AFR Coverage

March 31st, 2016

Bad debts spook bank investors by Jonathan Shapiro.

Read more here.

Short Sellers

March 24th, 2016

Eye of newt, and toe of frog, Wool of bat, and tongue of dog, Adder’s fork, and blind-worm’s sting, Lizard’s leg, and owlet’s wing, For a charm of powerful trouble, Like a hell-broth boil and bubble. Double, double toil and trouble; Fire burn, and caldron bubble.  Shakespeare’s Macbeth

The financial press frequently paints the picture of hidden cabals of short sellers conspiring together to drive down a stock, causing unrealised losses to retail investors and pain to executives whose company’s stock have been sold short. Whilst short-sellers are frequently derided as vultures, criminals, pessimists or un-Australian (or un-American), in reality shorting stocks is a hard, stressful and often lonely way to make money in the market. Short selling allows an investor to profit from taking a contrarian view.  In this week’s piece we are going to look at short-selling shares a hot topic given the offshore shorting in February of the Australian banks.

Read more here.

Takeovers: What would “The Gambler” do?

March 14th, 2016

Analysing the lyrics to country music songs can strangely provide insight into managing money and in particular in dealing with the game theory that investors must analyse when faced with a takeover offer. Recently we have been receiving quite a few requests from clients about the takeovers of Asciano and Investa Office Trust asking about what to do in various takeover situations.  In this Kenny Rogers themed piece we are going to look at the different kinds of takeovers and the strategies investors should employ when a stock they own receives a takeover bid; namely “hold ‘em”, “fold ‘em” and know when to walk away and know when to run”.

Read more here.

Idiot Proof Companies?

March 7th, 2016

I try to buy stock in businesses that are so wonderful that an idiot can run them because sooner or later, one will.” W. Buffett

Investors are constantly forced to assess the sustainability of company business models when looking at adding new stocks to their portfolios or critically evaluating the companies that they currently own. Indeed an institutional investor may be exposed to the management teams from several hundred companies in any given year. Amongst those companies they will find large variations in both management and business model quality. During bull markets with supportive business conditions it can be quite difficult to separate management quality from the positive tailwinds the business is currently enjoying.

In this week’s piece we are going to look at the characteristics of ‘idiot proof’ companies and the reciprocal which are companies that typically need both supportive market conditions and a strong management team to prosper.  Obviously the conditions of strong management teams and a sympathetic business environment are rarely permanent.

Read more here.

AFARF – Letter to Unit Holders

February 29th, 2016

Suspension of applications and redemptions

From 25th February 2016, applications, redemptions and dividend reinvestments for the Aurora Fortitude Absolute Return Fund (Fund) are temporarily suspended. This means you will not be able to apply for or redeem your units in the Fund until further notice.

Background

The Aurora Fortitude Absolute Return Fund holds Antares Energy Limited Convertible Notes (ASX Code: AZZG) (Antares Notes), which have been suspended from trading and are, consequently, currently illiquid. The note is due to be repaid on 31st March 2016, but information has become available to us which leads us to believe there is a possibility that repayment will not occur on this date, and therefore we are unable to accurately determine a value for the Antares Notes. This uncertainty means we do not believe it is the best interest of unit holders to continue to accept applications and redemptions. The Antares Notes currently comprise 8.03% of the net asset value of the Fund, but this percentage may change as the value of the Antares Notes, and the value of the Fund’s other assets change.

Acting in the best interests of Investors

Aurora has determined that, in these circumstances, it is in the best interest of investors in the Fund as a whole to temporarily suspend applications and redemptions to ensure all investors are treated equally so there is fair treatment between investors who choose to remain invested in the Fund and investors who choose to exit the Fund in the short to medium term.

What this means for you

The Fund has ceased accepting any applications for units or processing redemption requests effective from 25th February 2016. Any application funds received will be returned to you. The temporary suspension does not affect the distributions paid by the Fund. As more information becomes available to us, we will be in better to position to advise when liquidity is likely to be restored.

If you currently have a Distribution Reinvestment Plan in place, your future distributions will only be paid via direct credit into your nominated account and cannot be reinvested in the Fund until further notice. You will need to provide your bank account details by contacting our security registrar, One Registry Services on +61 2 8188 1510.

Further information

If you have any queries or concerns, please contact us.

Telephone: 02 9080 2377 or 1300 553 431 (within Australia) or 0800 447 637 (within New Zealand)
Email: enquiries@aurorafunds.com.au
Post: PO Box R1695, Royal Exchange NSW 1225

Aurora Funds Management Limited | ABN 69 092 626 885 | AFSL No. 222110
29 February 2016

AIB – Letter to Unit Holders

February 29th, 2016

Suspension of applications and redemptions and suspension from trading on ASX From 25th February 2016, applications, redemptions and dividend reinvestments for the Aurora Global Income Trust
(Fund) are temporarily suspended. This means you will not be able to apply for or redeem your units in the Fund until further notice.

The Fund is also suspended from trading on the ASX.

Background

The Aurora Global Income Trust Fund holds Antares Energy Limited Convertible Notes (ASX Code: AZZG) (Antares Notes) which have been suspended from trading and are, consequently, currently illiquid. The note is due to be repaid on 31st March 2016, but information has become available to us which leads us to believe there is a possibility that repayment will not occur on this date, and therefore we are unable to accurately determine a value for the Antares Notes. This uncertainty means we do not believe it is the best interest of unit holders to continue to accept applications and
redemptions, and to allow on market trades whilst there is doubt about the liquidity of a position within the Fund’s portfolio. The Antares Notes currently comprise 9.58% of the net asset value of the Fund, but this percentage may change as the value of the Antares Notes, and the value of the Fund’s other assets change.

Acting in the best interests of Investors

Aurora has determined that, in these circumstances, it is in the best interest of investors in AIB, as a whole to temporarily suspend applications and redemptions and halt market trading to ensure all investors are treated equally so there is fair treatment between investors who choose to remain invested in the Fund and investors who choose to exit the Fund in the short to medium term.

What this means for you

The Fund has ceased accepting any off market applications for units or processing off market redemption requests effective from 25th February 2016. Any application funds received will be returned to you. A request for voluntary suspension to suspend ASX trading has also been lodged with the ASX. The temporary suspension does not affect the distributions paid by the Fund or the investment strategy of the Fund. As more information becomes available to us, we will be in better to position to advise when liquidity is likely to be restored.

If you currently have a Distribution Reinvestment Plan in place, your future distributions will only be paid via direct credit into your nominated account and cannot be reinvested in the Fund until further notice. You will need to provide your bank account details by contacting our security registrar, Registry Direct on 1300 55 6635. Alternatively, you can provide your banking details online at www.registrydirect.com.au/investor.

Further information

If you have any queries or concerns, please contact us.

Telephone: 02 9080 2377 or 1300 553 431 (within Australia) or 0800 447 637 (within New Zealand)

Email: enquiries@aurorafunds.com.au

Post: PO Box R1695, Royal Exchange NSW 1225

Aurora Funds Management Limited | ABN 69 092 626 885 | AFSL No. 222110
29 February 2016

ABW – Letter to Unit Holders

February 29th, 2016

Suspension of applications and redemptions and suspension from trading on ASX From 25th February 2016, applications, redemptions and dividend reinvestments for the Aurora Absolute Return Fund
(Fund) are temporarily suspended. This means you will not be able to apply for or redeem your units in the Fund until further notice.

The Fund is also suspended from trading on the ASX.

Background

The Aurora Absolute Return Fund wholly invests in the Aurora Fortitude Absolute Return Fund (Master Fund). The Master Fund holds Antares Energy Limited Convertible Notes (ASX Code: AZZG) (Antares Notes) which have been suspended from trading and are, consequently, currently illiquid. The note is due to be repaid on 31st March 2016, but information has become available to us which leads us to believe there is a possibility that repayment will not occur on this date, and therefore we are unable to accurately determine a value for the Antares Notes. This uncertainty means we do not believe it is the best interest of unit holders to continue to accept applications and redemptions, and to allow on market trades whilst there is doubt about the liquidity of a position within the Master Fund’s portfolio. The Antares Notes currently comprise 8.03% of the net asset value of the Master Fund, but this percentage may change as the value of the Antares Notes, and the value of the Master Fund’s other assets change.

Acting in the best interests of Investors

Aurora has determined that, in these circumstances, it is in the best interest of investors in the Master Fund and subsequently ABW, as a whole to temporarily suspend applications and redemptions and halt market trading to ensure all investors are treated equally so there is fair treatment between investors who choose to remain invested in the Fund and investors who choose to exit the Fund in the short to medium term.

What this means for you

The Fund has ceased accepting any off market applications for units or processing off market redemption requests effective from 25th February 2016. Any application funds received will be returned to you. A request for voluntary suspension to suspend ASX trading has also been lodged with the ASX.

The temporary suspension does not affect the distributions paid by the Fund or the way the investment strategy of the Master Fund is made.

As more information becomes available to us, we will be in better to position to advise when liquidity is likely to be restored.

If you currently have a Distribution Reinvestment Plan in place, your future distributions will only be paid via direct credit into your nominated account and cannot be reinvested in the Fund until further notice. You will need to provide your bank account details by contacting our security registrar, Registry Direct on 1300 55 6635. Alternatively, you can provide your banking details online at www.registrydirect.com.au/investor.

Further information

If you have any queries or concerns, please contact us.

Telephone: 02 9080 2377 or 1300 553 431 (within Australia) or 0800 447 637 (within New Zealand)
Email: enquiries@aurorafunds.com.au
Post: PO Box R1695, Royal Exchange NSW 1225

Aurora Funds Management Limited | ABN 69 092 626 885 | AFSL No. 222110
29 February 2016

 

 

Ignore the hedge funds, banks are still a buy, Aurora says

February 23rd, 2016

Foreign hedge funds are talking up a collapse in the local housing market and taking short positions in the big four banks, but their enthusiasm is misplaced, Aurora Funds Management says.

Hedge funds have stepped up their positions in the “widow-maker” trade of short-selling Australia’s banks, anticipating falls on the back of what they see is a housing bubble due to burst.

Short-sellers have enjoyed some success. Share prices in the big four had fallen between 20 per cent and 30 per cent since capital requirements sent them tumbling from, or near, record highs last April.

Yet, the housing market wasn’t in crisis, despite the hedge fund doomsaying, Aurora senior portfolio manager Hugh Dive said.

Foreign investors apply the same metrics that have seen the Irish, Spanish and US housing market decline in the past decade.

“Whilst Australian housing can be viewed as expensive globally, we see a range of factors that strongly encourage Australian households to maintain mortgage payments,” he said.

“These include recourse lending, homes are exempt from capital gains tax and strong cultural desire to own one’s own home.”

Foreign investors are also sceptical of the scale of Australian banks. All four sit in the top 15 globally by market capitalisation, beefed up by record-banking profits, their attractive yields, and higher interest rates relative to Europe, Japan and the US.

“The basis of their thesis is that four banks from a small backwater in the financial world have little business being among the largest in the world,” Mr Dive said.

Of the top 10 banks by market capitalisation, four are from Australia and Canada, despite the more than 20 per cent falls in their respective currencies in the past two years.

Mr Dive said, historically, owning the world’s biggest (and most loved) banks in 1985, 1995 and 2005 proved to be a poor investment over the following decade.

Yet, the position of local banks in the global landscape had more to do with the losses and fines incurred in Europe and the US during the global financial crisis relative to Australian banks rather than any “world-conquering strategy”, Mr Dive said.

The banks’ record profits and healthy interim profits and updates posted this reporting season and bad debts at historically low levels meant the banks still had a place in local investors’ portfolios, he said.

“There is a little too much pessimism towards Australian banks,” he said.

“The underlying fundamentals are still very strong. The likes of Deutsche Bank and Credit Suisse would be delighted to be reporting profits that CBA are reporting.”

Reporter: Vanessa Desloires. Read more here.

Australian Banks and the Widow-Maker Trade?

February 21st, 2016

On Monday a Swiss friend was bemoaning the dramatic fall in the share prices of Credit Suisse and UBS. Indeed in terms of market cap UBS, CS and Deutsche Bank combined were worth slightly more than Commonwealth Bank. Despite working in finance, the Swiss friend has not heard of this Australian bank.

Probably the biggest question that any Australian equity fund manager faces is what weight in a portfolio to allocate to the banks. Over the past few years, the Australian banking sector has grown to represent 31% of the ASX100 on the back of record bank profits, weakness in other sectors and a chase for yield by investors globally as monetary policy settings across Europe, Japan and the US have pushed interest rates to multi-century lows. All of this has contributed to all 4 of the Australian banks now being in the top 15 banks globally by market capitalisation, despite their relative lack of importance in the global financial system. In this week’s piece we are going to look at the change in banks over time.

Click here to read.

Going Private

February 12th, 2016

Two weeks ago Australia’s largest private health insurer Medibank Private (MPL) provided a surprise upgrade, boosting its operating profit guidance for the 2016 financial year from “above $370 million” to “Operating profit of above $470 million”. This caused a spike in MPL’s share price, making it one of the top performing stocks in the miserable equity markets of 2016, returning +13% vs. the ASX200 fall of -9.3%. This upgrade on the back of improved margins was treated as a shock by some well-respected sell side analysts who then scrambled to upgrade their financial models of the company.

In this week’s piece we are going to look at privatisations and the reasons why they tend to perform better under private ownership than in government hands.

Read more here.

 

Page 10 of 18« First...89101112...Last »

Join Our Mailing List

Receive the latest investment funds news from Aurora delivered right to your inbox

SIGN UP HERE