US Markets

A strong performance from Amex and ConocoPhillips overnight, both names are current holdings in our US managed fund.

We continue to watch the NASDAQ for a break below the current uptrend, at which time we’ll increase index hedging.

Lendlease – Gearing Falls

Lendlease announced a raising of up to $1.15bn  $9.80 per share.

The equity raising comprises a fully underwritten $950m institutional placement, along with up to $200m via a non-underwritten SPP.  With the proceeds from the placement, liquidity will increase to $4bn and company gearing will fall to 10-15%, (assuming completion of the sale of the Engineering business).

A correction in commercial real estate will provide new opportunities for Lendlease but will also ensure a tough operating environment in the near-term.


Share Buyback Activity

30U.S. corporations repurchased more than $5.1 trillion of their stock since 2010 according to S&P Global.

This share buyback activity happened nowhere else in the world anywhere even close to the scale that we have seen in the U.S.

With the S&P500 still trading at historically high valuations in face of  economic weakness, corporate defaults & bankruptcies, discounted capital raisings, it’s likely the market requires a lower valuation range to consolidate within.

The table below helps link EPS ranges with where the S&P500 should be trading.