Archive

Reverse Repos Surge but Watch Repos

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Date21 Jul 2021
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1. INTRODUCTION $992b was parked with the Federal Reserve via the Reverse Repo Program (RRP) on 30 June 2021, 109% higher than the pre-COVID peak. Reverse repos allow institutions, such as banks, to purchase treasuries from the Federal Reserve and resell those treasuries back, typically for a small profit. It essentially serves as a virtually risk-free option for institutions to park excess cash left over after exhausting all other appropriate investment opportunities. The surge in...
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Dexus (ASX: DXS)

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Date11 Feb 2021
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INVESTMENT SUMMARY Materially oversold on remote work fears. Maintained 50c dividend and did not raise capital during COVID-19. Ticker | ASX:DXS GICS Sector | Real Estate Current Price | A$8.69 12m Target Price | ▲ A$10.85 Upside | 25% Market Cap | A$9,476m P/E | 14.1x Div Yield | 5.8% BUSINESS DESCRIPTION Dexus engages in office and industrial real estate development, leasing and tenant services. The Office segment offers domestic office space with any associated retail space, car parks and office developments. The Industrial segment comprises of domestic industrial properties and warehouses....
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The Lithium Rebound

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Date03 Feb 2021
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1. INTRODUCTION In 2020, Global X Lithium & Battery Tech ETF (NYSE:LIT) rallied 126% whilst domestic lithium producers Pilbara Minerals (ASX:PLS) and Galaxy Resources (ASX:GXY) rallied 234% and 144% respectively. Lithium stocks have bottomed out after trending down for two years on a global oversupply. Demand has begun sharply rebounding on forecasts that electric vehicle (EV) sales could increase 18-fold by 2025 and new grid-scale battery capacity will increase 4-fold in 2021 as battery costs...
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Why We Bought RIO at $92.74 (ASX: RIO)

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Date29 Jan 2021
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1. INTRODUCTION On 27 October 2020, we bought Rio Tinto (ASX:RIO) at $92.74. Our technical signals flagged a DeMark Sequential 13 Buy, suggesting a bottoming in the share price whilst fundamentals became increasingly attractive. We believed iron ore prices would continue trending higher on robust steel demand and an infrastructure-led economic recovery in China. RIO was our preferred exposure due to its history of production reliability and high fully franked dividend pay-out. We maintained a...
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Timing Markets Using the Yield Curve

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Date27 Jan 2021
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1. INTRODUCTION Bond markets are often hailed as a precursor to equity markets. Yield curves plot the interest rates of bonds by their maturities or time until repayment. They reflect what future expectations bond investors have on interest rates and economic activity. Our research into yield curves has allowed us to broadly time the market. Upon observing a yield curve inversion, we were risk-on in 2019 and risk-off in early 2020 in anticipation of a...
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Arena REIT (ASX: ARF)

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Date13 Aug 2020
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INVESTMENT SUMMARY Insolvency fears overblown due to low gearing, substantial childcare stimulus and high ongoing occupancy rates. Attractive dividend yield and resilient dividend growth despite higher unemployment and COVID restrictions. Ticker | ASX:ARF GICS Sector | Real Estate Current Price | A$2.36 12m Target Price | ▲ A$3.20 Upside | 36% Market Cap | A$772m PE | 14.6x Div Yield | 6.2% BUSINESS DESCRIPTION Arena operates as a real estate investment trust. It leases out its social infrastructure assets to a diversified tenant base in the...
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Macquarie Group Limited (ASX: MQG)

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Date11 Dec 2018
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INVESTMENT SUMMARY On an upgrade cycle with earnings growth guidance lifted to 15% for FY19. Banking Royal Commission will have a minimal impact on MQG, yet it has been devalued with domestic retail banks. Payouts an attractive sustainably growing yield. Ticker | ASX:MQG GICS Sector | Financials Current Price | A$109.57 12m Target Price | ▲ A$130.00 Upside | 18.6% Market Cap | A$35,509m P/E | 12.5x Div Yield | 5.5% BUSINESS DESCRIPTION Macquarie Group Limited provides diversified financial services globally. It operates in five segments: Macquarie...
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