Why this “beaten up” stock is on Claudia Kwan’s watchlist

One that met that need, however, took a hit this week as it lost out on a defence contract and the price tumbled. Objective Corp (OCL) has been a “tough holding” after some positive early performance and the news this week was enough for Kwan to exit the holding entirely.

But it wasn’t all bad news, as Nido Education started to turn things around and earned a spot on her watchlist. The NorthStar Impact Australian Equities Fund also reported its 12-month performance this week and delivered 24.27% net of fees, so it looks like the struggling OCL didn't cause too much damage.

In this Q&A, Kwan explains why she has her eye on the childcare operator, where things are looking up for healthcare stocks, and how she’s gaining exposure to Taiwan tech on the ASX.

What's your most recent investment and why?

Sims Ltd (ASX: SGM). Circularity has a strong tailwind given the drive for onshoring in the US. The SLS business and its exposure to DRAM gives rare exposure to Taiwan tech on the ASX.

SGM is moving from a resource cyclical to include tech, a lot of cyclicality, but there is a medium-term structural tailwind here if SGM can execute well.

With resource and tech pricing elevated for longer and demand curves strong, we don't need to dig more out of the ground if what we need is already above ground in waste streams at the right price.

Which investment did you add to your watchlist this week?

I added Nido Education (ASX: NDO), as the share price has been completely beaten up. It's trading on an 8x PE with a very interesting incubator model that provides a compelling earnings profile. Mathew Edwards is a very thoughtful founder who is intentional about raising the standard and quality of childcare in Australia. Watching...

What is the most recent investment you have trimmed or sold and what drove this decision?

Sold Objective Corp (ASX: OCL) after they lost a high-margin defence contract this week. It has been a tough holding, one that initially performed well and was tightly held. My mandate only allows me to invest in companies with a dual return (financial and social/environmental), so getting tech exposure isn’t easy. OCL met the requirements.

After meeting with management multiple times over the last 12 months the debate as to whether AI was an enabler or a disruptor to their business was being investigated, however the share price had come down enough to argue that downside was limited, until they lost the contract this week.

What's your favourite chart or data point from this week?

The Pharma ETF (NYSE: XPH) is just now clearing an 11-year sideways consolidation (chart one), and equal-weight Health is now in a five-year breakout. These are noticeable regime changes that highlight where earnings revisions and value are being found in the market.

What was your weekly high – a standout market moment or highlight?

Iondrive's (ASX: ION) share price move is a highlight. ION is an Australian technology company gaining traction in the US.

Ion's proprietary solution, IONSolv, selectively recovers and upgrades metals from complex materials into higher-value products (e.g. rare earth extraction from solar, battery and e-waste).

This week the technology was independently validated with commercial feedstock, and a US partner was secured, which is exactly what the market was waiting for.

What was your weekly low – a market disappointment or challenge from the week?

Objective Corp losing a high-margin defence contract, which saw the stock break down to new lows.

What first drew you to markets or this sector and what continues to keep you inspired today?

I chose the Futures Exchange for my work experience in Year 10, many moons ago when trading was done in live pits. Since then, life has always drawn me back to markets.

Working in markets gives you access to some of the most curious, intelligent and motivated people. It is so dynamic and all encompassing but beyond that, capital creates change.

Companies finding economics in destroying people and the planet does not interest me, actually I find it stupid. I’m inspired by companies finding economic solutions that are net positive to society and bringing along our investors who are looking for financial returns that way.

What's one piece of advice you'd give to new investors?

If you're new, keep it simple. Don’t go for the 6 (cricket analogy), just try to hit 1s and 2s and make sure you don’t get out!

There are good investments, bad investments, winning investments and losing investments. Know the difference, good investments are ones where the risk reward is to the upside.

How do you unwind when you're not thinking about the market?

I took up ocean swimming during Covid. I'm a weak swimmer, so it takes all my physical capacity just to keep up with the group and not drown — which, fascinatingly, makes it quite a mental unwind.

I'm known for trying the next new wellness fad or therapy that suggests it can hit the reset button: sound baths, cold baths, hot baths, whatever the next bath is I'll do it.

I used to play a lot of sport (BK - before kids) but nowadays (AK - after kids) I spend a lot of time watching amateur sport - pending parking situation - is considered an unwind.

I also like to travel to places no one else goes. One of the better trips I've done was a ski trip to Gulmarg, India, in 2010. 

Rapid fire! 🔥

What is your favourite investing book?

Psychology of Intelligence Analysis by Richards J. Heuer Jr.

What is your favourite investing or finance/markets related podcast?

I find small clips from Bloomberg TV and Goldman Sachs updates very insightful. I always want to hear what JPM's Jamie Dimon is saying, and I'm a long-time fan of Ray Dalio.

What's the first thing you read each morning?

My WhatsApp, to check what my kids need that day; then my screens and excels with all the technical tabs and pricing; then the AI generated news feed I’ve curated.

What is your favourite restaurant?

Grape Garden, Potts Point. The best Peking duck I've ever tried and the owner is a vibe.

What's something people are surprised to learn about you?

BK (before kids), I spent a lot of my vacation days meditating in 10-day Vipassana meditation centres around the world, where you don't speak (not a word) for 10 days. It was so challenging, but now, AK (after kids), not speaking or being spoken to for 10 days sounds very appealing.

Think there’s a better pick? Prove it. Share your rapid-fire book, podcast, and daily read in the comments.