US), Amazon (AMZN US) and Alphabet (GOOGL US). A simple deduction on the fundamental side as suitors usually underperform their prey in the stock market which in this case is supported…
The ASX200 drifted lower yesterday although it was primarily a lacklustre session by the banks which caused the -0.2% decline. Under-the-hood the local tech space remained the hot place to be after being ignited by the $39bn takeover bid for Afterpay (APT) on Monday, the biggest corporate play in history, perhaps we’re finally going to see the local IT stocks address their major underperformance when compared to the US FANG’s & Co through 2021 – more on that later.
CWN +1.68%: The Royal Commsion heard closing submissions from Crown today who confirmed the CEO of Crown Melbourne would go while Chair Helen Coonan will also fall on her sword. All fairly typical given CWN’s predicament. New management & board have a mandate to clean up CWN and from a shareholder perspective, we’re hoping they’re given the opportunity.
The banks are awash with both cash and economic tailwinds and as we witnessed with National Australia Bank (NAB) last month they’re happy to start buying back their own stock – $2.5bn in the case of NAB. Regional bank of Queensland (BOQ) has like CSR been on our radar for a while and it brings with it both the attraction of a potential takeover target and a 3.2% fully franked yield, not a bad combination.
Hamish Douglass’ fund manager MFG has pulled back 13% of late after being caught up in the Chinese governments strong arm regulatory tactics however its recovery back above $50 feels constructive although obviously a strong market backdrop helps – the current forecasted yield of 4.4% part franked is clearly attractive in today’s…
