Answers by Paul Rickard & Peter Switzer

Question 1: I hold Adbri (ABC) and the price is in positive territory to give me a small gain. Is there any more upside to ABC?

Answer: There aren’t too many investors who can report that they have made money on Adbri (ABC) (the old Adelaide Brighton). Congratulations! It has pulled back a bit since its half year results. The brokers are a touch bearish, worried about a softer residential building market impacting demand for lime and cement, Adbri’s capex programme and gearing profile. According to FN Arena, of the 5 major brokers, 3 have ‘sell’ recommendations and 2 have ‘neutral’ recommendations. There are zero ‘buy’ recommendations. The consensus target price is $2.17, just 3.3% higher than the last ASX price of $2.10. Range is tight from a low of $1.90 through to a high of $2.40. Not a stock on my “buy list” – I would be inclined to book the profit.

Question 2: I have a question about the Newmont takeover of Newcrest Mining (NCM). I think the Newmont offer undervalues NCM. While it provides diversification to worldwide assets, I wonder whether Newmont’s dividends and franking will match the Australian company for Australian shareholders. Accordingly, I’m inclined to vote against the takeover. What do you think?

Answer: I don’t want to discourage you from exercising your shareholder rights, but this looks like a “done deal”. With a unanimous Board recommendation and institutional backing, this is virtually certain to go through. Shareholders will receive 0.40 Newmont shares for every Newcrest share they own, plus a US$1.10 special fully franked dividend. The Newmont shares will be listed on the ASX trading as CDIs (CHESS Depositary Receipts).

In the Scheme Booklet, Newmont makes it clear that future dividends won’t be franked and, in all likelihood, will be lower yielding than the current Newcrest shares. If the Scheme is approved, you won’t have any choice whether to take the Newmont shares as this will happen automatically. So, if you are against the Scheme and don’t want to own Newmont shares, I would sell now (before Thursday 26 October) – the expected last day of trading of Newcrest shares on the ASX.

Question 3: In Peter’s article on Monday 11th September, he talks about the fact that he invested in Megaport (MP1), Xero (XRO) and Audinate (AD8). He goes on to say that – “I never rated them as top-quality companies like Macquarie or CBA but saw them as good quality tech companies which meant I didn’t go as long as I might have for a company like CSL”. What does he mean when he says “I didn’t go as long as I might have for a company like CSL

Answered by Peter Switzer: I’m jumping in here to give you an answer. When someone invests a lot of money in say a stock, they might say “ I went very long that share. For CSL with its track record I’d invest more money in an expected rebound. However, for tech stocks I’d be less inclined to invest too much money.

Question 4: Is there an age limit on making a downsizer super contribution? If we own the house together, can each of us make a downsizer?

Answer: You need to be 55 years or older. The minimum age has recently been lowered. There is no maximum age.

Other key rules are:

• You must have lived in the house for more than 10 years (can’t be boat, caravan or mobile home).
• You need to make the “downsizer’ within 90 days of settlement.
• You can only make one downsizer in your lifetime; and
• The downsizer doesn’t count against your non-concessional contributions cap and eligibility is not impacted by your total superannuation balance.

If the house is in joint names, both parties can make a downsizer of up to $300,000 each.

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.