Stairs Up ~ Elevator Down

Romano Sala Tenna

The well-worn saying that the markets take the stairs up and the elevator down applies to the current correction more than most. Whilst it doesn’t provide any specific consolation, it should remind investors that the current panic is not new and in fact it is the way that we expect... Show More

Don't Q for QBE

Romano Sala Tenna

It is rare that a company rallies 5% post announcing a forecast after tax loss of $1.2 billion. But perhaps when the bar is set as low as it was for QBE, this is a comparatively good outcome! Show More

How we are playing Santos  

Romano Sala Tenna

The chronology of events this past 24 hours is rather curious and provides somewhat of a conundrum as to how to play the current machinations. Santos has stated today that on the 14th of August the company received a confidential, non-binding, conditional and indicative proposal to acquire all the shares... Show More

Santos: The trend has turned

Romano Sala Tenna

In the true tradition of denial, we have maintained our position in Santos, and in fact, have added a modest amount over the past 12 months. Whilst it has been a particularly challenging period for both the company and investors, there are growing signs that the ship has been righted... Show More

To quote Matt Kidman, the Cashflow Statement is the P+L on truth serum! Follow the cash; record cash collections and record net operating cash from operations. Beyond that, i would also point you to the tier 1 auditor, increasing payment plan book and high level of recovery (over a greater mainframe) which indicate that the amortization rates are conservative.

On An undervalued Aussie small cap -

Not disputing the quality of the earnings (one of the 10 key criteria we use internally); it is the price that you are paying for this earnings stream that is not sustainable.

On Growth At a Stupid Price (GASP) -

A good question and one that highlights a lot of the misconceptions around this company. Firstly its worth noting that despite fluctuations in housing prices, actual total credit growth has only been negative once in the past 2 decades. But even if credit growth was to turn negative There are at least (4) ways that AFG can continue to grow profits: 1. Increasing the share of their higher margin white label and even higher margin securitisation products 2. Push into SME lending where they have a fraction of the market compared to mortgages 3. Adviser growth ; since listing this has increased from 2200 to 2900; the BRC has added even further pressure on lenders (banks) to ensure that they have the highest level of compliance; banks prefer to deal with large aggregators such as AFG as they have the best internal controls; more advisers will be driven towards larger aggregators and AFG is the largest 4. AFG is actively working on FINTECH and as the largest player they have the largest IT budget; early days but they are not asleep.

On A good company at a great price -

We too are avoiding infrastructure plays at this point in the cycle. In our view, the 2 main drivers of infrastructure stocks are 1) comparative yields and 2) cost of their (substantial level of) debt. Both of these are transitioning from tailwinds to headwinds.

On My thoughts on the recent Wall Street correction -

Hello Johan, Yes AML has certainly cemented its position as the #1 cobalt related play. Exceptional drilling results in terms of grades, widths and consistency.

On A Strong Theme in the Early Stages -

Beware projects with eye-catching high grades but no width or tonnage. Most of our work on Canadian/North American cobalt plays has left us particularly unimpressed at intersections measuring 1-2 metres or less. This is not gold mining! AML pregnant with newsflow over next 3 months. CLA also moving up our list.

On A Strong Theme in the Early Stages -

AML is towards the very top of our shortlist and we are meeting with the company today to progress our research. Keen to hear what investors like and why?

On A Strong Theme in the Early Stages -

Fully concur Nigel; the 4 big banks represent nearly 1/3 of the ASX100 and a staggering 46% of the ASX20. That means that every ETF based on the ASX100 is pumping nearly 30c in every dollar into 4 banks, and worse for an ETF based on the ASX20. Investors are nervous about investing in the banks at this stage of the cycle, yet they willingly invest in some ETFs that are simply replicating this exposure.

On ETF's: The most crowded trade in history -

Atlas does indeed face greater challenges than FMG, the most pronounced of which is the mode of transportation and associated costs. At this stage its a watching brief.

On The Good, the Bad and the Worse -

Yes correct. Whilst 'anchoring' can be a dangerous psychological weakness, the whole thesis of this piece is that if it is the oil price that has driven the weakness, then when the oil price rebounds the weakness will abate. This is predicated upon the central tenet that it is the oil price that has driven the weakness in the STO share price - not anything related to the company itself.

On Oil Price Barreling Upwards (Part 2) : What We Are Buying -