Can I participate in the Liontown capital raising? How can an investor get exposure to the cybersecurity thematic? Do the brokers see further upside for CAR Group? When will CBA pay their final dividend and can I elect to take shares rather than cash?
Question 1: Lithium prices have surged in recent days on the back of the Chinese Government closing some mines and short covering. Liontown (LTR) has announced a capital raising. Can retail shareholders participate, and on what terms?
Answer: Liontown (LTR) has raised a total of $316m in a two tranche placement. $266m to institutional investors, and a further $50m to Canmax, a large Chines industrial conglomerate that produces lithium chemicals and consumes lithium raw materials. The placement price was $0.73 per share.
Retail shareholders are only being offered $20m (although this could be increased), via a share purchase plan at the same price of $0.73 per share. The maximum subscription is $30,000. The share purchase plan closes on Tuesday 2 September.
Question 2: Every company seems to be investing in cyber security to protect their systems and data. I don’t know much about Australian cyber companies, but is there an ETF that tracks this area a little more broadly? I want to get exposure to the cyber thematic.
Answer: Betashares has HACK, the Betashares Global Cybersecurity ETF. HACK tracks an index from NASDAQ, the Nasdaq Consumer Technology Association Cybersecurity index. Currently, there are about 32 companies represented, the largest being Broadcom, Cisco, Crowdstrike, Palo Alto Networks and Infosys. Country representation is 81% USA, 7% India, then 4% France. By sector, 45% from Systems Software, 13% Communication Equipment, 11% Internet and 10% Semiconductors. The companies must have a market cap of at least US$500m.
HACK has a management fee of 0.67% pa. It is pretty liquid, with net assets of roughly $1.3bn
Performance has been strong. Up 8.6% over the last 3 months to July, and 32.1% over the last 12 months. The 3 year return is 23.3% pa, 18.0% pa, for 5 years and 18.6% pa since inception in August 2016.
Global X has a much smaller Cybersecurity ETF, BUGG. It has only been going since Sept 23 and is around $14m. It tracks the Indxx Cybersecurity Index that picks up companies that earn at least 50% of their revenues from cybersecurity, minimum market capitalisation of US$200m. Top holdings are Zscaler, Crowdsrtike, Palo Alto Networks and Check Point Software. The management fee is 0.47% pa.
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Question 3: I see that one of your favourite stocks, CAR Group (CAR), reported well on Monday and has rallied in price. Do the major brokers think there is upside?
Answer: The major brokers like the stock but see limited price upside. Because Monday’s result had been “pre-released”, there were only minor changes to target prices. According to FN Arena, the current consensus target price is $41.81, about 7.0% higher than the last ASX price of $39.07. The range of targets is a low of $39.00 from Macquarie through to a high of $46.50 from UBS.
Question 4: I own shares in Commonwealth Bank (CBA). When will I get the dividend payment of $2.60? Is it too late to takes shares rather than cash via the DRP?
Answer: CBA’s final dividend of $2.60 per share will be paid on 29 September. If you want to participate in the dividend re-investment plan (DRP) and take new CBA shares rather than cash, you must make an election to do so by COB on Friday 22 August. You can do this online. There is no discount.
CBA shares will trade ex the $2.60 dividend on 20 August.
