Question 1: I’m an ANZ Shareholder and keen to take up the rights re the Suncorp buyout. How do I go about buying the new shares and what price will I pay?
Answer: The new shares will be issued at a price of $18.90. You will get an entitlement to buy 1 share for every 15 you already own. The offer opens next Tuesday (26 July).
You will be sent in the mail, or by email, a letter from ANZ which details your entitlement, plus instructions on how to take them up. You have until Monday 15 August to act.
Here is a link to my story on the offer: https://switzerreport.com.au/anz-to-raise-3-5bn-for-suncorp-acquisition-should-you-take-up-your-rights/
Question 2: My wife is 54 and I’m 57. We have recently sold a property in our SMSF. On settlement we’ll have approximately $1 million in our super. As we approach retirement, I’m concerned that when it’s time to ‘clock off’ or wind down, the share market may have other ideas. This year demonstrates extreme volatility as an example. Can you suggest a diversification strategy that lowers the overall SMSF portfolio risk, but without sacrificing too much growth?
Answer: There is no magic panacea to your predicament – if you want growth, you have to take on risk. Diversification is achieved via exposure to multiple assets classes, and then within each asset class and potentially across managers.
Portfolio theory says that when assets are combined in the right combination, you can achieve the optimal level of return given the level of risk you want to take. The theory looks for negatively correlated assets – that is, assets where prices historically move in the opposite direction.
If you want a guide, consider the standard offerings of the major industry super funds. They will have funds described as “conservative”, “moderately balanced”, “balanced”, “growth”, “high growth” etc and a description of their investment objectives. You can use their asset allocation as a guide.
Question 3: I was recently looking at all the top-performing super funds and their top holdings. All of them had CBA in their top 10 holdings (which I have been considering adding to my portfolio). However, when I look at the analysts’ comments and online commentary, it’s hard to see much positivity around the outlook for CBA at the moment. Why do you think there is such a disparity between the superfunds and analysts? Also, do you believe CBA is a buy for the medium to long term?
Answer: The analysts like CBA as a bank – they just think it is super expensive compared to the other major banks in Australia (and competitors offshore).
To be honest, I don’t put a lot of faith into what the banking analysts say. I’m interested in their insights rather than their recommendations. They have been comprehensively wrong (too bearish) about the CBA for the best part of two decades – and comprehensively wrong (too bullish) about the ANZ for the last decade. They are smart people, but they’re not always right – and with the banks, often wrong!.
CBA is in my portfolio. And yes, it is a buy for the long term.
Question 4: Do you think Aeris Resources (AIS) is a good buy?
Answer: I’m always a little wary of companies that do share consolidations (Aeris has just completed a 1 for 4 consolidation – that’s why the price is now over $0.40. Also, I am a little wary of companies with major shareholders, such as Washington H Soul Pattinson, which owns 30%.
That said, Aeris (AIS) is considered to be a promising copper producer/explorer. Only one major broker covers the stock. Here is a precis of their first report (from FN Arena, 15/7/22):
“Given a lack of domestic copper opportunities, Ord Minnett seeks to find smaller copper stocks that can provide asymmetrical return potential. Hence, the broker initiates coverage on Aeris Resources.
The broker sets a $0.75 target price and begins with a Buy rating. The Tritton operation near Cobar in NSW is considered to be undergoing a transformation, as multiple new ore sources are brought online in the next 12 months.
In addition, the analyst points out the Round Oak acquisition will add zinc and copper exposures. While the market felt this acquisition was too expensive, Ord Minnett believes diversity and a transparent mine life significantly derisks the company. Meanwhile, Jaguar adds free cash flow and exploration appeal while Stockman offers a free option should the project go ahead, suggests the broker.
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.
