Overnight falls of 3.2% for the DOW (3.30% for S&P, 4.40% NASDAQ) are reminiscent of January-February 2018, and just like then it feels very unpleasant. However as always perspective is required when trying to ascertain whether this is a transitionary correction or the start of something more sinister. Show More
Medical device manufacturer and distributor ResMed Inc delivered their full-year result today. We highlight our three key takeaways from the report, share our view on the stock and focus on something that we feel the market has underappreciated. Show More
The ASX 20 has been a consistent underperformer in recent years leading some to conclude that after persistent underperformance, a reversal is due to take place between the ‘big’ end of town, and the ‘smaller’ business that sit outside those largest 20 companies on the ASX. Show More
With over 2000 companies listed on the Australian Stock Exchange, it is impossible for an individual to be adequately across all the businesses in that investment universe. Therefore, the question is, how do investors identify which businesses to invest in? Show More
So far 2018 has begun just as 2017 finished, with the established ‘more mature’ businesses, as categorised by the ASX top 20, underperforming their smaller cousins. Typically, these larger more mature businesses are synonymous with stable dividends and income, naturally luring those investors whose stage in the investment lifecycle preferences... Show More
Gold is holding up despite an environment of rising bond yields that are traditionally a headwind for the metal. With this relationship breaking down, we look at what is supporting gold, and nominate our preferred exposures in the sector. Show More
To assist investors in navigating these increasingly uncertain times, we have tried to distill in this wire some of the key themes to emerge out of earnings season. We also nominate one of our top picks in the mid-cap education space with some of the key traits we believe investors... Show More
Thanks for the question Simon. I tend to agree with you that the withdrawal of QE is another headwind for markets. QE has widely been credited as having been a significant driver of asset price returns. Therefore, one can expect the withdrawal of QE to have an adverse impact on asset prices. Exactly how that plays out is difficult to predict however we would expect it to show up in fixed income markets. Naturally with central banks pulling back, or out, of many markets there will now be less demand for certain parts of the yield curve. This will likely contribute to the upward pressures we are already seeing in yields. In the end of the day it’s not one factor alone the causes asset prices to fluctuate, rather a series of things. Some of these factors will have a positive impact on prices (Earnings growth), others will have a negative impact (Withdrawal of QE). It’s the net result of these factors (i.e. positives outweigh negatives or Vice versa), that will determine whether the move is positive or negative.
Hi Adisen, Thanks for your comments. I would tend to agree with you. Dividends aren't of the greatest concern if that company is reinvesting earnings that then go onto earn a companies high ROE. However certain investors have different objectives. For instance retirees may require dividends for income. For those investors we feel they should focus on dividend streams that are growing overtime rather then the headline dividend yield.
Hi Parth, you are right that generally you don't want a high debt to equity ratio. In the article we discuss 'net gearing'. Net gearing is a similar and arguably a superior measure to the debt to equity ratio, as net gearing takes into consideration the cash on a company’s balance sheet. The calculation for net gearing is Debt - Cash / Equity. As you can see very it's similar to the debt to equity ratio.
Hi Shane, no doubt at this stage SHM hasn't turned out to be some of our best work. The filtering system isn't foolproof and we certainly will never get everything right. In fact we'll get a lot wrong. As mentioned in the article it can just help narrow the focus. Strictly speaking SHM didn't pass the filters as it didn't deliver 2 years consecutive Revenue growth. It met all other filters however. We were more drawn to SHM for its dividend yield characteristics and low valuation multiple, as well as what we feel are underappreciated growth prospects with the BBQ business.
Thanks Dean and Ben! Hopefully the information is of some assistance going forward.
Hi Phillip, you make some valid points. Based on long term track records it's hard to argue against WAM and WAX. When looking at LICs it is important to examine the composition of the underlying portfolios to determine whether the particular LIC satisfies what it is the investor is looking to achieve. WLE has over 40% of its FUM invested in ASX 20 businesses many of which retail investors would already own directly. Investing in the likes of WAM, WAX and CIE can allow investors to avoid duplicating existing positions and gain exposure to other parts of the market.
Hi Peter, thanks for your interest in the article. As pointed out by Ian the $0.016 represents a quarterly dividend payment. In recent years CIE has moved from paying half yearly to quarterly dividends.