Register for Tonight’s Webinar
Leon will once more host a live webinar, reviewing the opportunities in review.
To receive the live link, please register here.
The webinar will start at 7pm NSW time.
Afterpay – Tencent Buys 5% Stake
Chinese gaming and social media group Tencent Holdings has bought a 5per cent stake in Afterpay Ltd. The stake was built from the end of March through April, a filing to the Australian Securities Exchange showed.
Origin – $4.50 Support
Origin and Santos are worth considering with a stop loss below the recent low.
James Hardie – Algo Buy Signal
James Hardie Industries is under Algo Engine buy conditions.
The share price has formed a higher low formation and rallied from the $17.50 support level.
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.
Northern Star – Weak Production Numbers
Northern Star Resources March quarter production was weaker than market expectations. COVID-19 had an impact with reduced staffing slowing development and impacting mine schedules.
NST is confident the initial disruption to operations has passed and is expecting a stronger June.
We look to buy NST below $12.50
Last Night’s Webinar – Replay
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.
NAB – Warning Plays Out
National Australia Bank 1H2020 profit falls by 51%.
The company also moved quickly to shore its balance sheet following the initial impact of COVID-19 related business provisions. NAB will raise $3.5bn via an institutional placement at $14.15 per share.
The placement will be done at a 10.5% discount.
Our bearish warnings on NAB are still yet to play out completely, as we see further raisings likely in the Sept quarter.
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