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Investment Advice

RELATED BLOG POSTS

Limited time investment opportunity - take advantage before 30 June!

Current market conditions has created a compelling, limited opportunity that you can take advantage of before 30 June.

Tailor a low volatility portfolio using 100 per cent financing, and take advantage of the current combination of high dividend yields and low interest rates.

In this environment you can create an investment portfolio with potentially very low post-tax servicing costs, with limited recourse protection on the downside and unlimited participation in the upside performance of the underlying shares.

Current pricing: compelling breakevens

To illustrate current opportunities,workings of a five year cashflow including allocations to Westpac, Telstra, NAB and the MSI Cash Trust.

  • Portfolio interest rate of 8.47% pa (fixed for one year) versus a RBA deductible benchmark of 8.05% pa
  • Potentially very low post-tax servicing costs over the five year term after factoring in interest deductibility, distributions and franking credits received from the portfolio
  • Estimated average post-tax servicing cost of $981 per annum on a $200,000 GEI loan amount, based on starting assumptions
  • Therefore stocks only have to appreciate by 1.45% pa to breakeven
  • To look at this another way, if you invested in this GEI plus portfolio on 5 June 2012, and WBC, TLS and NAB returned to their closing share prices as at 30 April 2012, over the five year GEI term the investor would make a profit. And this is a scenario which includes one of those stocks, TLS, actually falling in value
  • No cap to the investor's upside.

Key features - take advantage before 30 June

  • Blend new unlisted managed funds into the portfolio to:
    • enhance portfolio diversification and asset allocation
    • lower portfolio interest rates
    • reduce portfolio volatility
  • Tax certainty of an ATO Product Ruling - PR 2011/53
  • Deductible interest costs up to the RBA benchmark rate (currently 8.05% pa)
  • Fix and pre-pay interest before 30 June (interest loan available)
  • Uncapped direct share ownership: access current improved dividend yields, benefit from franking credits4
  • access uncapped capital growth potential
  • Borrow 100 per cent of the initial investment amount
  • 100 per cent capital protection throughout the term5
  • No margin calls
Please contact me on 1300 132 214 or by email to find out more about this offer.
Edward Mazzoni | Tuesday, June 19, 2012
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Arena Office Fund Capital Raise Update


The details of the Arena Office Fund Capital Raise have been finalised and it looks like a great opportunity to claw back some value in regards to these investments due to a very attractive discount of 36% on our purchase price.

Please review the details on our website.

Should you wish you can contact us directly on 1300 132 214.

Cheers

Rob Coyte
Edward Mazzoni | Thursday, June 14, 2012
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Pardon?

Financial markets have not yet returned to "normality" as can be very readily seen in the following scenario.
There is a listed Investment company Premium investors ltd (ASX:PRV) that is current buying back its shares at a premium to the last share price. Yes that's right the shares are trading on the sharemarket at $0.65 but the company is offering to buy back from investors at $0.80 per share.
How is this possible?
A listed Investment company simply buys shares in other companies therefore it only owns shares which are themselves listed on exchanges throughout the world at a price. Therefore, in theory the share price of the Listed Investment Company (LIC) should trade at the market value of all the stocks it owns.
In this case it is trading at a large discount. The LIC can therefore sell the shares that it owns and receive funds which can then be used to buy back its own stock back of its shareholders for far greater than what the market is trading at providing them some liquidity at a "real" price.
Opportunity for a long term investor is to but a portfolio of shares for a big discount to the current value.
Edward Mazzoni | Tuesday, May 15, 2012
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Bank practices during the GFC

Four Corners had a very interesting episode on last night dealing with banking practices during the GFC in particular BankWest which was formerly owned by HBOS (Bank of Scotland) click here to view

 

The behaviour of the banks collectively has directly impacted thousands of people around Australia. These people vary from small to medium size businesses, some of whose stories can be seen here, to investors in any property fund (such as Orchard) that was forced to sell assets at ridiculous prices at the height of the panic. Interestingly, these people are the same taxpayers who through Kevin Rudd provided the banks a life line and competitive position to be able to ride out the GFC storm.

 

There is currently a senate inquiry into the banking industry and its behaviour click here to view. I would suggest that those that have been effected ensure that your views and concerns are shared.

 

If you don’t do anything it is unlikely to wield any change.

Edward Mazzoni | Thursday, April 12, 2012
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Current State of Dividends for Shares

It is ultimately the dividends from our shares that give us an income stream to be able to fund our lifestyle. This income needs to grow over time as the cost of the goods and services we require rise with inflation.
 
What is the current state of the dividends from shares?
 
Howard Silverblatt, S&P’s senior index analyst announced recently that annual dividend rate of US$29.02 per index share the highest since June 2008 when it was US$28.96. With the GFC this figure fell 26 percent to US$21.44 in August 2009. It has subsequently risen 35 percent from that time.
 
According to Bloomberg, S&P 500 companies are paying out 30 percent of profits, less than the average of 52 percent. This means that actual dividend amounts have never been higher and companies are paying out proportionately less than they have previously providing a buffer for investors.
Edward Mazzoni | Monday, March 19, 2012
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Are you Positioned To Take Advantage of Market Changes?

The last 4 years have been difficult for investors the question is how do we go forward?

Quite simply we can lick our wounds and crawl in the corner or we can get on with “moving forward” (copyright Julia).

If we choose the later than the question then becomes how?

At the moment for patient and astute investors there is a plethora of opportunity in the markets as the world struggles to grasp the current economic issues. As the markets sell off has been considerable this means that a lot of this “bad” news is already factored into the share price.

However, as an investor you have some doubts on how you can benefit. Where am I going to get the money from and am I taking on too much risk? If you decide that you would like to have a go then we can build a strategy around some very good products to manage the later. Importantly, all we need to participate is some free cash flow every month.

Please refer to our website for further information and please hurry as this opportunity will close shortly.

If the world financial markets are turning are you positioned to benefit?

Edward Mazzoni | Friday, March 09, 2012
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Smart Money - Part 2

Following up from last week's blog on what the smart money is doing...
 
The major shareholder and founder of Billabong, Gordon Merchant, sent a letter to the board saying they believed a bid of $4 per share grossly underestimated the value of the company so they would not be engaged at the current bid of $3. It is believed that this has resulted in discussions ceasing on the matter. Back in 2007 the company had a share price north of $17 and a market capitalisation of nearly $4 Billion.
 
The company has sold some assets by way of selling a 50% stake in its Nixon business which will result in the receipt of some $285 million. These funds will be used to reduce the company debt which currently stands at $525 million.
 
Meanwhile, Singapore based Wilmar International Ltd., the world’s largest palm oil trader, bought a 10.1 percent stake in Goodman Fielder Ltd. for $115 million. Buying the stake in Goodman Fielder, which has local rights for Crisco oils and Newman’s Own salad dressings, increases Wilmar’s exposure to Australia after paying $1.75 billion recently for the nation’s biggest sugar company, Sucrogen Ltd.
 
Goodman Fielder shares, had a low of 39.5 cents in early Jan, and are now trading at 65 cents.

As reported in Bloomberg, Goodman’s second-largest shareholder through David Herro, Chief Investment Officer at Chicago- based Harris Associates LP,“At this price, we think Goodman remains substantially undervalued”.

The bid is “opportunistic”, Goodman Fielder spokesman Ian Greenshields said by telephone from Auckland when interviewed by Bloomberg. “Value lies well north of 60 cents,” he said. Goodman Fielder, whose brands also include Helga’s and Wonder White bakery, is trading at 6.63 times estimated full-year EBITDA.

Edward Mazzoni | Thursday, March 01, 2012
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When Business Are Cheap – Smart Money is Buying

Investors have been dealing with a lot of “big picture” issues. They have been following the Greece and European debt saga for nearly 2 years, we are also working through the inevitable hangover of the GFC and the fact the world economic growth has slowed. This has seen a reluctance for investors to be buyers in asset markets which when people invariably need to get out leads to softer and weakening prices.

This means that the underlying assets or business become cheaper.

As with all investing the decision to invest needs to reconcile what the value of the asset is “worth” to what it is actually trading at.

Invariably over its lifetime a business will have periods where it is struggling with certain factors or indeed dealing with undesirable issues the question invariably becomes when investors start selling the company when has it gone too far? The value as measured by the share market (price we can buy for) has gone beyond a “reasonable price” for that business notwithstanding the matters it may be faced with. This means opportunity.

At the moment a real life scenario is playing out with Billabong who has been looking at options for its balance sheet amid a collapse in earnings caused by stalling consumer spending in Europe and Australia and a surge in the Australian dollar.

Billabong reported a 72 percent slump in earnings, with net profit dropping to $16.1 million in the six months ended Dec. 31. Billabong have announced a wave of store closures for its global network which plans to cut $30 million from costs. This has seen Billabongs share price fall off a cliff from over $11 some 2 years ago to just below $2 at its low and dividends cut over this period. Just 2 years ago the business was valued at over $2.3 Billion and now about $500 million.

TPG Capital, the buyout company run by David Bonderman, offered to buy Billabong International Ltd. for $765 million or $3 per share on 17th Feb. This offer was some 68% premium to the previous day’s closing price. Naturally, after hearing the news the share price for BBG jumped quite quickly. “The TPG offer at $3 is quite opportunistic when you consider the value of the business and the value of its brands,” said Tim Montague-Jones, an analyst at Morningstar Inc. in Sydney speaking with Bloomberg. “I don’t think they would sell at $3 and it would have to be a lot higher than that.”
Edward Mazzoni | Monday, February 20, 2012
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Prosper or Panic?

Well it appears that the financial markets are here to test us again. No doubt the very recent memory of the GFC is contributing to the fear that has overcome markets in the last few weeks.
 
According to Bloomberg around US $75 Billion worth of mutual funds were sold in the past 4 months a similar amount to that sold in the period of Lehman Brothers collapse.
 
So where is the market and what are investors doing?
 
Bruce McCain, manages US $22 billion told Bloomberg recently “When we’re getting close to a market bottom, the phone starts ringing off the hook and our clients want us to sell everything. Market bottoms are less about an improvement in the fundamental situation, whether the economy or outlook for earnings, and a lot more about getting rid of all the anxious investors.”
 
“The five months after Lehman were an epic buying opportunity, yet investors liquidated en masse,” Barish an investment professional who mnaages US $8 Billion told said. “Retail unfortunately tends to time things poorly. I don’t expect the current situation to be all that different.”
 
Where are the underlying fundamentals of the businesses?
 
Data compiled by Bloomberg show US corporations have been hoarding cash and paying down borrowings. The S&P 500’s net debt to earnings before interest, tax, depreciation and amortization ratio is down to 2.5 from 5 in the second quarter of 2008. Furthermore this year’s earnings will increase 18 percent to a record US$99.57 a share and break $100 next year. This means we have companies at their most profitable and with a strong financial structure (less debt) meaning we are getting an absolute bargain if you are a long term investor.
 
What is The World's Greatest Investor Doing?
 
Warren Buffet is not concerned about European debt as he believes it will have fallout but nothing like the GFC. He doesn't believe the US is going into a double dip recession and that a recovery is underway.

His company Berkshire Hathaway is buying back its own shares because "they’re undervalued", Buffett said. He was quick to point out this won't preclude them purchasing shares of other firms or entire companies, who told shareholders in his annual letter that his “elephant gun” is loaded. “If the stock is cheap we will buy it in. If it isn’t cheap we won’t buy it.” said the Oracle.
Edward Mazzoni | Thursday, October 06, 2011
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A Revolution Occurring?

An investor in the US,  Southeastern Pennsylvania Transportation Authority, is looking to sue Goldman Sachs over their employee compensation schemes which rewards employees at shareholders expense. Goldman Sachs, the fifth-biggest US bank by assets, has lost US$50 billion in market value since 1999 while the company has paid out billions in compensation to the firm’s 31,000 employees. The lawyers remarked how “Goldman officials received billions in pay and bonuses last year while the firm settled claims by the U.S. Securities and Exchange Commission that executives misled investors in collateralized debt obligations linked to subprime mortgages”.

According to Bloomberg, Goldman’s set a Wall Street pay record in 2007, and was subsequently “pilloried by politicians and labor unions for its compensation practices after getting taxpayer aid during the financial crisis”.

It is hard to imagine how employees of banks who have lost billions in capital for their owners and sent the world to the brink of disaster forcing governments to bail out these banks for their misdeeds have been eligible for “bonus” payments. I can’t see how they keep their job yet alone the former.

However, is this a sign that maybe people are starting to have enough?

I have long believed that fund managers or mutual funds in the US have taken a way to passive role in the governance of senior management. They effectively let them get away with whatever they want surely part of the fund managers duty is to scrutinise the reasonableness of staff remuneration the same way they would if THEY owned the business. Clients in fund managers are paying fees and the fund managers should be earning those fees on the governance side by holding senior management to account if actions are not in share holders interests.
Edward Mazzoni | Tuesday, September 13, 2011
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Are you aware of the range of investment opportunities that could increase your wealth while managing your risk? We can introduce you to a range of these options and recommend those of greatest benefit to your individual situation.

These could include:
  • commercial property trusts
  • higher yielding investments
  • superannuation including private funds with a wide range of investment choice
  • share market investments
  • Bullion
  • specialised boutique fund managers
  • opportunities for Sophisticated Investors
  • hedge and private equity investments
  • Structured Products including capital protection solutions.
  • Private Equity including seed capital and Pre IPO opportunities

Private Placements to Eligible Investors

An investor that is capable of making an investment decision without the need to consider a disclosure statement/prospectus may obtain a benefit over conventional retail investors, as they may qualify to participate in “institutional” or “wholesale” placements of securities.

Centre Capital Securities has access to these types of investment opportunities please contact us if you wish to be informed of these opportunities as they arise.

Share Market Upside Without the Downside

We can show you how - for those with their own capital!

We can show you how - for those without capital but with free monthly cashflow!

 

 

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