Good afternoon,
Market is pretty flat today so I'm going to bang this note out at about 1pm and enjoy the good weather coming this weekend. ASX 200 trading at 5884, flat on yesterday's close, and up fractionally on this time last week (+0.44%).
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Resources outperformed pretty strongly this week, though as you'll see later, it was the gold stocks that caught a bid. Gold price pretty steady in AUD terms.
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Luke on TV
I forgot to put this in last weeks note, but last Tuesday (I think) I went on Ausbiz TV for a few minutes to talk about Vulcan (VUL) and De.Mem (DEM). I think I'm on every 2 weeks now so once I get the confirmed timeslot, I'll let you all know so you can watch live if your interested.
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Speaking of Vulcan Energy Resources (VUL)... pretty happy with the 40c placement we cornerstoned back in June (sophisticated investors only) with the stock currently trading over $1 last week for the first time (currently 91c). Seneca owns the stock as a house and for clients, and readers of this note would've already seen the interview I did with the CEO Francis a few months back.
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I saw a couple of blokes on ausbiz trying to give Vulcy a few pot shots - too many buzzwords they reckon - If you want to watch them fumble around in the dark here's the link (you might need to login to view it.)
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(gotta be one of my favourite GIF's of all time)
If that's who's on the otherside of my buy orders, I'm a very happy man.
Anyway, I'm back on the telly this coming week (every 2 weeks), 1.30pm on Tuesday 22 September if you want to watch me be nervous and try and sound confident at the same time.
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SMA Model Update
Still holding it's own after 3 months, despite the market pull back and since inception (17 June) has achieved 3.31% return (3.68% including franking) vs the ASX200 Accumulation Index of 0.07%.. that's an annualised return of 13.2% (remembering, past performance is no guarantee of future performance!)
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Recent additions to the portfolio have included Whitehaven Coal (WHC) and New Hope Coal (NHC), as well as Boral (BLD), Reliance (RWC), Perenti (PRN), NRW Holdings (NWH) and Silver Lake (SLR). We've also taken profits quite a few names, but things like A2 Milk (A2M), Nearmap (NEA), Northern Star (NST), Appen (APX) and JB HiFi (JBH) stand out.
Portfolio continues to be focused on generating a total shareholder return in excess of the ASX 200 Accumulation Index by investing in a diversified portfolio of 20-40 companies. We have a natural bias to quality industrials supported by structural growth tailwinds that we can acquire at a reasonable price, though there are certainly some more value-orientated stocks in the portfolio at the moment.
If you're looking for our best ideas, inside the ASX 200, this is it. Minimum investment is $25,000 and available exclusively on Praemium.
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MyDeal IPO
I've been following this company for a number of years, led by another good Mauritian gentleman and have produced what can only be described as exceptional results over the past 3 years.
For those who don't know mydeal.com.au is one of the leading marketplaces for household goods in Australia. They offer merchants the opportunity to sell their wares, and recently started offering their own private label products.
They run a super-capital light model, not much inventory and cash up front. Customers and merchants love the site, with repeat customers accounting for 40% of sales in Q4 and those repeat customers purchase 3.3x as much stuff as a new customer. What you really are buying with this business is their ability to acquire customers cheaper than anyone else, at under $15 each while averaging a gross profit of $31.40 per customer. All while charging their merchants increasing % of their sales (now 16%, up from 11% in 2017).
The company is doing $103m in gross sales, $15.8m in revenue, has 18m unique visitors per annum and converts over 4% of them. They own and have developed all their own technology in house, founder owns a bit under half the business still and their nearest compco is Temple & Webster (TPW) which trades on 7x EV to Sales or Kogan (KGN) on 5x. MyDeal should breakeven ($37k profit) as at FY20 close (pro-forma).
I still think they've got plenty of growth ahead of them, with a mobile app, increasing levels of personalisation and a loyalty program all low hanging fruit once they've got some capital to play with. MyDeal is raising $40m, incl a $5m management sell down with a post money market cap of $260m (EV $221m). You are buying operating leverage here people.
Book opens (and closes probably) Monday. Due to likely demand and scaleback, I'll take bids over $50,000 only via email.
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Movers & Shakers
Like I said, gold stocks dominated the big oositive moves this week (PRU, NST, EVN, SLR, GOR, SAR, RRL) while stocks like Perenti (PRN) are direct beneficiaries of higher gold prices.
A bit of the "restart" trade also evident - CTD, APE, SCG, CLW, SGR. Apprently Sydney is starting to buzz again from what I'm hearing. I hope Melbourne isn't far behind.
Otherwise a bit of biotech (AVH, MSB, CUV), building materials (CSR, FBU, BLD, BKW) and energy (BPT, NHC, VEA).
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Cleanaway Waste (CWY) in the news for all the wrong reasons, which is not what you want when you're trying to bid from work from the government. I know it's a bit of a Gen-Y/Millenial thing but organisational culture is so important, its something JB and I have focused on from day dot at Seneca.
Elsewhere, a bit of profit taking by the looks of things in MIN and FMG, BRG, WTC, VOC and CGC. Meanwhile dogs like IFL, QBE and AMP continue to get beat up.
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Still plenty of stocks going ex-div, coupled with index rebalance probably weighing on the market a bit.
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I loved watching game 1 of the NBA eastern conference playoff's and game 7 of the west series between Denver & LA Clippers. I'm a big fan of Jamal Murray and even though he was a disaster for my Minnesota Timberwolves, I love watching Jimmy Butler play as well. Can't see anyone left getting past Lebron, AD and the Lakers though.
As for the winged West Coast Eagles, they are unconvincing in the dewy Qld weather and I'm just glad they won last night against the Kangas.
On a side note, which moron at AFL House decided having a night GF in Qld would be a good idea? They change the rules every week to get the game more "free flowing" and then proceed to play the most important games of the year, at night, in a state where its pretty much wet weather footy after 5pm. Could've played in WA at the best stadium in the country, in front of 60,000 in the perfect, dry, clear Perth spring weather...
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Luke Laretive
CEO & Investment Adviser
T +61 3 8639 1601 | M 0451 122 656 | lukel@senecafs.com.au
Level 2 Professional Chambers
120 Collins Street Melbourne VIC 3000
AFSL No. 492686 |
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