AMP Ltd (AMP):
UBS Asset Management will oversee $17 billion in passive investments for AMP Capital in what may be one of the largest mandates handed out in Australia. The enormous allocation bumps the Swiss-based wealth manager’s Australian assets under management to about $43 billion and beats a $14 billion equity allocation by First State Super to Vanguard in 1999, according to Rainmaker data. The mandate comes as fund managers and institutional investors prepare to change their business models and financial products as the low-cost ‘‘passive’’ investing revolution sweeps through the industry. UBS Asset Management will oversee $17 billion in passive investments for AMP Capital in what may be one of the largest ever mandates handed out in Australia. Passive strategies will now account for 40 per cent of the assets managed in Australia by UBS Asset Management. The mandate also highlights that the concept of passive investment itself is somewhat of a misnomer. UBS Asset Management’s Australian head Bryce Doherty (left) described competition in the sector as ‘absolutely brutal’.
BHP Billiton Limited (BHP):
When Paul Singer’s hedge fund, Elliott Management, revealed it was agitating for BHP Billiton to unify its Australian and British listings; investors were stunned the activist was pounding the drums on what is widely thought of as a dead-end strategy. Trading the spread is well-worn territory for investors who profit by taking a long position in the cheaper London listed shares and shorting the ASX listed entity. Eligibility for franking credits, currency and valuation differences mean the Australian shares constantly trade at a premium. The spread is about 15 per cent today, versus an average of 9 per cent over three and five years. Fund managers cannot own US stocks if their mandates restrict them to Australian or UK shares. Hedge funds that trade the spread do so on the assumption that it is a cheap bet on BHP collapsing the structure, especially as it can blow out at times. The appropriate spread is a function of the net present value of the franking credits that accrue to Australian investors. One hedge fund said this justified a premium of about 14 per cent.
National Australia Bank Ltd (NAB):
The Reserve Bank of Australia under governor Philip Lowe has backed the concerns of regulators about bank lending standards, seizing on the rising number of households that are a month away from missing a mortgage payment in his first major review of the financial system. The RBA has put the spotlight firmly back on the banks in its twice-yearly report by noting ‘‘one-third of borrowers have either no accrued buffer or a buffer of less than one month’s payments’’. ANZ and NAB, who measure the percentage of mortgage holders who do not have buffers of one month or more, count 61 per cent and 27.7 per cent of their customers respectively in the non-buffer bracket.
Rio Tinto Limited (RIO):
These are not new allegations by Steinmetz against Soros, but the fact Steinmetz has chosen to revisit them now is instructive. You can’t deny that Beny Steinmetz, the Israeli billionaire who has been Rio Tinto’s bete noire for the best part of a decade, isn’t good for a bit of drama. After describing Soros as a ‘‘racketeer billionaire’’, the lawsuit comes to its central point: That Soros, ‘‘himself and through his minions’’, used his clout with the Guinean President Alpha Conde to ‘‘delay, damage, and destroy an investment worth at least $US5 billion ($6.6 billion) that plaintiffs lawfully held to mine some of the world’s most valuable deposits of iron ore located in the Simandou mountain range’’ in Guinea. These are not new allegations by Steinmetz against Soros, but the fact Steinmetz has chosen to revisit them now is instructive. For all Steinmetz’s legal theatrics, it remains to be seen if any of these big claims result in any big damages payments, or even make it to court.
TPG Telecom Ltd (TPM):
For a nearly invisible man, TPG supremo David Teoh has an uncanny ability to shake up Australia’s telco market. Last week’s announcement that the company intends to build its own mobile phone network clipped Telstra’s share price as investors saw one of its crown jewels, Australia’s best mobile network, at risk of profitability corrosion. But Teoh rarely plays the game just one move ahead, and TPG’s drive into mobile infrastructure could trigger some very interesting longerterm outcomes. Maybe it might formalise a strategic alliance with, say, TPG and even license its brand and assets to the company so that TPG effectively acquired a mobile network and Voda rid itself of the headaches of running an Australian operation. Eighteen months ago, TPG signed on as a Vodafone Mobile Virtual Network Operator, a kind of upmarket reseller, potentially delivering millions of new customers to Voda’s network. But if TPG’s own network really is built, there must be knock-on consequences. Maybe a revamp of Vodafone’s Aussie operations will be one of them.
Whitehaven Coal Ltd (WHC):
Whitehaven Coal is in the sweet spot of the coal market right now, and chief executive Paul Flynn says a resumption of dividends is likely to be less than a year away. Investors have traditionally bought Whitehaven shares for capital growth rather than dividends, but the unexpected strength in coal prices over the past year is putting dividends back on the agenda. With debt reduced and Whitehaven shares 10-fold higher than they were 14 months ago, Mr Flynn said the board was starting to discuss a date for dividends to resume. Whitehaven is expected to enjoy strong pricing in coming months, given its mines in NSW are still exporting into the tight coal market created by the disruption Cyclone Debbie caused in the Queensland coalfields. Whitehaven sold 4.9 million tonnes of coal in the three months to March 31, which was 11 per cent lower than in the same quarter of 2016, although that was partly due to a planned outage at the Narrabri mine. The company has maintained its vow to produce 21 or 22 million tonnes of coal in fiscal 2017, but will need to lift its production rate in the remaining three months to achieve that goa.
(Source: AIMS)
UBS Asset Management will oversee $17 billion in passive investments for AMP Capital in what may be one of the largest mandates handed out in Australia. The enormous allocation bumps the Swiss-based wealth manager’s Australian assets under management to about $43 billion and beats a $14 billion equity allocation by First State Super to Vanguard in 1999, according to Rainmaker data. The mandate comes as fund managers and institutional investors prepare to change their business models and financial products as the low-cost ‘‘passive’’ investing revolution sweeps through the industry. UBS Asset Management will oversee $17 billion in passive investments for AMP Capital in what may be one of the largest ever mandates handed out in Australia. Passive strategies will now account for 40 per cent of the assets managed in Australia by UBS Asset Management. The mandate also highlights that the concept of passive investment itself is somewhat of a misnomer. UBS Asset Management’s Australian head Bryce Doherty (left) described competition in the sector as ‘absolutely brutal’.
BHP Billiton Limited (BHP):
When Paul Singer’s hedge fund, Elliott Management, revealed it was agitating for BHP Billiton to unify its Australian and British listings; investors were stunned the activist was pounding the drums on what is widely thought of as a dead-end strategy. Trading the spread is well-worn territory for investors who profit by taking a long position in the cheaper London listed shares and shorting the ASX listed entity. Eligibility for franking credits, currency and valuation differences mean the Australian shares constantly trade at a premium. The spread is about 15 per cent today, versus an average of 9 per cent over three and five years. Fund managers cannot own US stocks if their mandates restrict them to Australian or UK shares. Hedge funds that trade the spread do so on the assumption that it is a cheap bet on BHP collapsing the structure, especially as it can blow out at times. The appropriate spread is a function of the net present value of the franking credits that accrue to Australian investors. One hedge fund said this justified a premium of about 14 per cent.
National Australia Bank Ltd (NAB):
The Reserve Bank of Australia under governor Philip Lowe has backed the concerns of regulators about bank lending standards, seizing on the rising number of households that are a month away from missing a mortgage payment in his first major review of the financial system. The RBA has put the spotlight firmly back on the banks in its twice-yearly report by noting ‘‘one-third of borrowers have either no accrued buffer or a buffer of less than one month’s payments’’. ANZ and NAB, who measure the percentage of mortgage holders who do not have buffers of one month or more, count 61 per cent and 27.7 per cent of their customers respectively in the non-buffer bracket.
Rio Tinto Limited (RIO):
These are not new allegations by Steinmetz against Soros, but the fact Steinmetz has chosen to revisit them now is instructive. You can’t deny that Beny Steinmetz, the Israeli billionaire who has been Rio Tinto’s bete noire for the best part of a decade, isn’t good for a bit of drama. After describing Soros as a ‘‘racketeer billionaire’’, the lawsuit comes to its central point: That Soros, ‘‘himself and through his minions’’, used his clout with the Guinean President Alpha Conde to ‘‘delay, damage, and destroy an investment worth at least $US5 billion ($6.6 billion) that plaintiffs lawfully held to mine some of the world’s most valuable deposits of iron ore located in the Simandou mountain range’’ in Guinea. These are not new allegations by Steinmetz against Soros, but the fact Steinmetz has chosen to revisit them now is instructive. For all Steinmetz’s legal theatrics, it remains to be seen if any of these big claims result in any big damages payments, or even make it to court.
TPG Telecom Ltd (TPM):
For a nearly invisible man, TPG supremo David Teoh has an uncanny ability to shake up Australia’s telco market. Last week’s announcement that the company intends to build its own mobile phone network clipped Telstra’s share price as investors saw one of its crown jewels, Australia’s best mobile network, at risk of profitability corrosion. But Teoh rarely plays the game just one move ahead, and TPG’s drive into mobile infrastructure could trigger some very interesting longerterm outcomes. Maybe it might formalise a strategic alliance with, say, TPG and even license its brand and assets to the company so that TPG effectively acquired a mobile network and Voda rid itself of the headaches of running an Australian operation. Eighteen months ago, TPG signed on as a Vodafone Mobile Virtual Network Operator, a kind of upmarket reseller, potentially delivering millions of new customers to Voda’s network. But if TPG’s own network really is built, there must be knock-on consequences. Maybe a revamp of Vodafone’s Aussie operations will be one of them.
Whitehaven Coal Ltd (WHC):
Whitehaven Coal is in the sweet spot of the coal market right now, and chief executive Paul Flynn says a resumption of dividends is likely to be less than a year away. Investors have traditionally bought Whitehaven shares for capital growth rather than dividends, but the unexpected strength in coal prices over the past year is putting dividends back on the agenda. With debt reduced and Whitehaven shares 10-fold higher than they were 14 months ago, Mr Flynn said the board was starting to discuss a date for dividends to resume. Whitehaven is expected to enjoy strong pricing in coming months, given its mines in NSW are still exporting into the tight coal market created by the disruption Cyclone Debbie caused in the Queensland coalfields. Whitehaven sold 4.9 million tonnes of coal in the three months to March 31, which was 11 per cent lower than in the same quarter of 2016, although that was partly due to a planned outage at the Narrabri mine. The company has maintained its vow to produce 21 or 22 million tonnes of coal in fiscal 2017, but will need to lift its production rate in the remaining three months to achieve that goa.
(Source: AIMS)
Latest comments