Question 1: What is your view on ‘materials’ – they have enjoyed a very solid uptick of late. I am particularly interested in BHP. Would you let them run a little further before taking some profits?
Answer: I think being at least index weight, possibly a touch overweight is the right call on ‘materials’. Despite the data suggesting that world economic growth is slowing, looking past this, any recession should be fairly mild. Further, China is coming out of Covid and the US dollar is starting to weaken.
While commodity (metal) prices might not be on a tear, there is a strong case to suggest that they will be reasonably well supported.
Of the major miners, BHP remains my preferred way to play it: a great set of assets, diversified, sensible expansion into “new age” metals of copper and nickel, strong balance sheet. Plus, extraordinary profits and dividends will maintain shareholder interest.
I am not that surprised BHP has started the year so strongly.
Question 2: Should I be concerned if there is a big short position in a stock I own? What is considered to be “big”?
Answer: I don’t think you should be alarmed but it is worth knowing. Certainly, I would consider carefully before I invested in a stock that was heavily short sold.
Short sellers don’t always get it right, but they are professionals, and obviously get it right more often than they get it wrong. They also have deep pockets and can be very patient, sometimes holding their positions for many, many months.
The key number to look at is the percentage of shares that are short sold. If this is more than 5% of a company’s issued capital, then the short position is material. ASIC collates and publishes short position data. We produce a table in the Saturday edition of the Switzer Report that lists the 20 companies with the biggest short positions.
Question 3: I own some ANZ Capital Notes, but I can’t find them on CommSec anymore. Have the stock codes for ANZ changed?
Answer: ANZ completed a corporate restructure at the end of December, and as part of this, new CHESS holding statements were issued and its stock code changed. It has since reverted back to ANZ.
However, the stock codes for the Capital Notes (also called hybrid securities) issued by ANZ changed permanently. ANZPH is now AN3PH, ANZPI is now AN3PI, ANZPJ is now AN3PJ etc.
Question 4: Are the analysts bullish on CSL?
Answer: Yes, all of the major broking houses have a “buy” on CSL. According to FN Arena, the consensus target price is $329.00, about 12.4% higher than the last ASX price of $292.63. The range is a low of $315.00 through to a high of $354.00.
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.
