Question 1. What’s your opinion of Bingo Industries (BIN)? I think they have good fundamentals and this share price drop is a bit of an overreaction. What do you think?
Answer: Yes, no doubt an over-reaction. But dead cat bounces are the norm when a sudden downgrading in sentiment occurs. Fundamentals might be OK, however the market has taken a call about the credibility of the management. I am not a buyer.
Question 2. One of the stocks I have liked is Service Stream (SSM). It has plunged over the last few days, as the three top directors, including the CEO, all sold half their holdings. I am wondering if I too should get out, as I can’t think of any reason why they would all mass exit after it mysteriously jumped, other than if they believe that it’s not going any higher. This strikes me as another example of directors behaving badly.
Answer: In fairness to the Directors, there are only very tight windows when they can sell shares. However, these sales are substantive, and come after quite a run-up in the share price. Sounds like you know what you want to do.
Question 3. I am sitting on quite a substantial loss in Clydesdale Bank (CYB). Should I hang on, or take the pain?
Answer: I think you are going to have to be very patient. It is so cheap, yet dogged by an uncertain outlook – NIM pressures, Brexit, PPI claims and integration challenges with Virgin Money. The three local brokers who cover it like it. Macquarie has an outperform and a target price of $5, Citi is neutral (no target) and Morgans has an add, with a target of $4.39. I don’t feel it is going to re-rate in the short term (certainly before any Brexit outcome is clear), so it’s likely to under-perform. The other question you should ask is why do you want to own a second or third tier UK regional bank? (Its listing on the ASX is a function of history). I own a handful (from the NAB demerger) and am holding mine. But it is not on my shopping list to buy any more. If I had a substantive holding, unless I felt that I could ride this stock out for the long term, I’d be looking at exit paths and other opportunities.
Question 4:Â Are there any tech companies on the ASX worth considering if one wanted to have an interest in possible tech developments, such as disrupters, A.I. etc?
Answer: I am sure that there probably are, however none (in the disrupter/AI field) readily come to mind. Perhaps I can ask our readers for some ideas? (Please send in any ideas!)
If you are looking specifically at AI, ETF Securities has an ASX-listed ETF that invests in robotics/automation/AI. They use an expert panel to pick the stocks. It trades under the stock code ROBO – more info at https://www.etfsecurities.com.au/product/robo
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 regard to your circumstances.
