Question 1: Why did the Coles (COL) share price get smacked when Woolworths’(WOW) CEO, Brad Banducci, resigned?
Answer: On the day, Woolworths lost 6.61%, whereas Coles lost 4.24%. The reaction was more than just about Brad Banducci resigning (which was an organised transition), it was also the day Woolworths announced its first half result. Woolworths and Coles are highly correlated businesses, and institutions go from one to the other. When you get a sharp movement in the price of one company, it’s rare than you don’t also see a movement in the share price of the other, as the factors driving the performance of one company will usually be having an impact on the other.
Question 2: Pengana Private Equity Trust (PE1) has been going down in recent weeks, but the NTA (net tangible asset value) looks ok and has not moved much. Any insights as to what might be driving the drop in share price and widening gap to NTA?
Answer: As a listed trust with a finite number of units, the price at which Pengana Private Equity Trust (PE1) trades depends on the relative interest of buyers and sellers on the day. Most listed trusts/listed investment companies are currently trading at a discount to their NTA (or net tangible asset value). On 31 Jan. PE1 was trading at $1.38, a discount of 12.1% to its NTA of $157.02. Over the last few weeks, the ASX price of PE1 has fallen from $1.38 to $1.24. This has occurred on light volume and with no news on the company (or fundamental movement in private equity markets). I suspect the fall in price was in part due to the unofficial “suspension” of the buyback the Trust was operating – according to ASX lodgements, the buyback was last executed on 29 January. Without the buyback, there are potentially less buyers to deal with the sellers. There has been no formal announcement from PE1, but that is my guess.
Question 3: What did the broker analysts make of Bluescope’s (BSL) profit announcement? The market initially took the share price down by 50c.
Answer: Bluescope Steel’s (BSL) first half result was considered a “beat” on earnings (by about 8%), although guidance for the second half was a touch weaker than expected. The analysts are mixed on the stock, with 2 “buy” recommendations, 1 “neutral” recommendation and 2 “sell” recommendations. While quite positive on the company and management, they are a touch worried about steel margins.
The consensus target price is $22.06, very close to the ASX price. The range is relatively wide: from a low of $16.50 through to a high of $25.50. Following the result, there were no changes to recommendations. There was a very marginal lowering in the consensus price: 3 brokers lowered their targets marginally, 1 increased, the other remained the same.
Question 4: Does BHP operate a dividend re-investment plan? Is there any discount?
Answer: Yes, BHP operates a dividend re-investment plan. The next dividend of US 72 cents per share, approximately A$1.10 per share, is due to be paid on 28 March. There is no discount. If you want to participate in the DRP, you will need to change your instructions with the registry (Computershare) before 5.00pm on 11 March.
