Roy Keenan from Yarra Capital Management shares insights with James Dunn from The Inside Network on the role of active management. The Inside Adviser
After the Hayne Royal Commission many advisers decided to steer away from large dealer groups in favour of becoming self-licensed. In the last six months, however, that trend has taken an abrupt turn.
SQM dives into equities ratings game with new five star model
SQM Research has expanded its managed fund and property research offering to include an ASX top 200 listed companies ratings service for the Australian financial advice community.
The service, called Shares Professional, provides objective ratings based on the quality, value and momentum of individual stocks at the top and middle sections of the ASX.
“The ratings have been compiled using a rigorous quantitative research process which is
qualitatively peer reviewed,” SQM stated upon the service’s release. “The ratings are based on SQM’s industry known five-star ratings model with a view to identifying opportunities over a medium to long term.”
According to SQM, the ratings factors are unique and each have their own distinct meaning. Quality refers to whether the company has a better than average track record of “growing the business, riding out the tough times and adding value”. Valuation, as expected, questions whether the current price offers relatively good value, while Momentum discerns whether the market is showing the stock “increasingly favourable sentiment”.
“Each key factor has its own distinct methodology employed using industry recognised ratios.
For example, under the valuation factor discounted cashflows, discounted dividends, price
to earnings, price to NTA, NAV are all used,” SQM stated. “Valuations also takes into account consensus
price targets and forward earnings. Such ratios are also weighted depending upon the
nuances of the sector concerned.”
Keeping it clean
Moreso known for its expertise in managed funds and property research, SQM’s managing director of research, Louis Christopher says the new service completes the providers suite of offerings.
“As such, SQM Research is a full-service research organisation providing ratings, data and
insights into direct equities, multi-strategy SMA models, single strategy funds on all asset
classes; and of course, real estate.”
In what is becoming a crowded finance research sector, with established players such as Zenith and Lonsec joined by a host of smaller teams, Christopher is acutely aware that advisers are looking for analysis that is as objective as possible.
“We provide these services while keeping our conflicts to a bare minimum,” Christopher stated. “We will never run a funds management business. We will never be a broker, nor a real estate agent. We will always put investors first and support the financial planning profession in that mandate.”
Christopher will be aided in overseeing the new rating service by ex-van Eyk Group head of strategic research Otto Rieth, who has a large hand in designing the new research model.
Initial results
In its first listed company release, SQM’s top 5 rated listed companies were headed by Stanmore Resources at number one with an overall rating of 3.75, followed by Wistech Group (3.65), AUB Group (3.61), Perseus Mining (3.59) and Cochlear (3.38).
On the bottom end of the list, shopping centre provider HomeCo fared worst with an overall rating of 0.99, followed by APM Human Services (1.11), Star Entertainment Group (1.26), NexGen Energy (1.30) and BSP Financial Group (1.31).
Shares Professional costs $49.00 for a month-by-month subscription or $550 for a 12-month
service.
