THINKING OUT LOUD

Australian and International Equities Update – December 2017

A newsletter with investment views, observations & ideas

In This Edition:

Summary of our Aussie portfolio stocks

A reminder of some of our philosophy and process

Our best and worst International stock picks

December 7, 2017

by Rob Zdravevski
Australian Equities Update

In my client note, dated June 30, 2017, I wrote about the boredom which the stockmarket at that time was exhibiting and how often this is pre-cursor before the next advance.

Well, over the past 5 months, the ASX 200 Index has had a total return (incl. dividends) of 7.2%.

Our clients have also benefitted.

Specifically, over the past month, where the ASX 200 rose 1.4%, while the performance of the various holdings in our client portfolios have included;

AWE +26.4%
Scottish Pacific (SCO) +12.6%
GDI Proprty (GDI) +7.9%
Ingenia Communities Group (INA) +5.6%
Primary Health Care (PRY) +5.4%
JB Hi-Fi (JBH) +4.4%
APN Outdoor Media (APO) +3.7%
Healthscope (HSO) +3.4%

With laggards in the portfolio being;

Graincorp (GNC) -8.8%
Telstra (TLS) -3.9%
NuFarm (NUF) -1.4%

During the past 6 weeks, we have lightened or sold all of our holdings in Mantra, AWE (both after receiving takeover bids) & Scottish Pacific.

We continue to manage portfolios in a conservative manner where we try to take as little risk as possible for the returns we seek.

Our reminder to our clients is that our default position is cash until we find investment opportunities which meet our criteria. We don’t feel pressured to be invested in “the market” unless there is a basis for each investment.

Finally, when assessing an investment’s potential and performance, we consider its potential for ‘total return’. We have seen many investors who seek ‘income’ and yet lose notable amounts on their capital. Analysis should be, first and foremost, focus on the price that you pay for the asset.
International Equity Report

Similar to our Australian portfolios, November was a month of recovery for the various shares held in our client international equity portfolios.

As we don’t hold or manage client monies in an audited pooled fund type entity, we can’t call ourselves fund managers and thus we are prohibited from discussing aggregated returns or performance BUT we can mention the individual performance of various stocks…so here goes…

Our best performing international stocks in the month of November 2017 were;

Synchrony Financial (SYF) + 9.8%
PBF Energy (PBF) + 9.1%
Tesco (TSCO LN) + 8.7%
Barclays (BCS) + 6.8%
Vivendi (VIVHY) + 5.6%
Paypal (PYPL) + 4.6%
Gazprom (OGZPY) + 4.6%
IHS Market (INFO) + 4.5%

Laggards for the month of November 2017 included;

General Electric (GE) – 8.6%
Carlyle Group (CG) – 6.7%
Lloyds Bank (LLOY LN) – 3.8%
KBR – 3.3%

For the Year to Date (Jan 1, 2017 – December 5, 2017), the best performing stocks in our clients portfolios are;

Paypal + 80.4%
Carlyle Group  + 43.3%
South Korea Index ETF (EWY) + 42.1%
ELIS + 40.9%
Vivendi (VIVHY) +40.0%
Intesa Sanpaolo (ISNPY) + 39.2%
Hispania Activos Inmobiliarios (HIS SM) + 36.9%
Alphabet (GOOGL) + 28.6%
IHS Market + 26.1%
PBF Energy + 23.8

while the worst performers YTD have been;

Nielsen (NLSN) – 6.7%
Barclays – 5.9%
Gazprom – 5.3%
Tesco – 2.3%

Throughout the year we trimmed our holding in Google (Alphabet), were pleased to have accumulated a position in the South Korea equities market as geopolitical tensions rose, remained patient with selected oil stocks and generally allowed our investment thesis’ to develop and mature. In the coming months we will look to accumulate positions in General Electric and also build on portfolio holdings in stocks such as Experian, Zillow and Zayo.

The dominant themes and industry exposure in our global portfolios include data technology, storage & transmission, oil, real estate, out-of-favour banking stories, electronic payments and credit rating/reporting.

Until next time,
Best Wishes, Rob

If you’d like to have a chat to me about some of our best stock ideas for your portfolio, feel free to call me on 0438 921 403.

To read about our thoughts and how we do business, please visit, www.karriasset.com.au where you can also find my blog.

Rob Zdravevski is the proprietor of Karri Asset Advisors, a specialist in the provision of investment advice and equity recommendations for clients’ portfolios.

 

Holders of an Australian Financial Service License, the company is located at Shop 14, 34 Dunn Bay Road, Dunsborough, WA 6281, AUSTRALIA

 

Contact Rob on 0438 921 403 or email rob@karriasset.com.au.

 

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