Question 1: Are Downer EDI (DOW), IAG and Amcor (AMC) long term holds?
Answer: IAG and Amcor are in my income and growth portfolios – so they are long term holds. Amcor is being impacted by a higher Australian dollar. According to the broker analysts, they have target prices of $5.46 for IAG (about 11% upside) and $17.03 for Amcor (about 18.9% upside).
Downer EDI is a restructuring story. I have never been a huge fan of the company, and I am not sure whether I am there yet. According to FN Arena, the consensus target price is $5.41, about 4.3% above the current market price.
Question 2: I see La Trobe Financial offering over 4% for a one year cash investment. I would appreciate your thoughts on this product.
Answer: La Trobe Financial is an established and reputable manager. It operates ones of the largest credit funds in Australia. It is currently offering a rate of 4.3% for a 12 month term account, which is an investment in the La Trobe Australia Credit Fund. This fund invests in loans secured by mortgages over real property – residential, industrial, commercial, rural, construction and development. According to the PDS, it is diversified with about 6028 mortgages supporting the fund.
It is, of course, much higher risk than a term deposit – and that is why you are getting a much higher rate. I think the important thing with higher risk investments is to ensure that you as an investor are diversified, and that you understand what you are investing in. Review the PDS thoroughly and as the old adage goes – don’t invest in something that you don’t understand.
Question 3: Are there any lithium companies that excite you at the moment?
Answer: If I wanted to play lithium, I would look at Galaxy Resources (GXY) or Pilbara Minerals (PLS).
I said a couple of months back, as crazy as it sounded, if I wanted to play the whole EV/lithium/batteries theme, I would probably invest in Tesla. At the time, Tesla was massively overvalued at USS430 – yesterday it was even more overvalued, closing at USS864! Have a look at James Dunn’s article on 3 companies involved with batteries: https://switzersuperreport.com.au/the-electronic-vehicle-revolutions-here-and-theres-3-stocks-im-watching/ [1]
Question 4: What are your thoughts on the Magellan Global Fund Partnership offer? The entitlement is in dollar value instead of unit cost. Why is this so?
Answer: Please see my article in Monday’s report: https://switzersuperreport.com.au/magellans-partnership-offer-should-you-invest/ [2] . The entitlement is on a pro-rata basis of 1 for 4, that is, for every $4 of current open class units held, you are entitled to invest $1 in closed class units. Existing holdings are valued at the NAV (net asset value).
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