The horses are running at Flemington and as Alan Kohler says in today’s Inside Line video (click here to watch it) “you could shoot a cannon down Collins Street already” as many move their eye off the market and onto the track. But at Eureka Report we are committed to giving you a week’s worth of investment information and our calendar is packed!
The star of the show this week may well turn out to be Jackie Fairley, the chief executive of Starpharma who will be in the studio live on Wednesday at 11am to talk with Alan Kohler. Fairley is one of the leading lights on the local life sciences sector and most recently has set the sector abuzz through a very impressive deal with AstraZeneca. The deal, which links this intriguing small cap with one of the biggest pharmaceutical players in the world, could be worth up to $100 million.
On Wednesday at 3pm Alan will also catch up with Geoff Cumming of chief executive of Anteo Diagnostics, another of the upcoming players in the life sciences area. Anteo has also struck a very useful deal in recent times through its “nanoglue” contracts with Asian business partners.
Meanwhile, in the hot area of peer-to-peer technology on Thursday at 11am we will be hearing from Chris Noone of Collaborate Corporation which facilitates rentals in multiple areas such as cars, appliances etc.
For webcast lovers we have managed to squeeze in two events later in the week: On Thursday at 12.30pm we will have brightday’s Kirstie Spicer back in the studio with our LIC specialist Mitch Sneddon. They will be talking about how to get international exposure in your SMSF. Mitch has also brought us right up to date with how his LIC portfolio has been performing (quite well!) and what he is planning to do in the portfolio in the months ahead – read all about it here.
Later on Thursday at 2pm Mitch is back in the studio to give a full portfolio update, hosted by our income specialist James Samson. James has also been answering questions on recent action in Dick Smith and Flexigroup, where he will be taking up rights in the group’s latest rights issue (to read more from James Samson on this stock click here for today’s story).
Best of luck to all our readers in the Melbourne Cup tomorrow and remember to keep the track for betting and the market for investing!
Meanwhile, here’s what our analysts have been up to during the last week:
Growth First model portfolio
There are no changes to the Growth First model portfolio this week. The last week of October saw the portfolio surrender half of its prior fortnight’s outperformance over the S&P/ASX 200.
There were bright spots – namely, Qube Holdings (QUB), which found favour with investors as it muscled its way onto the Asciano (AIO) share register in pursuit of the Patrick container terminals business. We also saw Empired (EPD) gain 6.4 per cent over the week as investor interest continues to heat up in the IT services sector.
Almost all of the drag came from one stock, Capitol Health (CAJ), which fell by 29 per cent last week. Investors fled the stock after Tuesday night’s revenue downgrade. The news and price action are disappointing but I remain confident in Capitol’s ability to grow earnings and for the stock to re-rate upwards.
To find out why Capitol Health deserves to keep its spot in the Income First portfolio, click here.
-- Tim Dohrmann
Income First model portfolio
It was a mixed week for the Income First model portfolio. DSH announced a downgrade to net profit after tax guidance, and the share price fell quickly, providing us with a stern reminder of the need to diversify. FXL announced that it would acquire Fisher & Paykel Finance, and saw its share price rally. The portfolio will likely take up its entitlements next month, lifting our interest in FXL.
Finally, the two banks in the portfolio both reported financial results. Both confirmed our suspicions that pressure is building on profitability, and that puts pressure on future dividends. For now, a 99c dividend was announced for NAB (trading ex-dividend this week) and a 95c dividend at ANZ (also trading ex-dividend later this week. Our intention is to continue to hold these banks at least through the dividend period, and then reassess our options. It is worth noting that the positions held are significantly underweight broader market exposures, and our intention is to keep this allocation well underweight.
The portfolio is otherwise performing to expectations. The sell down and underperformance in DSH caused the portfolio to suffer a poor October, but the effect was mitigated by stronger performances in VRT, WLL, FXL and DWS.
-- James Samson
LIC model portfolio
There are no changes to the LIC model portfolio for this week. The only capital being deployed by this analyst is $20 on the nose on Preferment in the Melbourne Cup.
-- Mitchell Sneddon
International model portfolio
There are no changes to the International model portfolio this week.
-- Clay Carter