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Spinning Off a King
Abacus Property Group (ABP) is a real-estate investment trust (REIT), listed on the ASX. Held within ABP is a bunch of east-coast office buildings, retail centres and, most importantly, Storage King, Australia’s second largest owner-operator of self-storage centres. ABP intends to partially spin-off its Storage King assets in August, pending shareholder approval, into a separate listed entity, called Abacus Storage…
IVE Got Value
IVE Group Ltd (ASX:IGL) IGL is Australia’s largest integrated marketing communications business with leading market positions across every sector in which the company operates. Over the past 20 years, IVE has been able to diversify operations, enabling cross-selling opportunities, which has resulted in more than 75% of customers purchasing products and services from multiple divisions. Their flagship segment, print, has…
New Additions to the Portfolio
Baby Bunting Group Ltd (ASX:BBN) Last month we purchased shares in Baby Bunting (BBN) following a sharp fall in its share price. The baby goods retailer updated the market on its half-yearly results, reporting lower-than-expected earnings in the first half. We like BBN for the following reasons: 1. It currently trades at an attractive relative and absolute valuation. At its…
What is Earnings Quality?
With an overwhelming amount of short-term remuneration linked to share price targets, investors need to be aware of the financial alchemy available to management. Companies have various tools in which they’re able to paint an image of financial health, stability of earnings, or revenue growth. Although earnings management isn’t a new theory, companies can often go years without fault. However,…
Why Invest in Small Caps?
“All great companies started as small companies.” – Ian Cassel There are several benefits to investing in smaller companies in favour of large-cap stocks. Below we outline three reasons why you should invest in small-cap stocks. 1. Less coverage Most small-cap stocks have little or no broker coverage in comparison to larger-cap stocks. Therefore, companies with a small market capitalisation…
The Wonders of Compounding
As global markets continue to tread water, a common mistake is placing undue importance on short-term forecasts, rather than focusing on fundamentals. Importantly, times of uncertainty can create the greatest of opportunities for patient investors. As such, now could be a good time to look for quality businesses selling at affordable prices. While it can be difficult to peer through…
Porsche AG's Initial Public Offering
Porsche AG’s initial public offering (IPO) will take place on the 29th of September 2022, as a Frankfurt listing. Volkswagen (ETR:VOW3) will float 12.5% of Porsche, raising around €9 billion for the company, with the sale set to become one of Germany’s largest to date. Volkswagen are pricing the shares between €76.50 and €82.50, indicating the company would be valued…
4 Key Financial Metrics All Investors Need to Know
If you wanted to be a successful talk-show host in Germany, what is the one thing you need to know? How to speak German, of course. Similarly, if you want to be a successful investor, you must have a basic understanding of the language of business... Accounting. Below we discuss four important financial metrics that we believe all investors must…
Scout Security Limited (ASX:SCT)
Business Description Scout Security Limited (ASX: SCT) operates a direct-to-consumer business, as well as a white-label Security-as-a-Service ("SaaS") platform and product suite. White-label partners include security, internet service and telco providers, all of which provide Scout with an opportunity to penetrate established customer bases and distribute its products and services globally. The Company generates revenue primarily through hardware sales and…
Family Zone
As the internet become more prevalent and prolific in our lives and the volume of content on the internet grows, it become increasingly more important to be able to monitor and filter the content available to children. Family Zone provides software for schools to deploy on computers provided by them as well as software for parents to monitor internet activity…
Cyclical stock: Reece
In September, the market experienced a sectoral shift from growth to cyclical as a result of a better-than-expected vaccine development. We started accumulating Reece (ASX:REH) as this is a cyclical stock that is being supported by the government stimulus package. REH will grow even stronger when the US economy recovers. Company Overview REH is a leading supplier of plumbing, bathroom,…
Pacific Smiles – It's all Smiles
Two months ago, we detailed one of our holdings, Pacific Smiles (ASX:PSQ) . Some investors asked, “Why would you invest in a growth company at a PE of 30 in a high inflation and raising rate environment?” In this post, we talk about why we invested in PSQ in the current environment. High patient fee growth PSQ’s patient fee growth…
Healthy aging - Healthia
Healthia (ASX:HLA) has been one of our top holdings for a while. HLA operates an integrated portfolio of allied health businesses, which includes My FootDr, Allsports Physiotherapy, Extend Rehabilitation, iOrthotics and DBS Medical Supplies. The below graphic showcases HLA’s operating businesses: We believe HLA has a good pipeline of growth from rising demand and acquisitions. Healthy response to aging population…
SEQ earnings upgrade
One of our portfolio holdings, Sequoia (ASX: SEQ), appreciated by +15% this week. A profit upgrade announced on Wednesday triggered the share price movement. In this post, we share our opinion towards this company and why we keep topping up our position on the way up. Company overview SEQ is an integrated financial services company providing a wide range of…
Another acquisition from EML Payments
One of our portfolio holdings EML Payments (EML) appreciated by +15% this week. The news which triggered the move was announcement of another major acquisition, this time of fintech company Sentenial. As discussed in our previous blog post , EML processes electronic payments for clients. This week’s Sentenial acquisition expands EML’s offering into Open Banking-enabled account-to-account payments. In this post,…
What we learnt from our Dicker Data site visit
A month ago, we discussed one of our portfolio holdings, Dicker Data Ltd (ASX: DDR) . DDR is primarily an IT hardware distributor, partnering with over 70 of the world’s leading hardware vendors. The Company recently opened its new national distribution facility at Kurnell NSW which we toured last week alongside fellow investors. In this blog, we talk about 2…
Responding to the floods
This past week’s floods have been labelled a "one-in-100-year" event. We believe one of our portfolio holdings, Johns Lyng (JLG), is well placed to service the victims of this catastrophe, whilst also showcasing its value proposition to insurer customers. Company Overview JLG is an integrated building services group delivering 3 main services: Building & Restoration Services; Commercial Building Services; and…
Tech company that we comfortably invest in during the rising rate environment
Over the last few months, there has been a large sell-off in long-dated bonds. This has also led to a fall in the prices of growth stocks that have long-dated cashflows. For example, the ASX All Technology Sector Index has fallen by 14% from the record high on 10 February. We have used this tech sell-off as an opportunity to…
Technology play - Dicker Data
In recent years, growth companies, especially those in the technology sector, experienced a tremendous run in the share market. A wide variety of technology themes pop up and they all sound promising. However, not all themes are realised in the near future. When the theme fails to work out, investors suffer great losses. To avoid this big risk but enjoy…
Pfizer succeeds! 90% effective vaccine! What's next?
Pfizer made it! On 9 November, Pfizer made an announcement declaring positive interim results from a COVID-19 vaccine phase III trial. In the press release, Pfizer said they had identified 94 cases of COVID-19 among more than 40,000 trial participants. While the company did not disclose how many of those were in the controlled group, they claimed the vaccine was…
Tesla share price up 60% in August. Here's why
Investors should focus on the company behind the stock and invest in undervalued high-quality businesses. According to the legendary investor Peter Lynch, “This is one of the keys to successful investing: focus on the companies, not on the stocks.” However, a new investing trend is emerging. When companies receive more attention from the general public, it generates “noise”, it’s discussed…
Traditional Retailers saved by JobKeeper for now
The earning season is revealing that bricks and mortar retailers are a key beneficiary of the government stimulus. This month, the retail sector has been one of the best performing sectors. The share price of Adairs and Nick Scali, rose by 20% after reporting their earning results. JobKeeper is one of the key reasons for positive earnings surprises. JobKeeper has…
Redbubble – Still benefiting from Covid-19
Redbubble one of our portfolio positions, owns and operates two websites: www.redbubble.com www.teepublic.com The websites link buyers and artists one market place, with over 1 million independent artist in a wide range of categories. We have tested the websites and its actually quite a good way to buy a present for a family member. I bought a few t-shirts as…
Finally the emergence of value
I recall being taught about this new valuation methodology called EV/Sales or EV/Revenue when I was new in the industry. It was the new paradigm and I was told it was the new way to value companies. I was running a small LIC at the time and was investing in things that looked incredibly cheap on a cash flow or…
Is Value Dead?
The turnaround in equity markets globally has been nothing short of astonishing and something that has taken a lot of seasoned investment professionals by surprise. The composition of the recovery has been surprising also, rather than a flight to quality there has been a flight to tech and growth stocks with little or no earnings, which presents a challenge in…
Investing – it’s not all about the numbers
German payment processor Wirecard was one of the hottest technology firms in Europe. In 2018, the company was valued at over €20 billion, more valuable than Deutsche Bank. The company entered the DAX index, a club of 30 major German companies. However, the share price has plummeted in one week by 96% from EUR 103 to EUR 3.5. What can…
The Hangover is coming
You don’t need to be a rocket scientist to know that the sugar hit from both Jobkeeper and Jobsaver are going to cause a terrible hangover. Its further exacerbated by the subsidies to childcare. I’m not against all these initiatives, rather I think that the Government acted well and did a great job softening the economic impact of the Corona…
Recession Or Recovery
With the recent rally in the share market, you would struggle to think that there has or will be any longer-term economic impact to companies or the economy. To use the logic of Benjamin Graham, the father of value investing, in the short run, the market is like a voting machine--tallying up which firms are popular and unpopular. But in…
A Stock Pickers Market
DONT BUY THE INDEX After the widespread selling in March some stocks have rallied and pushed through their old highs. Afterpay has gone from $8 - $40 and while it’s in the ASX100 now you won’t get that type of return buying the index. When you own the index, you are going to get exposure to a lot of businesses…
Are Equities Oversold or Overbought?
At the close of market on Friday the Australian Market (All Ords) was down 4.87% after a record run in April. We are still heavily weighted to cash, which does require some resolve to maintain, both while the market is racing ahead and at the same time when you get days like today when the market is sold off nearly…
Where To From Here
Fellow Investors, We had our quarterly webinar this week, if you missed it there is a link below where you can watch it. This week we saw the equity market rapidly pulling back losses from prior weeks, there doesn't seem to be much recognition of the longer-term economic impacts of the current lockdown. The government stimulus needs to be paid…
Thoughts on volatile markets
Dear Fellow Investors, Firstly, thank you to all of our loyal and supportive shareholders and investors, it’s certainly volatile times in financial markets. The one factor that provides some comfort is that the market is presenting some attractive opportunities to buy companies. We continue to expect that markets will be volatile and this will impact share prices and our performance.…
There's an awful lot to like about Macmahon Holdings
There's an awful lot to like about Macmahon Holdings. Macmahon Holdings is a mining services contractor, established in 1963 and listed on the ASX twenty years later. Prior to its listing, Macmahon projects were principally in the Northern Territory and Western Australia but a series of acquisitions and expansions now sees them operating in such diverse geographical regions as Africa,…
Buying good stocks in dips
Volatility is a frightening word to many investors and many of you will no doubt say that you have seen enough of that lately. We agree, insofar as providing a smooth investment journey to our shareholders is important to us, but we also know how to make a bit of hay when the sun shines. The investment team at Glennon…
The case for small caps
Within Australian equities, investors may choose between large caps or small caps. In the long term, large caps grow at, or around, GDP and are generally heavily weighted with financial and material stocks (see the graphs below). This does not provide sufficient diversification for most investors. Many investors may utilise ETFs to get the exposure to the ASX100, but they…
The week that was and what it means for investors
Undoubtedly a tough week for markets, with US stocks suffering their worst loss in eight months and Australian markets following suit. Interestingly the sharp sell-off has come from concerns that in response to the US economy growing too fast a rapid deployment of interest rate increases will apply the brakes too hard. The knee-jerk reaction has been felt most hard…
What's Your Risk Budget
Glennon invests in Australian small and micro cap companies, most of which have earnings, prospects of growth and a valuation that makes them attractive. We stick mainly to industrials but will invest in resource stocks but prefer them to have earnings or a clear path to earnings. For a small portion of the fund we believe there is room for…
Inconsistent market analysis can upset your investment’s hopes
This week we caught up with Collins Foods post their FY18 profit results announcement and expressed a warning to them to be more vigilant when monitoring the analyst forecasts in the market. We don’t own Collins Foods but have followed it closely for a number of years and it is pretty clear a decent result got a negative share price…
Real Estate Agencies – The Final Frontier
Most industries in Australia have faced some form of disruption with technology being leaned on to increase efficiency, promote competition against dominant incumbents and introduce new concepts. One group has so far managed to fend off attempts to derail its privileged market position – real estate agents. Technology has in fact played a part in preserving the status quo. The…
Is there any value in Blue Sky?
For those of you who didn’t have time to read the Glaucus research report on Blue Sky. We have had a look at it. While I wasn’t swept away with the quality or detail of the research it has had a marked impact on the share price as you can see from the chart below. We never held any shares…
Why I'm bored of bitcoin
One of the great things about the Christmas and new year break is being able to relax away from the market and reflect on the year gone by. Bitcoin was the hot topic for 2017, particularly in the second half. Let me be clear. I'm bored of bitcoin already. I'm bored with the influx of LinkedIn requests I'm getting from…
The Downside of Issued Shares
I recently wrote about thinking like an owner, including the way it makes you look closely at board decisions. Today I wanted to discuss how going into investments as though you are the owner of the business can give you a good indication of the effectiveness of the board as well as the amount and price of capital that is…
Investing in the China Story
Glennon recently attended a two-day China conference where we listened to representatives from Austrade, the Chinese answer to Amazon, Alibaba, and a bunch of local companies who are doing their best to succeed in China. There is no doubt the potential is enormous. If the economy grows at the expected 6% it is like doubling the economies of NSW and…
Thinking Like An Owner
So you have made an investment in a company, you think it’s a good investment and you’re optimistic about having bought a great business at an attractive price. The business is either cheap considering it’s what you currently know about the company, or cheap when you take into account what you think the business could achieve. You’ve ticked all the…