Between the end of “reporting season” and mid December, we spend our time on the road visiting companies and looking for undiscovered gems. Visiting so many companies gives us a good feel for how the economy is performing. The reality is that it’s a mixed bag out there, but it’s certainly not all doom and gloom. As the economy transitions from the resources super cycle we’ve benefited from lower interest rates and a lower currency… We’re also seeing some long needed respite for our non-resources export sector. Many Australian companies were also wise enough to have used the strong currency to buy offshore businesses and are now benefiting in a “currency translation” sense. Treasury Wine Estates is one company that is benefiting on all fronts. Despite its strong profit performances and acquisition success elements of the market remain skeptical and continue to view the company through the lens of what it was as opposed to what it is becoming. We’ve often found that the calls that initially seem contrarian often provide the best performance in the long term. (VIEW LINK)
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