Wilson Asset Management weekly: Reckon and Incitec Piviot

Chris Stott

The S&P/ASX All Ordinaries Accumulation Index closed down 0.7% for the week. On Wednesday, the Westpac-Melbourne Institute index of consumer sentiment fell 1.7% in November. On Thursday, data from the Australian Bureau of Statistics (ABS) reported Australia’s unemployment rate fell to a near five-year low.

In this week’s report we discuss Reckon and Incitec Pivot.

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Pay day for Reckon

On Thursday, Australian software company Reckon Limited (ASX: RKN) announced the sale of its Practice Management business to MYOB Group Limited (ASX: MYO) in an all cash sale of $180 million. Reckon intends to use the proceeds to repay the majority of its debt and pay a special dividend to shareholders. We are pleased with this outcome and have held Reckon shares for sometime due to the strategic value of its assets. Shares in Reckon closed up 30.5% for the week. We own Reckon as a research-driven investment in WAM Capital, WAM Research and WAM Microcap and we own MYOB as a research-driven investment in WAM Capital, WAM Leaders and WAM Research.

Explosive result for Incitec Pivot

On Tuesday, chemical agriculture company Incitec Pivot Limited (ASX: IPL) released its 2017 full year results, reporting earnings before interest and tax (EBIT) of $501.2 million, a 17% increase on the previous corresponding period. The company also reported EBIT up 46% in its explosives segment driven by sustained quarry and construction growth and resurgent activity in the commodities sector. Shares in Incitec Pivot closed up 4.8% for the week. We own Incitec Pivot as a market-driven investment in WAM Leaders and Century Australia.


Chris Stott

Chris is the Chief Investment Officer of Wilson Asset Management, having joined the company in 2006. He is also the Portfolio Manager responsible for WAM Capital (ASX:WAM), WAM Research (ASX:WAX), WAM Active (ASX:WAA) and WAM MicroCap (ASX:WMI).

Expertise

ASX:IPL ASX:MYO ASX:WAM ASX:WAX ASX:WLE ASX:RKN ASX:WMI ASX: CYA

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