Scentre Group and URW Under Review

Cognitive biases can have their benefits. Last week, we downgraded former and long-standing Buy recommendation Virtus Health to Sell. The company has been within the purview of three analysts over the years but recently the investment case had been deteriorating.

In the end, it was time to shake off the restraints of confirmation bias (seeing what we want to see) and commitment bias (being consistent with what we have said in the past) and change our mind.

Now, just a week later, we may be walking into the welcoming arms of recency bias (more easily remembering something that has occurred recently). If we are, we do so willingly.

When an investment case starts to veer off track, all the biases point towards staying the course (please forgive the awful motoring metaphors). With Virtus, we might have changed our minds a little more quickly than we did. There are other stocks where a change of mind came far too late to recover from a substantial loss.

We do not wish to make that mistake with current Buy recommendation Unibail-Rodamco-Westfield (URW) and former buy Scentre Group, last recommended on 5 Apr 18 (Buy - $3.92).

Scentre's share price has barely moved since then whilst URW's has slumped over 30% but this has nothing to do with our desire to re-examine the investment cases on both. In the last few months, we've had a growing sense of unease over both. We want to pay attention to that nagging feeling in the pit of our stomachs and take the time to reassess our thinking.

We may come out of this unmoved but we owe it to our members and ourselves (some of whom are shareholders like many members) to drag those doubts into the open and see whether they outweigh the ostensibly cheap pricing and attractive yields.

Over the next few days we'll be doing exactly that. We'll get back to you sometime next week with the results of our assessments. In the meantime, URW and Scentre Group are UNDER REVIEW.