Model portfolio updates
Growth First model portfolio
This Wednesday, September 30 marks the end of the first quarter for the Growth first model portfolio. Performance has been strong with a 7 per cent total return, against the S&P/ASX200 benchmark that has declined 8 per cent.
Two of the original positions have been especially strong in AMA Group (AMA) and Netcomm Wireless (NTC). AMA began with a 7 per cent weighting and a 60 cent entry price. Now at $0.91 the stock makes up 10 per cent of the portfolio. At the open tomorrow we will be reducing this by 3 percentage points back to 7 per cent.
Netcomm initially had a 5 per cent weighting with a $0.74 entry price. Now at $1.37 it has an 8.5 per cent weighting. At the open tomorrow we will be reducing this by 2 percentage points to 6.5 per cent.
The combined 5 per cent proceeds of these re-weightings will be used for a new position in DWS Ltd (DWS). James Samson first wrote on DWS two weeks ago (see DWS: Servicing a turnaround, September 14), and he included it in his Income First model portfolio. The stock also meets the conditions for the Growth First model portfolio trading on a PE of 9 with a bonus 9 per cent yield. Strong growth is forecast as the company benefits from recovering IT services industry conditions.
After the open tomorrow morning, we will update the Growth First model portfolio table with the discussed changes.
-- Simon Dumaresq
Income First model portfolio
This week I have added a 5 per cent weight in a real estate investment trust, Arena REIT (ARF). The company is exposed to growing supply in the childcare and medical services fields and provides a quarterly distribution to unit holders.
The model has performed to expectations through a volatile market, with the slow progressive approach to adding new stocks cushioning the impact of weak markets. Since the inception of the portfolio, the All Ordinaries is around 7 per cent lower and the portfolio has outperformed this by a healthy margin. Additionally, the portfolio has produced some dividend eligibility to date, with GEM, FXL, AHG, WLL and DSH all paying dividends. With both GEM and now ARF paying quarterly dividends, and the two bank exposures set to pay off cycle, the income from the portfolio is beginning to resemble our intended balance.
The addition of ARF at a 5 per cent weight will be implemented using tomorrow morning’s open price.
-- James Samson
LIC model portfolio
There are no changes to the LIC model portfolio this week. The portfolio currently sits at approximately 75 per cent invested now and the rest of the cash will be deployed gradually as opportunity arises. The invested component has held up well through these volatile times with a number of positions having either cash or the ability to short sell at their disposal.
Over the month of October we will see two holdings go ex-dividend in Cadence Capital (October 20) and WAM Research (October 12) with dividends of 6 cents and 4 cents per share respectively.
For those who missed it last week I had the chance to speak with Tom Millner, Managing Director of core holding BKI Investment Company: click here for the full interview. This coming Wednesday September 30 I will be sitting down with the chief investment officer of WAM Research Chris Stott. Join us if you can and ask Chris some questions as we go.
-- Mitchell Sneddon
International model portfolio
There are no changes to the International model portfolio this week.
What’s on at Eureka Report this week
It’s a jam-packed week at Eureka Interactive, starting with Clime Asset Management’s chief investment officer John Abernethy and international portfolio manager Pieter Fourie on Tuesday at 10am. Regular readers of Eureka Report will be familiar with Clime’s focus on value investing, so given the market’s recent falls it’s a great time to find out more about where the team at Clime sees value now.
On Wednesday, hear from NAOS Asset Management chief investment officer Sebastian Evans at 10.30am, then stick around for an update on the Growth First model portfolio with Simon Dumaresq at 12pm.
At 1.30pm on Wednesday, Mitchell Sneddon will interview Wilson Asset Management’s chief investment officer Chris Stott. This boutique fund manager offers a range of LICs: WAM Capital, WAM Active and WAM Research (which features in the LIC model portfolio).
Then at 2.30pm on Wednesday Alan Kohler will speak to Samuel Marks, managing director of renewable energy firm Greenearth Energy, about the company’s energy saving products.
On Thursday at 9am, Alan Kohler will host Wesfarmers CEO Richard Goyder in the studio. Alan has previously pointed out that Wesfarmers values its conglomerate status, so get your questions ready on any part of the Wesfarmers business: supermarket giant Coles, home improvement chain Bunnings, retailers Target and Kmart or the coal and chemicals divisions.
At 11am on Thursday, Alan Kohler will speak to Danny Wallis, executive chairman of IT services and consulting business DWS, another Eureka pick, featured in the Growth First model portfolio. Rounding out the week, David Kirk, co-founder of private equity-style LIC Bailador Technology Investments, will take your questions from 12.30pm Thursday.
-- Elizabeth Redman