One of the biggest business stories of this year has been the urgent moves at the once-mighty department store group, Myer. As the company battles serious challenges on almost every front it has changed its chief executive: Today we introduce the new Myer chief executive Richard Umbers in a one-on-one video interview with Alan Kohler.
With constant signals that consumer spending is buoyant in the lead up to the crucial Christmas season, Umbers tells Alan of his plans for the group including a substantial redesign of the existing department stores and some ambitious online initiatives. As an executive in the centre of the retail markets you’ll find the interview useful not just as an introduction to the new boss at Myer, but a very useful snapshot of the wider environment for all retail stocks just now.
Later in the week we’re going to get the latest update on international stocks and the International model portfolio from Clay Carter. At 2pm on Tuesday Clay will be talking to Elizabeth Redman on the progress of this portfolio which has seen very strong earnings results in recent weeks. No doubt Clay will also be asked a range of questions about his latest pick Criteo. To read more about Criteo click here.
You may remember Andrew Vlahov is the chief executive at Enerji, the Perth-based green power utility company, who was to have been our interview subject last week. Due to circumstances beyond our control that segment had to be rescheduled, so this Thursday at noon we are trying again. Fingers crossed it should all work out. Apologies to anyone who was inconvenienced last week, with live interviews there will occasionally be changes to the timetable.
Meanwhile, here’s what our analysts have been up to during the last week:
Growth First model portfolio
Performance has been strong in the Growth First model portfolio. Last week saw our stocks rise by an average of 5.79 per cent, leading the S&P/ASX 200 index which returned just over four per cent.
It’s important to note that volatile returns are typical for a portfolio of growth companies. That volatility can and does cut both ways, which means these stocks have a real tendency to undershoot or overshoot fair value.
When the market pushes up a share’s value to price in substantial future achievements, it’s worth reviewing the company’s place in your portfolio. With that in mind, at tomorrow’s market open we will trim our position in NetComm Wireless (NTC).
NetComm’s share price rose a whopping 43 per cent last week as investors ran to price in future contract wins in the US. You can read our analysis of the share price action here.
NetComm now comprises nearly 11 per cent of the Growth First model portfolio’s value. At tomorrow’s open, we will reduce this by three percentage points to just under eight per cent.
With NTC up more than 229 per cent since we added it to the model portfolio, it has been a great source of outperformance. Now is the time to take some of those profits while retaining a healthy exposure to NetComm’s outstanding growth story.
-- Tim Dohrmann
Income First model portfolio
The All Ordinaries lifted almost 3.8 per cent last week, driven by a strong bounce in global market prices. Pleasingly the Income First model portfolio has continued to perform well. However, in a more buoyant market place, it is interesting to see that the high cash balance (almost 35 per cent) begins to cause some underperformance. Over coming weeks additional stocks will be introduced to add to the dividend yield through the February reporting period, and in order to ensure the portfolio is not hindered should the market perform better into 2016.
AGM season continued last week. Automotive Holdings (AHG) provided a strong trading update confirming our forecasts for continuing growth in net profits. Additionally, Arena REIT (ARF) reiterated that the company was on track to meet distribution guidance. Both of these companies continue to provide the portfolio with strong exposure to high yielding businesses that have growth upside.
The Flexigroup (FXL) AGM was this afternoon at 4pm, and any update will be with the market by the time you read this (though no release is available at the time of writing). Regardless of the update, the portfolio has exercised its entitlements under the retail offer, and more on this decision can be read here.
-- James Samson
LIC model portfolio
There are no changes to the LIC model portfolio this week. Now the portfolio is very close to fully invested (only 5 per cent cash) it is up to the managers behind the LICs to play their part.
Tomorrow, November 24, Thorney Opportunities Limited (TOP) will hold its AGM and chairman Alex Waislitz has invited three of its holdings, Diversa Limited (DVA), Australian Renewable Fuels Limited (ARW) and TPI Enterprises Limited (TPE) to present as well. For those who cannot make it the AGM will be broadcast live from 11am here.
-- Mitchell Sneddon
International model portfolio
There are no changes to the International model portfolio this week.
-- Clay Carter