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The rally across equities is driven by two factors: expectations of slowing rate rises in the US and extreme bearish positioning by investors. But it’s premature to think that rate rises by the US Federal Reserve will stall soon.
Inflation in the US remains stubbornly high with wages continuing to rise to uncomfortable levels. Despite some relief from lower commodity prices, the tight rental market continues to put upward pressure on the CPI. We are expecting another 75 basis point rise in November, followed by a 50 basis point rise in December. We are unlikely to see a peak in interest rates in the US until early next year, by which time we should begin to see real economic weakness.
We think many investors have been far too cautious and are sitting on large cash balances. As a long-short manager, this market is presenting us with some of the best buying opportunities in many years for many quality businesses. Our view is that some of those excess cash balances will be redeployed into the market over the next six months which, together with a pick up in M&A activity early next year, should underpin the Australian market.
Since the sell-off in June, we have added REA Group, Johns Lyng Group and NextDC to the portfolio. We are looking for quality companies with an established franchise and track record that has been unfairly sold off by the market as investors hide in safe havens. A lack of confidence by market participants are presenting unprecedented opportunities.
We are net neutral the Australian banking sector. Our view is that trading conditions for banks are probably as good as it gets, with rising interest rates, steady mortgage growth and a benign credit environment. As a long-short manager, we look at this sector in a relative order. We prefer some of the cheaper banks, such as ANZ, which will report its earnings with a good tailwind and we pair it with one of the more expensive banks such as CBA.
With an expected slowing of economic activity, banks – like many parts of the economy such as building materials and consumer discretionary – will be under more pressure. Meanwhile, the CBA share price continues to trade close to an all-time high versus building materials, for instance, which are down 30 per cent.
To us, this means a falling share price in the not so distant future.
We do think lithium stocks are frothy. While the medium- to long-term prospect of demand for lithium-ion batteries remains strong, in the shorter term they have run up too fast, too high. We have been early investors in many of those lithium names and we have generated enormous return. We are now taking profits in the space and recycling capital into some of the underperforming names and other sectors.
Ramsay is probably one of very few deep value stocks currently trading on the ASX. With recovery on the way, its earnings will compound 25 per cent over the next three years and medium term growth will be supported by capital deployment into field projects, and increased waiting lists support winning public sector work. Private hospitals are a highly sought after infrastructure-like asset.
Ramsay is now trading at a 40 per cent discount to the KKR bid, and it has substantial premium property on the balance sheet that can be split into a separate structure to create value.
With two young children, I am all about pop culture. Stranger Things is one we have followed closely. Netflix has now become our daily go-to in addition to many other streaming services.
One of my favourite restaurants in Sydney would have to be Chin Chin at Surry Hills. Its yummy fusion food with vibrant decor is a great place for catching up with friends. Another favourite in the nearby streets is the wine bar WyNo X Bodega. It is a tiny wine bar with sharing tables, and they have some of the best wines around the world for tasting, and also serve some of the best food to go with those wines.
The Australian Financial Review is a media partner of sohnheartsandminds.com.au
This article was originally posted by the AFR here.
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Top global money managers are telling investors to steer clear of companies that don’t make money and invest instead in unloved but profitable businesses, as continuing central bank interest rate rises threaten to keep markets falling.
Two hundred of Australia’s best and brightest money managers, bankers and entrepreneurs toasted the seventh Sohn Hearts and Minds conference at David Walsh’s Museum of Old and New Art, better known as MONA, in Hobart on Thursday night.
A room filled with 700 of the country’s financial luminaries and billionaires is a difficult place to pitch an investment idea but it’s a great place to raise money for charity.
Professional gambler and arts impresario David Walsh had a brutal message for successful top money managers – you may just be lucky.
The Sohn Hearts & Minds Investment Leaders Conference, held annually, had before Friday’s event made more than $40m in collective donations to medical research. It applies the stock picks made by fund managers in an investment portfolio.
Fund manager turned anti-corruption campaigner Bill Browder is advising investors to hang on to their cash until central banks stop raising interest rates and the cost of living starts to come down, before investing it strategically.
Technology behind the tech; healthier lifestyles; the green transition and regulatory tailwinds. These are the mega-themes the smartest minds in the market are now firmly getting behind which they believe can help them deliver outsized profits.
Perpetual’s top stock picker Anthony Aboud makes his money running against the crowd and this is why property trusts like Charter Hall are sitting right the top his list right now.
Perpetual’s star stock picker Anthony Aboud says companies with strong balance sheets will finally be rewarded for their discipline in an environment of rising interest rates and global market upheaval.
Some of the top fund managers in the country will on Friday pitch their best investment ideas to the Sohn Hearts & Minds conference.
Gerry Cardinale, the owner of AC Milan and a host of other soccer, cricket, baseball and ice hockey assets is trying to double his money in the ‘resilient’ asset class.
Twenty students from Kingston High School have been given the opportunity to attend the prestigious Sohn Hearts & Minds conference this week.
James Miller, a portfolio manager at Firetrail Investments, believes investors need to stop seeing the global decarbonisation push as a risk – and start seeing it as an opportunity.
Carleton’s conviction will be on full display on Friday, when he makes his third appearance at the annual Sohn Hearts & Minds Investment Leaders Conference, where stock-pickers share their best ideas in the name of medical research.
Maggie O'Neill, Head of Marketing and Operations at HM1 joined Nick Griffin, CIO of Munro Partners to discuss the history of Hearts & Minds, Munro Partners' involvement and Nick's upcoming stock pitch.
Bob Desmond is Head of Claremont Global and Co-Portfolio Manager. He will present at the Sohn Hearts & Minds Investment Leaders Conference in Tasmania on November 18.
An increasing intransigence from authorities in Beijing toward private enterprise - and harsh pandemic restrictions - might be keeping some investors away, but the same factors are creating good opportunities in Chinese stocks.
Joyce Meng is a presenter at this year’s Sohn Hearts & Minds Investment Leaders Conference on November 18, which takes place in Hobart and aims to raise money for medical research.
Munro’s Nick Griffin on why he prefers Alphabet and Amazon over Meta, shorting industrials and Chinese equities, and his top picks for the energy transition.
Founder, CIO and CEO of Eminence Capital Ricky Sandler talks about his journey launching the $5.7 billion dollar asset manager, how the market has changed over the past decade and his motivations for participating in this year's Sohn Hearts & Minds conference.
When Auscap Asset Management founder Tim Carleton tips a stock at this month’s Sohn Hearts & Minds conference in Hobart, he doubts it will be a name that shocks investors.
The veteran fund manager says the most uncertain period of his career will deliver huge opportunities – providing his firm can stick to its system.
One of the nation’s most influential fund managers has warned that investment markets have entered a “new phase”, with hidden risks in the form of debt sitting in super funds, private equity and big investors that is set to test the financial system.
Speaking to The Australian Financial Review before the Sohn Hearts & Minds conference, Sandler named global on-demand ride-sharing and food delivery service Uber Technologies among his top picks, alongside real estate marketplace Zillow.
When former Amcor chief executive Ken MacKenzie was named the new chairman of BHP five years ago, that was a sign for top-rated fund manager Peter Cooper to move back into the mining giant.
Jun Bei Liu is the lead portfolio manager at Tribeca Alpha Plus Fund. Ms Liu is set to present an investment idea at the Sohn Hearts & Minds conference in Tasmania on November 18.
Regal’s hedge fund focused on the resources space has thumped the market and its top stock picker, Tim Elliott, says resources stocks are still cheap.
Desmond, who worked in London before moving to Australia in 2008, is making his first appearance at the annual Sohn Hearts & Minds Investment Leaders Conference, where fund managers give their favourite stock tips to raise money for medical research charities.
Catherine Allfrey, Principal and Portfolio Manager of WaveStone Capital will be speaking at this year's Sohn Hearts & Minds Conference in Hobart which raises funds for Australian medical research.
The WaveStone principal says retail will drop away but quality operators will find a way through.
Bill Browder, the fund manager who has become one of Vladimir Putin’s fiercest critics, says the Russian leader is increasingly desperate, but no less dangerous.
Bill Browder, once the largest foreign investor in Russia and the man behind the global Magnitsky justice campaign, says the US is the weakest link in the war in Ukraine.
There are many descriptors for Browder, including Russia’s anti-corruption crusader, and its most dogged oligarch hunter. But it’s his title as Putin’s No.1 foreign enemy that bestows on him another label - consummate survivor.
On November 18, Griffin – with $4.7bn under management at Munro Partners – heads to Hobart for this year’s face-to-face pitch to investors on his 2023 pick.
Tim Carleton, founder of Auscap Asset Management and 2022 Conference Fund Manager sat down with Equity Mates to discuss his investment philosophy and what makes a great Australian company.
When investor Kara Nortman and actor Natalie Portman decided to start a soccer team, they created a brand that has grabbed the sporting world’s attention.
Sporting teams and leagues are becoming serious investments for global firms managing billions of dollars, as private equity funds eye off the sector’s growth potential and resilience to economic slumps.
Australia’s sports leagues are being held back by a culture of conservatism and need to be more open to private equity investment or risk falling behind, investors say, with Netball Australia’s rejection of a $6.5m bailout cited as just one example of administrators’ aversion to private capital. Conservative Australian sports leagues are ‘letting investment opportunities pass them'.
Keynote speaker will be Bill Browder, the former Hermitage Capital hedge fund manager that has become an arch nemesis of Russian President Vladimir Putin, as he has lobbied governments to black-list senior Russian officials attempting to shift their assets offshore.
A financier and political activist who is viewed as a key enemy of Russia’s government will address Australian investors on the war in Ukraine at this year’s Sohn Hearts and Minds conference, as the conflict continues to have a major influence on global markets.
Bill Browder, one of Russian President Vladimir Putin’s fiercest critics, the founder of Hermitage Capital and the man behind the Magnitsky Law on human rights, will headline this year’s Sohn Hearts & Minds investor conference.
