Q: As a long-term holder of each of the big four banks, I am wondering whether I should reduce (or possibly exit) ANZ?
This is mainly because of press reports of the alleged difficulty in realising on the capital invested in its various Asian assets (if that becomes necessary in addition to its announced capital raising).
Are these assets trading profitably anyway?
A (By Paul Rickard): ANZ remains my least-preferred major bank.
My rating is:
- NAB
- CBA
- Westpac
- ANZ
The CEO will definitely go soon (and the chairman should probably follow suit as well). And in my mind, the strategy around Asia remains confused.
That said, they are now the cheapest – on FY 15 multiples, PE of 11.3, dividend yield 6.2% compared with NAB at 12.8 and 6.1% and WBC at 13.2 and 5.8%.
At these levels, I wouldn’t be selling – banks are now attractively priced and despite not being keen on the ANZ, there is probably some value to be found here.
Q2: I currently hold 20,000 shares in FlexiGroup and recently purchased 4,000 – have I made an error?
I believe the stock was oversold on fear and innuendo resulting from departing senior executives.
A2 (By Paul Rickard): FlexiGroup (FXL) fell approximately 16% following the shock departure of its CEO. It has rallied back a little following the release of its second half report.
Two brokers have also upgraded their ratings – Citi to Buy from Neutral, and UBS to Neutral from Sell.
According to FN Arena, the consensus target price is now $3.03 and sentiment is fairly positive at +0.5 (scale -1.0 is most negative to +1.0 most positive).
It is a high yielder, guidance for FY 16 is tight, and barring any blow out in bad debts – looks reasonably priced. This being the case, a rally back to $3.00 is not out of the question.
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