Market Matters Q&A

The recent call on Commonwealth Bank (CBA) in the Income portfolio

Hi MM team, I found your call to potentially sell CBA from the Income portfolio very interesting. Interesting because I sort of have a similar quandary regarding my holding of DBI. MM’s CBA investment pays a 7.7% dividend that is fully franked (div/entry price).
I have read and I think I understand the rhetoric about CBA and its lofty price but it’s a comfortable cashcow. Please can you explain why MM is looking to potentially sell. Does MM have a replacement investment of similar ilk in mind (income and risk)?
Or is it just a funding vehicle for the next buy?
Thanks and regards, JanP

Hi MM,
It’s more a comment than a question. I appreciated your recent comments on CBA. I unfortunately listened to too many sell-side analysts and took the opportunity to get some extra income from CBA by selling covered call options. Whilst initially out of the money, they are now well in the money so could lose them when they next go ex dividend in August. My options (no pun intended) to keep the shares are to buy out the contracts or roll them over, both at a cost to me. Otherwise, I’ll take solace in the knowledge that no-one ever went broke taking a profit.
Cheers Peter

No jeers from us on selling CBA – go for it!- Karl

Jan

APA Group (APA)

Morning Shawn & Team,

Continue to value your daily reports & insight as ever.

With the RBA anticipated to cut rates by 25BPS next week, what impact (if any) would you anticipate this to have on the APA share price please (if any).

Also, do you know why, with a strong holding gold price, depreciating US$, why NST seems to be descending daily, now over 20% off its highs with a low RSI?

Thank you, Bernie

Bernie

The ETF Ponzi Scheme

Hi  Guys,

I am sure I am not the only one concerned about the continuing seemingly unstoppable rise in Industry Index ETF valuations, with only minor drawdowns.

Perhaps you can answer the mystery. For my part I think it has the hallmarks of a Giant Ponzi Scheme.

Index Funds must follow the related index with Buy and Sell orders to closely follow the index. However, they also must create and redeem the number of units on issue in the ETF, according to the volume of Buy/Sell Orders received. Here in Australia we have an almost unique situation where the Superannuation Sector is subject to a rising minimum Contribution to Super now 11.5 % pa of workers Gross Wage.

Much of this capital in continuing to roll into ETF’s with both Insto’s and SMSF’s fuelling the growth in funds in ETFs, to record levels. Insto’s must also maintain their weighting by market sector, causing them to increase their allocation of funds., many choosing ETF’s to achieve this.

This has distorted the Value and Yields of many market sectors and stocks. Witness the CBA with a Yield of 2.5% and our Banking Sector now the most expensive in the world.. But the ETF and Share price continue to rise??

Has the world gone mad?? What am I missing here? When and How do you see this Ponzi Scheme blowing up?

Thanks James for your expert commentary

Richard

Alkane Resources Ltd (ALK)

I am a long term holder of Alkane and it has been a bit of a ride although I have managed some alpha to keep ahead. The latest merger proposal seems to have some logic to create a more liquid and potentially more attractive target, but I am wondering why Mandalay sees this as an opportunity. My conspiracy theory misgivings is that it may make a way for the tightly held shareholders to liquidate their positions. Am I overthinking this. I always value your opinion so interested for your take on the pros and cons of this merger for the ALK share price.

Peter

Monash IVF (MVF)

Dear MM,
I noted you are buying Helia Group, HLI, for the active income portfolio after its recent drop in price. I was wondering what you thought of Monash IVF, MVF, as an option for this portfolio or as a high risk/reward opportunity. There may be similarities to HLI. Good dividend, possible SP recovery, and a reasonable response (?) to their second mistake. Hopefully they don’t come in threes! Best regards
Mark

Hi MM,
I’d appreciate your view on MVF as a growth/dividend stock. I know they have had recent issues that have impacted share price but are these issues systemic or can they be addressed?
Thanks.

Mark

CSL Ltd (CSL) and tariffs

Morning Shawn & Team,

With markets encountering a barrage of headwinds in recent months & now trading at all time highs, do you think there is complacency for July tariff risks, or will they be ‘shrugged off’?

Specifically, do you see good value or more upside, or risk & more downside for CSL at current levels? It has traded in a range for the last 5 years, but is it at risk of the pending pharmaceutical tariffs if announced? Would this be short-lived knock anyway & to be seen as an opportunity to pick up, or best to get out ?

What effect does a lower US$ have on CSL earnings please?

Thank you, Bernie

Bernie

Active Growth Portfolio – yearly performance 2024-2025

Firstly, thank you for your excellent service and great market insight.

Secondly, my question is relevant to the Active Growth Portfolio in 2024-2025. Maybe, my question sounds “rough”, but I don’t mean anything sinister, nor offensive.

Why has the portfolio under-performed the ASX200 index by 15%+ ? How does it compare to other brokers/services? Are there any observations you are willing to share?

Again, I am not trying to be difficult just trying to get your insight into this performance.

Thanks once again for your service and I wish you all the best next financial year.

Kind regards,
Robert

Robert

Data#3 Ltd (DTL)

Hi, could I please have your thoughtss on DTL please??

peter

Unibail-Rodamco-Westfield (URW)

Can I get your thoughts on the upcoming voluntary delisting of URW. As a CDI holder we have been given information on the Delisting process and 4 Options available to us.

Murray

Southern Cross Elec. Eng. (SXE) & IPD Group (IPG)

What is the reason that you have SXE on your Emerging Companies hit list and not IPG? Are these companies similar and if not, what are the reasons for your preferring SXE?

Angela