Question 1: Westpac is paying their next dividend before July 1 so we can receive the franking credits this tax year. Is it likely that NAB and ANZ will do the same? I’ve written to them and not received a reply.
Answer: I think it’s likely but I suspect we won’t find out until they report their results.
ANZ is due to report on 1 May, NAB on 2 May.
Question 2: In your article headed ‘What’s the best managed investment?’, you noted that Milton Corporation (MLT) was trading a bigger discount to net tangible assets (NTA) than Argo (ARG). I see that Milton has 26.5% of their investment in banks, first and second tier excluding Macquarie and Suncorp, while Argo only has 16.6%. Does this explain the discounts to NTA due to the risk/investment appetite for the banks (especially second tier) and why Milton has a bigger discounted share price to NTA?
Answer: There is certainly a difference in bank holdings (although with Argo, I can only see their top 20 holdings and there is some indirect investment through holdings like Australian United). That all said, I am not sure that this factor accounts for the difference in NTA.
Question 3: Is it time to take profit on the big miners such as Rio and BHP?
Answer: The resource majors (BHP, RIO and Fortescue) are sky high today because of the tragic accident in Brazil and the disruption to the iron ore supply. How long does this continue and how severe will it be? It’s a bit like answering “how long is a piece of string?”. While there is a famous and usually very reliable investment adage that says “let your profits run”, I think a bit of profit taking is in order. However, if the iron ore price keeps rising, BHP, RIO and Fortescue share prices will go higher. Unfortunately, I don’t know of anyone who has a great record in predicting commodity prices, particularly iron ore.
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