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We have 30% of our portfolio in ANZ shares earning a 9% div. Should we just stay there forever or sell up at a price when we feel the share price will not go higher or retain say half of them? Any advice would be appreciated.
A: I would always be a little nervous about having 30% of my portfolio in one stock.
At least in the last couple of weeks, you have done pretty well with ANZ. From consistently being the worst performing major bank stock, new CEO Shayne Elliott has junked Mike Smith’s Asian strategy, moved the bank back to being an Australasian retail and commercial bank, cut headcount and cut the dividend. ANZ is no longer the cheapest stock – it is now trading on a multiple of 12.1 times FY16 earnings, compared to 11.3 for the NAB, 13.1 for Westpac and 14.1 for CBA.
While I like what he is up to, I do think ANZ is starting to look fairly fully priced compared to the other major banks. Yes, I would reduce, and if I was to maintain my bank exposure, switch into NAB and probably CBA.
