Question 1: I would like to invest in the latest Capital Notes offered by ANZ and CBA but note that you need to lodge an application through a Syndicate Broker. I do all my investing directly and don’t have a broker, can you suggest how I can invest in these products?
Answer: In an attempt to “protect investors from themselves”, hybrid securities have effectively been deemed too risky/complex by the issuers such that the PDS is only made available to ‘wholesale investors’ or ‘individuals receiving personal advice’.
You have two choices. Contact a syndicate broker, or wait until the security lists on the ASX and then buy it.
If you think about it – you can’t buy in the primary market, but you can buy in the secondary market. Illogical.
Question 2: I was very interested to read your comments about taking profits in Woodside (WPL) and the merger of BHP/Woodside. We have roughly an equal number of shares in both companies. Do you know how many Woodside shares I will receive when the demerger of BHP’s oil assets is completed?
Answer: BHP has yet to confirm the exact number of shares. However, I calculate that you will receive approximately 178 Woodside shares for every 1,000 shares owned in BHP.
This is based on: BHP/Woodside saying that post the transaction, BHP shareholders will own 48% of Woodside; post-unification, BHP has 5.0623bn shares on issue; and a preliminary announcement from Woodside saying that it expects to issue 901.5 million shares as part of the transaction.
Question 3: Betmakers (BET) share price dropped from a high of $1.65 last June to around 62c today. Its recent profit results were encouraging with revenue up 473% and EBITDA positive. It has signed a number of deals in the US including fixed odds betting in New Jersey. Macquarie Group has recently become a substantial shareholder in the company, holding 11.24% of the shares. Is it a good opportunity to follow Macquarie’s bet on Betmakers?
Answer: I can well understand why you want to follow the lead from Macquarie. Their holding is mainly in the Group company, plus a small amount for the funds they manage on behalf of others. My caution is that their timeframe may be very different to yours. Macquarie are very patient investors.
No major brokers cover the stock. It’s a small cap, and because it is in gaming, it is off the radar for many investors. My guess is that you will need to be patient as well.
Question 4: Are Kogan (KGN) and Washington H Soul Pattinson (SOL) a good buy? Both of them have been hit very hard lately.
Answer: I am not a Kogan fan. According to the brokers, it is fairly priced (target price of $5.62 vs last ASX price of $5.81). UBS has a target of $5.70, Credit Suisse of $5.53.
Another company with interesting governance arrangements is Washington Soul Pattinson. It is an investment manager, with strategic holdings in Brickworks, TPG, New Hope Mining, and Tuas Ltd, amongst others. Interestingly, it is now classified in the ‘Energy’ GICS sector.
Many major fund managers won’t touch SOL because of concerns around governance, so there is very limited analyst coverage. Notwithstanding a very solid long term track record of investing, I would only invest in SOL if I liked the underlying assets.
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.
