September, 2023
The fund outperformed the benchmark by 42bps, largely attributed to our defensive positions.
During the month, nearly every sector experienced losses, except for the energy sector, driven by Crude Oil prices surpassing US$90 per barrel due to an extended OPEC production cut. In the portfolio, we maintained an overweight position in Woodside (WDS) due to its favourable valuation compared to peers, attractive dividend yield, and strong liquidity. Furthermore, we continued to favour Ampol (ALD) to gain exposure to convenience retail.
The Financials sector outperformed the market, driven by the major banks. ANZ, NAB, and WBC, along with Macquarie (MQG), are set to report their full-year results in November 2023. Investors are optimistic about reduced bad debt provisions, given the better-thanexpected performance of the property market and the absence of further interest rate hikes from the Reserve Bank.
Iron ore miners showed resilience compared to their counterparts, driven by market expectations of forthcoming economic stimulus measures from China following the conclusion of the Golden Week celebrations in October 2023. Consequently, the fund increased its allocation to BHP and held a slight overweight position in RIO and FMG. In a related Chinese context, Treasury Wine (TWE) defied the market's downturn, with its share price rising by 5.6% for the month. Investors were anticipating the removal of tariffs on Australian wine by the Chinese government, which is expected to boost earnings.
In other developments, the competition for critical mineral resources, especially in the lithium sector, intensified with mining mogul Gina Rinehart acquiring a blocking stake in Liontown (LTR), a takeover target. This strategy echoes previous instances like Mineral Resources (MIN) obstructing DVP's takeover of Essential Metals (ESS). These events reinforce our confidence in lithium investments, considering the ongoing shift toward renewable and clean energy. Our primary exposure to lithium remains Pilbara (PLS), a dedicated lithium producer with robust cash flows to support its operations.
During the month, the fund started to accumulate shares in Orora (ORA) after its capital raise. The packaging company raised $1.34 billion at $2.7 per share (a 20% discount) to fund the purchase of Saverglass, a global manufacturer of premium and luxury wine and spirit bottles. This strategic move aligns with ORA's goal of establishing itself as a prominent global provider of sustainable packaging solutions.
In terms of stocks, Aussie Broadband (ABB), +14.7%, was the star of the month after launching a competing bid for Symbio (SYM), outbidding Superloop (SLC), in an attempt to diversify business. Shares in Viva Leisure (VVA) rallied +13% as the health group operator returned to profitability after years of COVID lockdown aftermath.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Newsletter-ASOF-2023.09.pdfJune, 2023
The Fund distributed 1.3 cents per unit for the second half of FY2023, bringing the total FY2023 distribution to 3.3 cents per unit.
The Materials sector performed the best in June in anticipation of further stimulus from the Chinese government, particularly fiscal stimulus, after a few recent small symbolic short and medium term lending rate cuts. A virtually no inflation environment (0.2% YoY CPI) provides extra headspace for more profound stimulus. FMG, BHP and RIO advanced as iron ore surged 10%. We retained our market weight positions amongst those 3 iron ore stocks. Pure play lithium producer Pilbara (PLS) rallied 11% as the Australian government announced further investments in critical minerals, in a decarbonisation effort.
Financial stocks also performed well with the major banks recouped underperformances from previous months. At 10-11x PE (ex. CBA) and approx. 6% yield on average, the banks became attractive for value and yield hunters. Shares in Insurance Group (IAG) also traded higher after a positive update at its investor day, where the insurance company slightly lifted its forecast medium term ROE target. Tech stocks also followed the NASDAQ higher with market favoured the likes of Xero (XRO) and WiseTech (WTC). Previous month’s winners NextDC (NXT) and Altium (ALU) pared gains, which might be due to profit-taking.
Healthcare was the worst performing sector of the month with the heavy-weight CSL to blame. Shares in CSL crashed 9.47% as market caught off-guard with a new FY24 NPATA guidance, an approx. 15% downgrade to consensus as well as accelerating FX pressure, which has risen to $230m - $250m (June) vs $175m (Feb). Some positive news flows into Ramsay Health (RHC) as the private hospital operator’s Sime Darby assets were up for sale.
Other outstanding performers of the month include HomeCo (HMC), +15%, which own its first institutional mandate in form of a $350m equity commitment from an Aussie superfund for its Last Mile Logistics fund. Praemium (PPS) rallied 10% as the group’s bid to the regulator to reduce NTA requirement was approved, which was expected to provide PPS more efficiency and flexibility to pursue growth opportunities.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Newsletter-ASOF-2023.06.pdfMay, 2023
Majority of sectors finished the month lower with the consumer facing sectors performing the worst. Treasury Wine (TWE) lowered its earnings guidance amid an ongoing inflationary environment, particularly for packaging materials, & softening consumer demand. Similarly, other companies such as Wesfarmers (WES) and Endeavour Group (WV) also noted weakened consumer appetite in recent months. A few retailers such as Dusk (DSK) & Universal Store (UNI) also downgraded their trading expectations, signaling that even the more resilient segments such as youth retailing was not immune to this consumption downgrade cycle.
The Material sector underperformed as a weak set of Chinese industrial data further confirmed that China's post lockdown economic recovery is losing steam. We need to see proactive easing from the Chinese policy makers to keep the momentum going. Commodity prices retreated as a result. Iron ore -756%, Copper -S.91%, Aluminum -3.4%, although Lithium was an exception, +67.6%. The share prices of resource stocks reflected the commodity movements, with EV/lithium stocks such as PLS, AKE and IGO outperformed the base metal peers (BHP, RIO, FMG). Additionally, during the month, ME has agreed to merger with Livent Corp (US) to form a US$10b lithium powerhouse, making it the 2nd lithium M&A of 2023, and further reiterate the investment thematic of lithium and Electric Vehicles.
In terms of stocks, NextDC (NXT) had a great month, +12.7596, on the back of the Al phenomenon. NXT remains our top Tech pick to benefit from the Al Boom due to a more affordable valuation & possession of real assets (land and properties). Some other top performers of the fund include James Hardie (MX), +9.61%, as signs of recovery of the US housing market emerged. Cleanaway (CWY) advanced 7.4% as the company reaffirmed guidance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/AEIF-Monthly-Newsletter-MAY-2023.pdfApril, 2023
In April. the Australian equity market experienced a relief rally as the banking crisis appeared to be contained. The financial sector led the market, with players that were more leveraged or exposed to business lending driving the gains. The RBA's decision to maintain the overnight cash rate at 3.6% also contributed to positive sentiment in the market.
The headline Consumer Price Index (CPU declined to 7% year-on-year (YoY) by the end of the March quarter, down from 7.8% YoY in the December quarter although several categories such as Rent. Utility bills and Food still experienced high inflation. This confirmed the RBA's assessment that inflation has reached its peak. However, the unemployment rate remained unchanged at 3.5% for another month, indicating a persistently tight labour market. There is a cautious outlook regarding future CPI releases and interest rate decisions, as there is a possibility of unexpected upward surprises.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ASOF-Monthly-Newsletter-APR-2023.pdfFebruary, 2023
Defensive and non-cyclical sectors outperformed as market positioned itself for an economic downturn. Endeavour Group (EDV) advanced 5% as Its 1H23 result beat consensus forecast by 7%. specifically in the hotels & drinks (Dan Murphy's) segments. Moreover. trading during the first 5 weeks of CY2023 was also positive with hotels +31% vs pcp. Recession proof stocks such as The Lottery Corp (TLC) and the 2 supermarkets (COL and WOW) also outperformed market. Shares in Telstra (TLS) firmed 1.96% as the Telco reaffirmed guidance and commitment for its FY25 $500m cost reduction target. Shares in Aussie Broadband (ABB) also performed well as the teko reported strong growth across all key metrics. Other performance contributors to the fund include gym operator Viva Leisure (WA). +19.4%, who posted a profit for the first time since the pandemic lockdown disruption.
On the other end of the spectrum, Materials was the worst performing sector in February. crashing close to 7% on recession fears. BHP and RIO declined 8.45% and 7.83% respectively despite strengthened iron ore prices. Shares in lithium miners Pilbara (PLS) and Al!kern (AKE) each declined 12% as lithium spot prices continued to drift from the peak. Market also speculated more downside to lithium prices this year due to expanding supply, slowing Chinese demand and the Chinese government's potentially imposing restrictions on mining projects amid environmental concerns.
Shares in the banks were weakened after CBA revealed that Australia 01 Bank's Net Interest Margin (NIM) has peaked in October 2022. The bank also indicated that home loan pricing across the industry is currently below cost of capital as lenders battled it out for market share. According to CBA. Australian homeowners to date have only felt about half of the impact from the current RBA tightening cycle. indicating more pain to come.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Newsletter-ASOF-2023.02.pdfDecember, 2022
The fund edged down 4.42% in December on the back of a weaker stock market The 1st Half of Financial Year 2023 came in at 2 cents per unit, payable the 10th business day of January 2023.
The Materials sector stood out. supported by strong commodity prices (iron ore +14%. nickel +11%). BHP's takeover of OZ Minerals (OIL) became effective in December after 5 weeks of due diligence. OD_ shareholders could receive a fully franked final dividend of up to 51.75. which is the equivalent to an approx. 6% yield. Other iron ore stocks such as RIO and FMG also performed well, whereas lithium producers PIS and AKE underperformed. We took the opportunity to top up our positions in both companies on price pullbacks.
Consumer staples, Telecommunication and Utilities all fared better than market, thanks to their defensive nature. Woolworths (WOW) has sold 5.5% of the issued shares in Endeavour Group (EDV) to fund its PET Inspiration (PETstock) acquisition. Post-sate, WOW will retain 9.1% interest in WV with no intention of further selling in the immediate to medium term. The 2 supermarkets. WOW and COL. have consistently underperformed market in the past 6 months. We believe the dynamic for these stocks will soon change as the demand for recession proof stocks returned. Treasury Wine (TWE) performed well as the China/Australia relation improved. Shares in Telstra MS) firmed despite the ACCC opposing its regional tower sharing agreement with TPG. Aussie Broadband (ABB) also outperformed market.
On the stock front, Bendigo Bank (BEN) came out from left field with a prof it upgrade and a better than expected exit NIM of 2.01%. We subsequently saw a rebound in share prices of the big 4 banks. and to a lesser extent. Macquarie (MAGI. Unfortunately for Star Casino (SGR) shareholders. the NSW's newly proposed casino tax regime sent the stock into panic mode, which saw Star's share price down nearly 35%. Nevertheless, we suspect this will attract a lot of attention from overseas Private Equity firms who would like to have an exposure in the Australian duopolistic casino industry.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ASOF-Monthly-Newsletter-DEC-2022.pdfNovember, 2022
The fund returned 5.17% for the month of November.
The Materials sector rallied over 15% in November as commodity prices soared on China’s reopening, specifically iron ore, and nickel. The fund held an overweight position in BHP and a market weight position in RIO. Shares in BHP and RIO advanced 21.84% and 24.29% in November respectively. The fund also held a slight overweight position in OZ Minerals (OZL), which received a revised takeover bid from BHP, valuing the copper miner at $28.25. Nickel Mines (NIM) was the fund’s best performing stock in November, up 33.56% for the month, which the fund held an overweight position. On the other hand, Lithium miners underperformed in November on the back of Tesla’s weak vehicle sales report. Lithium stocks have had a good run in recent months; therefore, a pullback was not unexpected.
Interest rate sensitive sectors such as Real Estate, Technology and bond proxy styled Infrastructure also performed well as a CPI miss sparked hopes that the RBA would soon pause its rate hike cycle. Goodman Group (GMG) is the fund’s only exposure in the Property Trust space, which rallied 12.47%. Transurban (TCL) also firmed 7.7% as bond yields declined.
On stock basis, shares in CSL surpassed the $300 level for the first time in more than a year as investors anticipated a worse than normal flu season in the US. Shares in Commonwealth Bank (CBA) hit its all-time high in November. The fund remained bullish on the Big 4 banks and Macquarie Bank (MQG). Our COVID recovery picks, Webjet (WEB) and Viva Leisure (VVA) travelled well as normality returned. Aussie Broadband (ABB) firmed 12% in November as the newly proposed NBN fee structure highly favoured ABB.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Newsletter-ASOF-2022.11.pdfOctober, 2022
The fund returned 5.29% for the month, slightly below market. In terms of sectors, Energy had a stellar month as OPEC+ and allies announced the biggest on record production cut, adding more pressure on an already tightly supplied oil market. Other sectors that were negatively affected by the interest rate & recession fears such as Real Estate and Consumer Discretionary also rallied across the board. Stock wise, shares in Qantas (QAN) rose 16% as the Flying Kangaroo expected to be back in black by the end of December, buoyed by strong travel demand despite high fuel cost headwind. October saw an across-the-board rally amongst the banks as investors expected an improvement in Net Interest Margin (NIM) as a result of higher interest rates.
Shares in NAB, ANZ, WBC and MQG traded higher in anticipation of their full year results due in late October/early November. Bond sensitive stocks such as Transurban (TCL) and NextDC (NXT) also recovered as the Aussie 10y bond yield dipped below 4%. It is also interesting to note that the Aussie 10y bond yield is now below the US counterpart, a feat that has not been seen in 2018. In the mid to small cap space, shares in Jumbo (JIN) and the Lottery Corp (TLC) trended higher, leading up to the $160m Powerball. HUB24 (HUB) rallied 21%, as the wealth platform operator recorded $3b in net inflows for the September quarter, bringing its Funds Under Admin to $68.4b.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ASOF-Monthly-Newsletter-Oct-22.pdfSeptember, 2022
The fund returned -6.41% for the month, slightly below market. However. we believe it was a solid effort amid market volatility and extremity. Mid and small cap stocks tend to underperform in a bear market.
On a stock level. Or Minerals (OZL) was the best performer, up 5.5% in September. We believe BHP might have to sweeten the takeover bid to cover their copper shortage. Only 26% of BHP's portfolio is copper, while iron ore and coal accounted for 49% and 25% respectively. In the mining space. BHP and RIO performed relatively well in anticipation of more economic stimulus from China. In Healthcare. shares in Resmed (RMD) advanced on another round of Phillips mask recall while CSL received good news in regard to blood donors. Solomon Lew led Premier Investments (PMV). the owner of Just Jeans & Smiggle. had a stellar month after delivering a strong FY22 result (7% above consensus) along with a special dividend (approx. 7% annualised yield). Shares in wealth platform Praemium (PPS) also firmed in anticipation of the 3Q FUM flow report due in early October.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/ASOF-Monthly-Newsletter-Sept_2022_v4.pdfAugust, 2022
The fund returned -0.73% for the month as small cap stocks were harshly sold off post Jerome Powell’s speech at the economic conference in Jackson Hole
On a stock level, olive oil producer Cobram Estate was the best performer, up 16.5%. Despite the US expansion plan taking longer than expected, the Australian segment was ahead of forecast, thanks to a higher fair value adjustment on oil inventories. Travel and tourism stocks Webjet and Flight Centre contributed positively to the fund’s relative performance as travel activity recovery well progressed. Our overweight positions in Health Care stocks such as CSL, ResMed and Ansell, also contributed positively to the fund’s relative performance. Despite rising costs of living due to inflation and higher mortgage repayments as a result of higher interest rates, consumer spending has held up well. JB Hi Fi, Wesfarmers, and Premier Investments (owner of Just Jeans, Jay Jays …) performed relatively well. Other outstanding performers in the small cap space include People Infrastructure (Human Resources in Health & Hospitality) and Praemium (wealth management platform). Last but not least, the fund held an overweight position in BHP, which provided a nice boost to income as mining giant declared a record final dividend.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Update-ASOF-2022.08.pdfJuly, 2022
The Australian Equity market recouped a portion of the collapse recorded in June, which was amplified by tax loss selling. A lower than expected inflation print for the June quarter (6.1% vs 6.3% forecast) suggested a more benign interest rate hike by the RBA, which gave the market comfort.
Additionally, the unemployment rate declined to 3.5%, hitting its lowest level in almost 50 years, indicating that Aussie households are generally well placed to absorb the impacts of rising interest rates. Last but not least, the reporting season has started on a strong note in the US and Australia, with major beats coming from the Tech sector. Overall, the Australian All Ords Accum Index advanced 6.34% in July after falling over 9% in June, a solid rebound. In the US, the S&P500 rallied 9.11% while the Tech-heavy NASDAQ index rocketed 12.35% in July
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Update-2022.07.pdfJune, 2022
Overall, the Australian Market finished Financial Year 2022 in negative territory. The majority of the gains were effectively wiped out in the span of a few months, further proving the extreme level of market's volatility. However, on the positive side, the unemployment rate is at a record low with the number of job vacancies hitting a record high. Saving ratio remains higher than historical average. Retail sales consistently beat expectations. With China hinted its willingness to provide stimulus to keep the economy train going, we believe Australia might come out better than expected. Both Armytage Funds performed relatively well in Financial Year 2022. AEIF outperformed the market by 1.12% while ASOF performed in line with its benchmark.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Update-2022.06-EOFY-Edition.pdfFebruary, 2022
• February was an extremely volatile month for the Equity markets. Markets rallied during the first half of the month, recovering the losses from the January sell-offs. However, markets gave up majority of gains during the second half, due to a combination of a less than stellar reporting season and heated up geopolitical tensions, as Russia invaded Ukraine in late February. The US indices were deep in losses at the end of February while the Australian counterparts barely finished the month in the green.
• To cushion market volatility, both Armytage funds have moved to a more defensive stance by increasing cash holding and reducing exposure to speculative investments. The funds have also started to increase holdings in oversold quality names due to the War and the BHP unification, such as Wesfarmers (WES), Telstra (TLS) and the 2 supermarkets WOW and COL.
• The Energy sector continued to outperform the market in February as the Russian invasion of Ukraine became a reality. Brent and WTI Crude prices surged over the $100/barrel mark for the first time since 2012 on fears of supply constraints. White Haven Coal (WHC) topped the group, returning 22.8% while Woodside (WPL) came a close second, up 22.36%.
• Consumer staples stocks also performed well in February as defensive places against a volatile market. GrainCorp (GNC) and Endeavour (EDV) soared as results beat market expectations. Shares in the supermarkets Coles (COL), Woolworths (WOW) and Metcash (MTS) also firmed.
• Tech stocks continued to stay under pressure, especially the non-profitable members. Non-profitable tech stocks in the US have had a shocking 4 months, down 45% since mid-November. Down under, tech stocks whose half yearly results did not meet consensus numbers, were mercilessly sold off in February. Appen (APX) crashed 27% while Life360 (360) tumbled 36%.
• Resource stocks had a reasonably good month as key commodities such as nickel and iron ore rallied. BHP returned to its pre ex-div price in 3 days. Gold miners led the sector as gold prices have broken out.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Update-2022.02.pdfNovember, 2021
Netwealth (NWL) has proposed to merge with Praemium (PPS), at 1 NWL share for every 11.96 PPS share, plus a cash consideration from the net proceeds from the sales of PPS’s international business.
• Inghams (ING) has warned of rising feeding costs and a dip in demand linked to lockdowns. Meanwhile, Elders (ELD) forecast the prices of beef and lambs to keep rising because demand is outstripping supply and Australia’s herds are still being rebuilt.
• The Commonwealth Bank (CBA) delivered cash NPAT of $2.2b in the first quarter of FY22. The bank’s income was down 1%, with the growth in mortgage volume helped offset lower net interest margin pressure and lower non-interest income.
• Traffic levels in Sydney and Brisbane are back to pre-COVID levels, said Transurban (TCL) CEO.
• James Hardie’s (JHX) profit has soared during the first half of the new financial year, with net sales climbing in the past six months. The company declared an interim dividend of US40¢ a share.
• Vicinity Centres (VCX) and Scentre Group (SCG) both have seen positive initial signs on reopening in NSW and VIC. • Coles (COL) is expecting robust sales in the group’s supermarkets in the lead-up to Christmas as the large cities on the eastern seaboard return towards near normal in the next phase of the pandemic.
• Ramsay Health Care (RHC) has suffered a sharp fall in earnings in the September quarter, which the company attributed to a slowdown in elective surgeries linked to COVID-19 restrictions.
• Treasury Wine (TWE) has acquired Family Frank Vineyards in Northern California for US$315m. • Crown Resorts (CWN) has received an offer from shareholder Blackstone at $12.50 a share cash and is considering the revised bid. Blackstone already owns 9.99 per cent of the casino operator. • The FIRB has approved the $5.2b takeover of Spark Infrastructure.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Monthly-Market-Update-2021.11.pdfOctober, 2021
The Reserve Bank of New Zealand has raised the official cash rate, the second central bank among developed nations after Norway to deliver a post-crisis interest rate increase, as the economy battles high inflation and a red-hot property market.
• Chinese coal prices firmed in October as floods in China’s coal mining regions add to supply pressures at the same time as cooler weather cranks demand for energy.
• China’s GDP has risen 4.9% in the third quarter of the year compared with a year prior, falling short of economist expectations of a 5% growth. Chinese industrial output in September rose by 3.1% compared with a year prior, undershooting expectations for a 3.8% increase. Chinese retail sales climbed 4.4% in September, beating forecasts for a 3.5% increase.
The high growth Technology sector is back at the forefront in October in anticipation of the AGMs. Shares in Nearmap (NEA) rose 16% as its Aust. based rival Aerometrex (AMX) was affected by border closures while NEA noted no issue. Accounting software Xero (XRO) noted national SME job growth has entered negative territory in the September quarter, falling 0.9% YoY. However, XRO’s SME sales still grew 6.6% YoY. The RBA concluded that it would be in the public interest for Buy Now Pay Later providers to remove their no-surcharge rule. All BNPL members traded weaker in October except Afterpay (APT), whose shares were supported by the takeover bid from Square.
• The Industrial sector performed the worst in October, down 3.25%, as many of its members are bond proxies, which were affected by rising bond yields. Aurizon (AZJ) declined 11% while Transurban (TCL) finished the month 5% lower
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Monthly-Market-Update-2021.10.pdfSeptember, 2021
The The Australian market took a step back in September after rallying in the previous 11 consecutive months. The All Ords Accum Index declined 1.58% for the month of September.
• The price of iron ore fell below $100 for the first time in 14 months as worries about the anticipated default of Chinese developer Evergrande added downward pressure on the commodity. Concerns around a spill-over impact on China’s property market are deepening. There is no relief on production cut pressure, as the government is asking more provinces around Beijing to cut their steel production to improve air quality ahead of the Winter Olympics next year.
• China’s central bank (PBoC) increased its injection of short-term cash into the financial system after concern over a debt crisis at China Evergrande Group roiled global markets. The People’s Bank of China injected 120 billion yuan into the banking system through reverse repurchase agreements, exceeding the 30 billion yuan of maturities.
• Brent crude prices settled at the highest level in almost three years as supplies shrink at a time when a global energy crunch makes it increasingly likely oil will be tapped for power generation. Oil inventories are rapidly tightening. Supplies in the US are at the lowest since 2018 with output levels weaker after recent US Gulf Coast storms, while stockpiles at a key hub in Europe remain below average levels for the time of year.
• Two of the world’s largest bitcoin exchanges have halted new registrations for Chinese users, taking one of the first actions to comply with Beijing’s latest cryptocurrency ban.
• Stressed supply chains through the pandemic threaten to push up prices significantly for consumers and are unlikely to abate before the virus is under control, ANZ analysts have warned.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Monthly-Market-Update-2021.09.pdfJuly, 2021
COVID19 was back at the forefront in July with the prolonged NSW lockdown and the vaccine rollout program took the centre stage.
• The latest OPEC+ discussions hit a roadblock on Monday, with the United Arab Emirates refusing to accept a proposed increase in supply, sparking fears of non-compliance among members and a potential disbanding of the alliance. The lack of unity in OPEC presents a real risk over the medium term. In the absence of a deal, the current production cuts remain in place, meaning the oil market will tighten further as demand surges amid easing travel restrictions.
• China’s exports unexpectedly surged in June, helping to underpin the economy amid signs the recovery is starting to slow. Exports climbed 32.2% in dollar terms in June from a year earlier, while import growth slowed to 36.7%, the customs administration said on Tuesday. That left a trade surplus of $US51.53 billion ($68.7 billion) for the month. Economists had forecast that exports would grow by 23% while imports would climb by 29.5%.
• The AUD fell as activity is sapped by lockdowns in Sydney and Victoria, and amid increasing fears global growth could be stalled by the delta variant of the coronavirus.
• Domestic passenger numbers at Sydney Airport fell 56.8% in June, versus the corresponding month in 2019. International passengers fell 93.8%. It warned stay-at-home orders issued by the NSW government on June 25 will limit interstate and trans-Tasman passenger numbers further
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Monthly-Market-Update-2021.07.pdfMay, 2021
Inflationary pressures and economic recovery remained the core narratives across markets in May. The Aussie market posted gains in May on commodity strength and the RBA maintaining interest rates at record lows. The ASX100 Accum. Index advanced 2.6%, outperforming the All Ords Accum Index’s performance of a 1.96% gain. The US markets trailed behind with the S&P500 only up 55bps while the NASDAQ declined 1.53%.
• Both funds continued to outperform the market in May. Since the beginning of CY2021, AEIF is 1.8% ahead of the ASX100 Index while ASOF outperformed the All Ords Index by 2.4%. The manager is pleased with the outperformance against the respective benchmarks of the 2 funds given their conservative overlay.
• The Information Technology sector declined over 9% in May as the rotation out of growth stocks continued, though unlike April, the decline was more stock specific. Despite announcing an increase in Annualised Contract Value (ACV) guidance, on the following day, Nearmap (NEA) was sued by US Eagle View for patent infringement claims. EML got into trouble with the Irish Bank regulator, which sent share price 40% lower on the day the announcement was made. Afterpay (APT) fell below $90/share for the first time since Oct 2021, in line with the Buy Now Pay Later sector’s performance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Update-2021.05.pdfApril, 2021
Global markets regained momentum in April as fears of rapid inflation and rising bond yields subsided. Markets were also supported by iron ore hitting record highs, the earnings seasons commenced in the US and better than expected employment data post JobKeeper in Australia.
• Technology stocks rebounded in April as the bond yield rally took a breather and investors believed rising inflation was transitory. Shares in Afterpay (APT) and NextDC (NXT) recovered from their March lows. Unity Wireless (UWL) continued to search for new highs, finishing the month at $2.77, up 20.43%.
• Travel & Tourism stocks were heavily impacted by the rapidly developing COVID19 crisis in India and the delay in rolling out the vaccine in Australia. Sydney Airport (SYD), Webjet (WEB) and Hello World (HLO) all traded lower. On a positive note, Australia is considering allowing vaccinated residents to travel abroad first under a staggered system of reopening its borders. Additionally, Qantas (QAN) expected domestic capacity to reach 90% of pre-pandemic levels in 3Q2021
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Update-2021.04.pdfDecember, 2020
The Australian market traded side-ways for the first half of December as the newly mutated COVID19 strain in the UK as well as the new COVID hotspots in NSW and VIC took the main stage, shrugging off better than expected job numbers. Fortunately, surging iron ore prices, a last minute Brexit deal and the US Congress passing a US$900b stimulus deal were some positive catalysts that helped push the market slightly higher towards the end of the month.
All the banks, with the exception of Bendigo Bank (BEN) and Commonwealth Bank (CBA), failed to make an impact in December despite better than expected deferred home loan data and APRA no longer restricting the banks’ dividend payout ratio. The Healthcare sector significantly underperformed the market in December. CSL plunged below $280/share for the first time since July 2020 after announcing scrapping its COVID vaccine trial. Shares in Mesoblast (MSB) plummeted over 40% on disappointing updates. Iron ore price surpassed $160/tonnes as Brazil’s Vale announced it expected to produce between 300m-305m tonnes of iron ore this year, significant lower than last year. Shares in BHP and RIO each advanced over 11% for the month while pure iron ore play Fortescue Metals (FMG) rallied 28.52%. Gold stocks also performed well as the precious metal posted its first monthly gain since July. Crude oil prices plummeted leading up to Christmas following the discovery of the new strain of COVID19 virus. However, it pared back some of its losses after the US reported a larger than expected decrease in crude stockpile. The Energy sector performed in-line with the market. Surprisingly, Whitehaven (WHC) rose 24% on the back of its Winchester South’s metallurgical mine upgrade amid the China’s ban.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/Armytage-Fund-Monthly-Update-2020.12.pdfticker: ETL0139AU
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https://armytage.com.au/index.php/news/
Report => select the related fund name
asset_class: Domestic Equity
asset_category: Australia Derivative Income
peer_benchmark: Domestic Equity - Derivative Income Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund
manager_contact_details: Array
fund_features:
The Fund is managed with a view to offer investors long-term capital growth potential and a regular semi-annual income stream, from a portfolio of micro, small and large-capitalisation investments that Armytage considers to be of high quality and good value. The fund aims to provide a higher level of yield (2.5% above) than the S&P All Ordinaries, while matching or beating the total return of the index over the medium term. Armytage’s Value based investment style incorporates a bottom-up proprietary business valuation investment approach supplemented by top-down thematic overlays to identify the highest quality alpha opportunities in its investment universe. This approach allows Armytage to construct a portfolio of stocks providing relative-value over the investment time horizon.Consistent with Armytage’s business valuation approach, Armytage seeks to invest in businesses that have a clear and understandable business model, preferably have a history of generating profits, paying dividends and have forecast able future profits and cash flows. In this regard, Armytage tends to avoid investing in higher risk early stage companies that are research and development or exploration based. The total portfolio will be continually reviewed in order to assess whether the Fund’s objectives are being met.