One thing you can be sure of in a buoyant market, even with volatility we’ve been having, is an uptick in IPO activity.
Switzer Super Report expert, Charlie Aitken, says that access to deal flow and supporting deal flow have been genuine alpha generators in 2014.
“I have tried to encourage all investors to consider all new deal flow,” he says.
“My view was, and remains, that private equity could no longer use the equity market as their ‘toilet’. Deals would have to be priced at discounts to listed peers and forward earnings forecasts would have to be conservative.”
“Similarly, balance sheets would have to be conservative.”
Turns out he was right. The table below shows year-to-date performance from 2014 IPOS.
10 Largest IPO’s: 2014 YTD performance…median return +22%
Source: Bell Potter, 2014
Property proof
Just over 18 months ago, the Switzer Super Report started watching the residential property market – starting with the auction clearance data – like a hawk. And what we saw was very interesting. Weekend clearance rates, which had been stuck around the 60% mark for ages, were gradually starting to head up. Real estate investors, and even some first homebuyers, were being lured back into the market by the much lower rates.
Anecdotal evidence we were hearing at the time – of friends and family attending auctions and property viewings in Sydney and Melbourne – also showed that there seemed to be some very strong themes underlying the market.
Of course we weren’t the first, but we were one of the first to see the heat. Fast-forward to today and the national clearance rate has been sitting above 70 to 75% for weeks. Of course, there have been the inevitable naysayers that come along with every bull market, even as early as September last year.
That’s not to say there aren’t some concerns. On our sister website Switzer Home Loans, this week, Tim Lawless of property research company RP Data warns that the inflow of investors into the market has made assets expensive, as the same time as rental yields are coming down.
That means investors have to get savvy and look outside the square, i.e. outside the big city centres. And in our property report on Monday we pointed to some property guru John McGraths top regional pics – Moss Vale in the Southern Highlands, Mount Ousley/Balgownie in Illawarra, Blackheath in the Blue Mountains and Kincumber in the Central Coast.
Just as with all asset classes, there is still money to be made in property if you’re prepared to do you homework and plenty of research.
Important: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. Consider the appropriateness of the information in regards to your circumstances.
