Wednesday, August 28, 2013
Battle of the ISP's - M2 leading the way, TPG and Telstra underperforming
Been looking at the Australian Internet stocks and their comparative performance over the last three years. Everyone always talks about Telstra and TPG being market darlings, but really it is M2 Communications and iinet that are outperforming, at over 3 times the gains of the ASX200. You would have done well investing in those stocks from 2010!
Tuesday, August 27, 2013
AustBrokers still going strong - New Price Target of $11.80
Still can't believe why Austbrokers (AUB.AX) is neglected by investors. Great final year results (increases in dividends, revenues and profits) and the initial response on the shareprice is to sell???
Sanity prevailed at the end of the session though, when the shareprice went back up to $11.05 (around a 0.35% gain for the day) I still think the price is under what it should be however. According to the offered growth predictions of between 5-10%, I think the price should be around $11.80 (so I think it is trading at a 6% discount or so at the moment). Maybe it is the miniscule dividend yield of 3.2% that is scaring people away. But always remember that a dollar of dividend is exactly the same as a dollar of capital gain.
Anyway, the usual disclaimer applies (Not a recommendation to invest/not invest in Austbrokers. Please talk to your financial advisors etc)
Sanity prevailed at the end of the session though, when the shareprice went back up to $11.05 (around a 0.35% gain for the day) I still think the price is under what it should be however. According to the offered growth predictions of between 5-10%, I think the price should be around $11.80 (so I think it is trading at a 6% discount or so at the moment). Maybe it is the miniscule dividend yield of 3.2% that is scaring people away. But always remember that a dollar of dividend is exactly the same as a dollar of capital gain.
Anyway, the usual disclaimer applies (Not a recommendation to invest/not invest in Austbrokers. Please talk to your financial advisors etc)
Friday, August 23, 2013
FairFax Media Results : Still a dog, but getting better
Been running the ruler over the FairFax Media results which were released yesterday...still not great.
Big problems regarding the revenue at the moment, so much so that I think there is some earnings management going on.
Firstly, the 2012 revenues were restated 4% lower (from the original 2.3 billion to 2.1 billion). Secondly, they decided to change the circulation revenue reporting from net (with distribution costs included) to gross, with distribution costs in the Expenses. Not a good look. I think there is a fair bit of pressure for the company to meet their revenue targets.
I wonder why companies do this sort of earnings management, as it all is revealed in the cash flow anyway. Cash flow from operations dropped 30% over the year.
No joy in regards to making it's cost of capital. I calculated the cost of capital of Fairfax to be around 9% and that is not being hit at the moment. But most of this is already piced in.
Currently, I have a pice target of 63 cents a share, which is an improvement of the current 58 cents a share, by around 10%. Might be worth a buy and hold until it hits that price, but I don't see a major upside to this investment until revenue starts to improve.
Big problems regarding the revenue at the moment, so much so that I think there is some earnings management going on.
Firstly, the 2012 revenues were restated 4% lower (from the original 2.3 billion to 2.1 billion). Secondly, they decided to change the circulation revenue reporting from net (with distribution costs included) to gross, with distribution costs in the Expenses. Not a good look. I think there is a fair bit of pressure for the company to meet their revenue targets.
I wonder why companies do this sort of earnings management, as it all is revealed in the cash flow anyway. Cash flow from operations dropped 30% over the year.
No joy in regards to making it's cost of capital. I calculated the cost of capital of Fairfax to be around 9% and that is not being hit at the moment. But most of this is already piced in.
Currently, I have a pice target of 63 cents a share, which is an improvement of the current 58 cents a share, by around 10%. Might be worth a buy and hold until it hits that price, but I don't see a major upside to this investment until revenue starts to improve.
Thursday, August 22, 2013
Is a correction of the ASX 200 coming...Looks possible
Been looking at the ASX200 index which is currently sitting on 5100 and wondering if it is due for a correction. There does appear to be some indicators that are pointing to a downward movement for the asx200 in the near future
First, my Gordon growth model formula. Using the figures from the 1st of August, and the current RBA growth measure of 2.25%, I have the ASX200 at 4880.
Secondly, the P/E ratio. According to the RBA, this is at 17.2 for July. Based of the 2.5 year historical average of P/E of 15, again it looks over bought.
Lastly, looking at the technical indicators. These aren't two bad, but the price is above the 20 day and 60 day averages, the ROC has just jumped below 100, RSI is heading down, price is at the middle of the bollinger bands and the oscillators are around 50 and heading down.
Wouldn't take much for a movement down in my opinion.
Disclaimer : Not a recommendation, just an observation. In you want to invest, please see a Financial Advisor
First, my Gordon growth model formula. Using the figures from the 1st of August, and the current RBA growth measure of 2.25%, I have the ASX200 at 4880.
Secondly, the P/E ratio. According to the RBA, this is at 17.2 for July. Based of the 2.5 year historical average of P/E of 15, again it looks over bought.
Lastly, looking at the technical indicators. These aren't two bad, but the price is above the 20 day and 60 day averages, the ROC has just jumped below 100, RSI is heading down, price is at the middle of the bollinger bands and the oscillators are around 50 and heading down.
Wouldn't take much for a movement down in my opinion.
Disclaimer : Not a recommendation, just an observation. In you want to invest, please see a Financial Advisor
Friday, August 16, 2013
Monday, August 12, 2013
Looks like 150 hours wasn't enough :-(
No luck on the CFA Level 2 this year. Boo hiss. Failed band 8. A bit disappointing, but just goes to show how tough the exam was (42% pass rate this year).
I did really well in some sections (alternative investments, quantatitive methods to name a couple), but lost out a bit in some of the other sections, including Ethics which surprised me (usually a strength).
Oh well, back to the drawing board. Haven't committed to doing the exam again next year...will wait and see how I am traveling a little closer to the end of this year.
I did really well in some sections (alternative investments, quantatitive methods to name a couple), but lost out a bit in some of the other sections, including Ethics which surprised me (usually a strength).
Oh well, back to the drawing board. Haven't committed to doing the exam again next year...will wait and see how I am traveling a little closer to the end of this year.
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