Question: Challenger (CGF) has fallen from $14 to under $ 11. Would it be good buying at this price?
Answer (By Paul Rickard): I am a bit of a loss to understand why Challenger (CGF) has fallen so hard.
The market has become a little concerned about margin pressure, and sale of new annuities. The latter reflects a decline in business originating in Japan (where Challenger sells Australian dollar denominated 20-year fixed rate annuities), due in part to US bond yields now being higher than Australian bond yields. This all said, Challenger has re-affirmed guidance.
According to FN Arena, the consensus broker target price is $11.74. Of the major brokers, there is 1 buy, 5 neutral and 2 sell recommendations. Target prices range from $9.70 from Ord Minnett to a high of $13.20 with Credit Suisse.
I suppose I would be a cautious buyer.
Question: What are your thoughts on investing in WAM Global IPO price at $2.20? The minimum investment is $2,200.00 per shareholder.
Answer (By Paul Rickard): Geoff Wilson and his team have a fantastic track record when it comes to Australia. The question is: can they apply a similar investment thesis and compete in a world market? What experience have they had investing offshore?
Only time will tell.
There are also advantages and disadvantages with a LIC structure.
Fees are within the market range but on the high side:
- Management fee of 1.25% plus GST.
- Performance fee: 20% of the outperformance plus GST.
- Fees incurred directly by the LIC for transaction costs, custodian fees, website etc.
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