subject: Managed Accounts Trading Notification - Purchase Of Wbc [print this page] Good afternoon,
On Monday morning we purchased WBC shares for the managed accounts portfolio at a touch under $22.19 (trading $22.87 as we type)
CBA recently reported a very strong FY result and based on our own research we believe that fundamentally WBC is in a similar position. Consider the following statistics from Southern Cross Equities' in-house research:
- WBC's overall LVR (Loan to Value Ratio) on their mortgage book is below 50%
- Since the GFC they have repossessed a total over 294 homes across the whole of Australia.
- 70% of borrowers are ahead on their mortgage payments!
As was flagged last week, NAB's result left us, and the broader market, underwhelmed. At these prices, WBC has a much more compelling investment case both technically and fundamentally. This purchase brings the portfolio to just over 50% invested of which most of this is protected through index put options.
Regarding some of our other positions:
LLC released a solid FY result which we hope will be the catalyst for a move upward from current levels. Price wise, however, the stock has not performed to expectations and we are seeking an exit when an opportunity presents.
WPL announced large scale exploration success with a total 185m intersection of gas which saw the share price rocket higher in the past couple of days. Today, WPL reported first half results which came in almost 20% ahead of average analysts' expectations, and a full 40% ahead of the previous corresponding period. By rights, WPL should be trading much higher, and we anticipate being able to exit at our target profit within the next two weeks.
Finally there has been some interesting price action (with no announcement) in QHL. We recently contacted the company and confirmed that they are on track with their deliverables for the JSF project about which they expect to be able to announce more information on in the coming months. They indicated the price action was probably due to an article written by "The Speculator", David Haselhurst in which he called QHL a buy and said with everything on track for a formal JSF contract, upside potential is now significant. We agree!
All in all the portfolio is looking quite healthy, and of course we continue to take a cautious approach when adding positions to the portfolio.
As always call us if you have any questions.
Talk soon,
Shawn Uldridge and Hayden Kerr.
by: Hayden Kerr
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