Contango: Views on two out of favour big caps
George Boubouras, Chief Investment Officer of Contango Asset Management, says he has recently been adding Woolworths back into his portfolio after having been out of the stock for some time. Boubouras says the key to a turn around in Woolworths is for there to be sustainability in the margin contraction. He says the success that Aldi has had just goes to show how good the domestic market has been for Woolworths and Coles. However, despite the negative sentiment towards Woolworths Boubouras believes the risk reward proposition is sufficiently attractive for him to start adding Woolworths back into portfolios. “We are still underweight but it seem like on balance a lot of the correction has happened. We still have scenarios where it can still be much lower prices it is just that the probability of that are outweighed and we see some upside in the short term.” In this video Boubouras explains how their approach on Woolworths can also be applied to RIO and why they remain bearish on iron ore stocks.
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