Latest news with #passiveinvesting
News.com.au
3 days ago
- Business
- News.com.au
Precision Points: Stockpicking and fundamental value still keys for the patient investor
In Precision Points, Precision Funds Management executive directors Dermot Woods and Andy Clayton draw on insights from two decades on the front lines of equity markets to share their expertise with Stockhead readers. The world is heading increasingly in the direction of passive investing, ETFs and index tracking portfolio management. That lines up the capital held in major institutions, especially the super giants responsible for managing the retirement savings of millions of Australians, more closely to the momentum of the market. But fundies say there is still a role for stockpicking. Precision Funds Management's performance over the past month is a case in point, with portfolio managers Dermot Woods and Andy Clayton pointing to double digit gains, beating the performance post-Liberation Day of the broader market. They say the worm has turned outside the gold space, with a number of long-held conviction bets paying off. "The market's broadening out all of a sudden. There's a little bit of breadth to the rally which is interesting because any time we've had an indicator of that really in the last year or so, that's immediately been murdered," Woods said. "You can sort of smell the animal spirits returning to the smaller cap space and (investors) being a bit more open minded." One of the key triggers has been declining interest rates, with cuts in February and May taking the RBA cash rate to 3.85%, the lowest level since May 2023. "What benefits most from declining rates? All the gold guys will tell you it's gold because everything's good for gold for gold bulls," Woods said. " But what it's really good for is base metals and property and old fashioned cyclicals – contractors and things like that." Success stories Among the key contributors to Precision's performance in May were property sector stocks Cedar Woods Properties and Australian Finance Group (ASX:AFG). They've lifted a respective ~25% and ~22% over the past month. Cedar Woods is a small cap developer with around 9700 lots planned across 37 residential developments in WA, Victoria, Queensland and South Australia. AFG, meanwhile, is a mortgage aggregator, which recorded an 18.5% lift in mortgage lodgments for the third quarter of FY2025, its highest on record at $24bn. Woods said Precision had held the trade for a couple of years. "It's a patient trade really," he said. "Part of the reason we were happy to sit with a patient trade in property rather than say lithium is we're getting paid a dividend. "That's 2 or 3 times cash rate sitting there. And there's proper fundamental asset value that we look at, certainly in the case of Cedar Woods. "We bought it for the two things that are happening now, which is lower rates and stupid government kneejerk policy to bribe the electorate." The other, more recent trade, that has worked out has come in the base metals space, where copper miner Sandfire Resources (ASX:SFR) has quickly returned to all time highs within five weeks of being sold off to 12 month lows in the week of market mayhem following Donald Trump's tariff policy reveal. LME three month copper prices fell to US$8590/t on April 9, when SFR shares hit $8.15, but they've sharply rebounded to US$9635/t by May 8. There's been genuine market tightness behind that run. Copper smelters have spent most of the year paying miners to treat their concentrate because supplies are short compared to refining capacity in China, while at just 83,000t copper metal stockpiles in LME warehouses are their barest in two years. "There's always pockets of overvaluation. There's always pockets of undervaluation. And the one that we spotted two years ago was definitely property. It has taken two years to work to work out," Woods said. "The one we spotted two months ago was copper. We didn't think that would happen (in only) a month and a half." Fundamental value While sectors with strong momentum can make money at the right time of the cycle – gold miners and developers are a case in point right now – Woods and Clayton said they liked to look for stocks that offered fundamental value, which protected downside risk if the market turned. They're wary on gold and view a number of companies in the space as overvalued right now. But those which have long term cashflow generation and production growth in full view, like West African producer Perseus Mining (ASX:PRU), still ring true. "A lot of (gold stocks' prices) is influenced by what happens on the (passive ETFs) GDX or GDXJ overnight," Clayton said. "Which is why Perseus is one of our key holdings. We think ... fundamentally they're cheap." Precision thinks Perseus is unique, given it has two-three growth assets all of which can be funded through internal cashflows. "They're generating US$150 million a quarter in free cash, plus they've got growth," Clayton said. "They bought the Nyanzaga asset (in Tanzania) off OreCorp. They've just done FID on that. And they'll be arguably ... plus 600,000oz by FY28. "They have good, long life reserves at all their key projects. " Compared to the Aussie guys that's, I would say, probably trading 50% less than a comparable 500,000oz producer."
Yahoo
19-05-2025
- Business
- Yahoo
SThree (LON:STEM) investors are sitting on a loss of 43% if they invested a year ago
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. Active investors aim to buy stocks that vastly outperform the market - but in the process, they risk under-performance. That downside risk was realized by SThree plc (LON:STEM) shareholders over the last year, as the share price declined 46%. That falls noticeably short of the market return of around 4.8%. Even if you look out three years, the returns are still disappointing, with the share price down35% in that time. With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). Unhappily, SThree had to report a 12% decline in EPS over the last year. The share price decline of 46% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 5.93. The company's earnings per share (over time) is depicted in the image below (click to see the exact numbers). It's good to see that there was some significant insider buying in the last three months. That's a positive. That said, we think earnings and revenue growth trends are even more important factors to consider. It might be well worthwhile taking a look at our free report on SThree's earnings, revenue and cash flow. As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. So for companies that pay a generous dividend, the TSR is often a lot higher than the share price return. We note that for SThree the TSR over the last 1 year was -43%, which is better than the share price return mentioned above. The dividends paid by the company have thusly boosted the total shareholder return. Investors in SThree had a tough year, with a total loss of 43% (including dividends), against a market gain of about 4.8%. However, keep in mind that even the best stocks will sometimes underperform the market over a twelve month period. On the bright side, long term shareholders have made money, with a gain of 5% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand SThree better, we need to consider many other factors. Take risks, for example - SThree has 2 warning signs (and 1 which doesn't sit too well with us) we think you should know about. SThree is not the only stock that insiders are buying. For those who like to find lesser know companies this free list of growing companies with recent insider purchasing, could be just the ticket. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on British exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
17-05-2025
- Business
- Yahoo
Sime Darby Berhad (KLSE:SIME) investors are sitting on a loss of 20% if they invested a year ago
Passive investing in an index fund is a good way to ensure your own returns roughly match the overall market. When you buy individual stocks, you can make higher profits, but you also face the risk of under-performance. That downside risk was realized by Sime Darby Berhad (KLSE:SIME) shareholders over the last year, as the share price declined 24%. That's disappointing when you consider the market declined 2.5%. Longer term shareholders haven't suffered as badly, since the stock is down a comparatively less painful 6.1% in three years. With that in mind, it's worth seeing if the company's underlying fundamentals have been the driver of long term performance, or if there are some discrepancies. AI is about to change healthcare. These 20 stocks are working on everything from early diagnostics to drug discovery. The best part - they are all under $10bn in marketcap - there is still time to get in early. To quote Buffett, 'Ships will sail around the world but the Flat Earth Society will flourish. There will continue to be wide discrepancies between price and value in the marketplace...' One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). Unhappily, Sime Darby Berhad had to report a 8.3% decline in EPS over the last year. The share price decline of 24% is actually more than the EPS drop. Unsurprisingly, given the lack of EPS growth, the market seems to be more cautious about the stock. The less favorable sentiment is reflected in its current P/E ratio of 9.63. You can see how EPS has changed over time in the image below (click on the chart to see the exact values). This free interactive report on Sime Darby Berhad's earnings, revenue and cash flow is a great place to start, if you want to investigate the stock further. It is important to consider the total shareholder return, as well as the share price return, for any given stock. The TSR is a return calculation that accounts for the value of cash dividends (assuming that any dividend received was reinvested) and the calculated value of any discounted capital raisings and spin-offs. Arguably, the TSR gives a more comprehensive picture of the return generated by a stock. As it happens, Sime Darby Berhad's TSR for the last 1 year was -20%, which exceeds the share price return mentioned earlier. And there's no prize for guessing that the dividend payments largely explain the divergence! We regret to report that Sime Darby Berhad shareholders are down 20% for the year (even including dividends). Unfortunately, that's worse than the broader market decline of 2.5%. Having said that, it's inevitable that some stocks will be oversold in a falling market. The key is to keep your eyes on the fundamental developments. On the bright side, long term shareholders have made money, with a gain of 7% per year over half a decade. It could be that the recent sell-off is an opportunity, so it may be worth checking the fundamental data for signs of a long term growth trend. It's always interesting to track share price performance over the longer term. But to understand Sime Darby Berhad better, we need to consider many other factors. To that end, you should be aware of the 2 warning signs we've spotted with Sime Darby Berhad . We will like Sime Darby Berhad better if we see some big insider buys. While we wait, check out this free list of undervalued stocks (mostly small caps) with considerable, recent, insider buying. Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on Malaysian exchanges. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
08-05-2025
- Business
- Yahoo
The 40% return delivered to Singapore Post's (SGX:S08) shareholders actually lagged YoY earnings growth
Passive investing in index funds can generate returns that roughly match the overall market. But if you pick the right individual stocks, you could make more than that. For example, the Singapore Post Limited (SGX:S08) share price is up 38% in the last 1 year, clearly besting the market return of around 15% (not including dividends). So that should have shareholders smiling. Zooming out, the stock is actually down 13% in the last three years. After a strong gain in the past week, it's worth seeing if longer term returns have been driven by improving fundamentals. Our free stock report includes 2 warning signs investors should be aware of before investing in Singapore Post. Read for free now. While markets are a powerful pricing mechanism, share prices reflect investor sentiment, not just underlying business performance. One way to examine how market sentiment has changed over time is to look at the interaction between a company's share price and its earnings per share (EPS). Singapore Post was able to grow EPS by 123% in the last twelve months. It's fair to say that the share price gain of 38% did not keep pace with the EPS growth. So it seems like the market has cooled on Singapore Post, despite the growth. Interesting. The image below shows how EPS has tracked over time (if you click on the image you can see greater detail). SGX:S08 Earnings Per Share Growth May 8th 2025 We know that Singapore Post has improved its bottom line lately, but is it going to grow revenue? If you're interested, you could check this free report showing consensus revenue forecasts. What About Dividends? As well as measuring the share price return, investors should also consider the total shareholder return (TSR). Whereas the share price return only reflects the change in the share price, the TSR includes the value of dividends (assuming they were reinvested) and the benefit of any discounted capital raising or spin-off. It's fair to say that the TSR gives a more complete picture for stocks that pay a dividend. As it happens, Singapore Post's TSR for the last 1 year was 40%, which exceeds the share price return mentioned earlier. The dividends paid by the company have thusly boosted the total shareholder return. A Different Perspective We're pleased to report that Singapore Post shareholders have received a total shareholder return of 40% over one year. That's including the dividend. Notably the five-year annualised TSR loss of 1.8% per year compares very unfavourably with the recent share price performance. The long term loss makes us cautious, but the short term TSR gain certainly hints at a brighter future. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Consider for instance, the ever-present spectre of investment risk. We've identified 2 warning signs with Singapore Post (at least 1 which can't be ignored) , and understanding them should be part of your investment process.
