Tag: shares

iSentia Group Ltd (ASX:ISD) disappoints again!

 Shareholders in iSentia Group Ltd (ASX:ISD) are surely due for some good news with this mornings downgrade another blow to long suffering holders.

This how the company broke the news.

isd-down-grade

While it is some solace for shareholders that the “core” Saas and VAS businesses are performing in line with expected growth. The content marketing division although  only representing 7% of EBITDA in 2016 it has managed somehow to drag the first half below last years result.

Lets not forget it was only a few short months ago the company was expecting solid double digit growth.

While the company has put in place actions to resolve the situation there is no guarantees, as such I believe investors should wait to see proof before making a decision either way.

Tip for new investors.

When a well known stock falls by 30% such as iSentia has done, it is important to reconsider the fundamentals of the company and not to panic sell on the first day. You will often find (nothing is 100% guaranteed) such companies will often rebound strongly with other investors rushing in to buy what they believe is now a bargain price. This will allow you time to check the fundamentals overnight and allow you to receive a better exit price if you wish to sell.

Note: This rebound is not applicable to small illiquid stocks which can tend to head lower over time.

 

Disclosure:
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.

Warren Buffett is buying airlines, has the world gone mad?

Berkshire Hathaway the company run by investing legend Warren Buffett has announced in its regulatory filing that as at September 30, Berkshire owned $US797 million of American, $US249.3 million of Delta and $US237.8 million of United shares. He has also recently gone on record to owning Southwest Air as well.

Lets not forget this is the same Warren Buffett who wrote in a letter to Berkshire Hathaway:

“The worst sort of business is one that grows rapidly, requires significant capital to engender the growth, then earns little or no money. Think airlines. Here, a durable competitive advantage has proven elusive since the days of the Wright brothers. Indeed, if a farsighted capitalist had been present at Kitty Hawk, he would have done his successors a huge favor by shooting Orville down.”

While it is customary for Warren Buffett to not comment on why Berkshire has started to invest in a company what we see from Australian airlines is that profits are very much aligned with the oil price. Australia’s own airline Qantas Airways Limited (ASX:QAN) which had been struggling for many years posted record profits over the last 12 months on the low oil price.

In my opinion a bet on the airlines by Buffett means he believes lower oil prices are here to stay for the medium term and that the US economy is picking up to afford extra income for travelers to spend.

What concerns me is the increased competition in pricing, which we have seen in Australia which no doubt will have also infiltrated the American market. While cheap flights are great for travelers they are the reverse for airline margins. Any rise in the oil price will in my opinion cause some serious issues for the airline’s bottom line and that is why I wont be following Warren into the airline industry investments anytime soon.

Tip for New Investors

It is important to only enter positions because you understand the reasons for investing not because another investor is holding the company. Firstly the well known investor may have held the company for a long time before you became aware he holding and it may no longer represent value at its current price. You also need to be aware to the possibility that some investors may make their holdings public in an effort to inflate the price before selling. (Note I am not suggesting Warren Buffett would engage in such practices I believe he is one of the most upfront and honest investors in any market)

Disclosure:
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.

Trump Triumphs

 Wow what a day and what a week.

The man no one thought would become President of the United States of America has done just that.

As the shock waves still vibrate around the world the question for investors is what does this mean to them and how should they invest a Donald Trump presidency?

If you had asked me this question last week I would have said go short equities and buy gold but since Donald Trump has been elected his whole approach has changed completely.

It began with his gracious acceptance speech where he thanked Hillary for her years of service yes that’s the very same Hillary just a few weeks earlier he had said he would send to jail if elected. He then went on to outline his idea of spending big in infrastructure to stimulate growth and get middle class Americans back to work.

The policy of huge tariffs had apparently disappeared and the market was liking the change with the ASX down 5% at one stage to bounce back to over 3% the next day.

While I must admit I do not know if this new approach will last I have been calling for expenditure on infrastructure in both Australia and the US to help economic growth as rate cuts begin to lose their affects.

While I am not convinced President Trump will follow through with these new promises as an investors I can only invest on what I know, and so far Trump is making the right noises.

Tip or New Investors.

While it is tempting to guess which way the market will head with a Trump victory, I have learnt that even the most highly paid analysts are wrong about the future more often than they are right. It is human nature to try to foretell the future but it is better to base your investing on facts and sound economic principles.

Disclosure:
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.

REA Group Limited (ASX:REA) Q1/2017 listings slowing.

REA Group Limited (ASX:REA) has today released its Q1/2017 trading update and the announcement confirms what was reported by Fairfax Media Limited (ASX:FXJ) that property listings in key markets Sydney and Melbourne had continued to fall throughout the quarter. (See announcement below)

rea-01-2017

REA Group is blaming the lack of listings as deterring potential sellers, perhaps this is the case but it sounds an unusual reason not to list a property for sale. Personally I would prefer less competition when selling my home. I dare say uncertainty around government changes to tax treatment of investment properties are starting to influence the market.  REA Group does however appear to be coping slightly better than Fairfax’s doman.com.au in the local market.

Pleasingly revenue growth in Q1 was driven by its purchase of iProperty Group Ltd (ASX:IPP).

The good news for investors is that revenue is forecast to increase above revenue costs over the forward financial year but trading on a forward price to earnings ratio of 25 its share price may come under further selling pressure.

Tip for New Investors

As a new investor it is tempting to jump on companies which have grown strongly over a number of years but it is important to remember nothing grows strongly forever. As a company matures and growth slows it is more important to look for value in the share price before entering.

Disclosure:
Please Note: None of the above should be considered investment advice. These are my own opinions based on a number of years market experience. Please do your own research and consult a qualified financial advisor if you wish to invest.