Question 1: What do you think of the Hearts & Minds Investments (HM1) listed investment company? Is it worth buying?
Answer: I think Hearst & Minds is worth considering, particularly if you like the idea of a ‘high conviction, concentrated’ portfolio. And you want to help medical research at the same time.
Despite the stocks being ‘hand picked’ by some of Australia’s leading fund managers and meant to represent their “best picks”, the investment performance has been pretty ordinary. For the year to 31 July, 8.1% (compared to the world index of 15.8%), and for the 3 years to 31 July, -1.2% pa compared to the world index of 12.2% pa.
Because of the poor performance, it is now trading at a material discount to its NTA (net tangible asset value). As at 4 August, the discount was 20.8%.
While I like the idea of paying 80c for something worth $1.00, the risk is that the discount gets wider (particularly if the investment performance doesn’t improve). So critically, it is important to get comfortable about some of their stock selections.
Question 2: Why did the share price of the Charter Hall Long WALE REIT (CLW) fall after the profit announcement? How do the analysts now view it?
Answer: Although CLW met guidance for FY23, their forecast distribution for FY24 of 26c per unit was 2c lower than the analysts expected. This was largely due to higher interest costs and restructuring the interest rate hedge.
While there is nervousness that they might become forced sellers of assets (to stay within their debt covenant), the analysts seem relatively comfortable. All of the major analysts have a ‘neutral rating’. Consensus target price is now $4.13, about 13% higher than the last ASX price of $3.65. Range is a low of $3.56 (from Macquarie) through to a high of $4.85 from Morgan Stanley.
Question 3: Does the ACCC’s rejection of the purchase of Suncorp Bank by the ANZ make a merger between Bendigo and Adelaide Bank and Suncorp more likely?
Answer: The market seems to think it does and this was one of the scenarios the ACCC cited in rejecting the authorisation. However, I don’t think it is realistically on Bendigo’s radar and wouldn’t be counting on it. It looks like hard work for not much gain.
Also, both ANZ and Suncorp are going to appeal the decision to the Australian Competition Tribunal.
Question 4: What is the last day to buy CBA to get the next dividend payment? Will I still be able to participate in their DRP plan?
Answer: CBA is paying a final fully franked dividend of $2.40 per share. It will trade ‘ex-dividend’ on 16 August, meaning that the last day to buy the shares and receive the dividend is Tuesday 15 August.
If you want to participate in the DRP (dividend re-investment plan), you have until COB on Friday 17 August to make an election. Contact the share registry (Link Market Services).
