Nick Dignam from Fortitude Investment Partners shares insights with Lachlan Maddock from Fortitude Investment Partners on how a diversified portfolio in mid-market private equity is structured. The Inside Adviser
The world of alternative investments is at a crossroads. As markets defy expectations and liquidity concerns take centre stage, investors find themselves forced to rethink how they deploy capital in an increasingly complex environment.
An election win for investors, Nasdaq, S&P 500, and ASX 200 finish higher
Markets to open higher, ASX up 1.3% on the back of CSL (ASX: CSL), National Australia Bank (ASX: NAB) profit crushed, ‘Nirvana’ for sharemarkets.
The ASX 200 (ASX: XJO) delivered another strong day as it became more clear that Joe Biden would be the next President of the United States. Despite the election still being ‘too close to call’ the Democrats are ahead in most remaining key states (more on this below). Blood plasma and vaccine producer CSL Ltd (ASX: CSL) was the single biggest contributor, increasing 3.4% on the expectation that a Democrat Government would be more supportive to healthcare companies. National Australia Bank (ASX: NAB) announced a 36.6% fall in profit for the 12 months to 30 September in what has been deemed a ‘mixed’ result by experts. Management have continued to highlight the importance of cost-cutting as revenue fell 1.4% in 2019 due to the impact of lower interest rates. Profit was primarily impacted by another $1.03 billion in write-downs however just one third of deferred loans have failed to commence repayments. The dividend was maintained at 30 cents per share, well down from 83 cents in 2019, and now offering a yield of around 4.4%. This result solidifies our preference for NAB, as it remains years ahead on the digitisation and cost cutting program.
Shopping centre owner Scentre Group (ASX:SCG) back on track, Ingham’s (ASX:ING) flags a higher dividend.
Poultry farmer and retailer Ingham’s Group (ASX: ING) lead the market for the day, increasing 16.1% after reporting a 6.2% increase in sales on the back of strong demand from the grocery store chains. Management also increased the dividend payout range from 70-80% of earnings, which bodes well for a higher income in the year ahead.
I’m quite positive about the agricultural and food sector given the potential lifestyle changes post-COVID but tend to prefer direct property plays rather than companies with operating and pricing risk. Scentre Group (ASX: SCG) owner of the Australian Westfield shopping centres reported that every asset was now open and that 92% of stores within those centres were now trading including Victoria. I can attest to that fact after visiting Westfield Doncaster for the first time in 2020 on the weekend. Most importantly, rent collections are now back to 77% of total billed in 2020 with 85% received in the third quarter. The successful lockdown strategy means management has guided towards a reinstatement of dividends early in 2021. Shares finished 2.2% higher.
US election result positive for investors, Nasdaq and S&P 500 both over 2% higher.
Despite protestations from either side, it is increasingly looking like a Biden Presidency with a Republican Senate and Democrat’s running the House of Representatives. What does this mean? According to Magellan CEO Hamish Douglass, it is almost the ‘Nirvana’ for sharemarkets. Basically, it ensures the ‘checks and balances’ are in place, would restrict the new President’s ability to repeal tax cuts, and force a more moderate spending agenda. The clear result has been global stock markets continuing their strong rally, the S&P 500 finishing 2.0% higher, and the Nasdaq 2.6%. The technology sector continues to drive performance, with semi-conductor group Qualcomm (NASDAQ: QCOM) over 12.7% higher after announcing strong growth in their 5G products.
