Perennial: Small cap index still looks expensive
Perennial: Small cap index still looks expensive. Andrew Smith, Portfolio Manager of the Perennial Smaller Companies Trust, says at the current 16x FY15 PE the small cap index remains expensive. To overcome this Smith says he has been looking outside the index to find stocks that are receiving less coverage from brokers and analysts. This has enabled him to construct a portfolio positioned at a 11.9x FY15 PE - a 30% discount to the market. At a company level Smith says HFA Holdings remains attractive despite the recent 40% rally. The Company has substantial US earnings which plays into the prospect of a falling currency. Smith also says the outlook for APN is attractive as advertising revenue should follow on the success of their two leading FM radio networks. A falling currency and strength in the housing sector are the two major themes Smith is following. A recent investment in residential property developer Peet is reflective of his view on the property market outlook.