At Seneca, we believe that at the core of any relationship is trust. And that trust is earned through consistent excellence and courageous transparency.
Having spent many years working at large organisations, we learned that it’s not the institution that our clients trust, but the people who work there every day. It’s about the careful consideration of each individual client’s unique needs and consistent application of the advisor’s expertise to the changing economic conditions.
As the CFO of one of the world’s leading specialist natural resources investors, and after having employed Luke in a previous role, I’ve been thrilled with the efficiency, capability and service-offering Seneca have been able to offer my SMSF. Relative to the conflicted banks and standard ‘stockbrokers’ they provide me with unique investment opportunities, considered financial advice and most importantly, really tailor their advice to my circumstances and investment preferences. I think their innovative approach is set to really corner the market.
Rob Bishop - CFO, AMCI Investments Pty Ltd
Luke and the team at Seneca have been instrumental in driving returns for our SMSF in recent years. As the CEO of one of Australia’s most innovative organic fertiliser company’s, whilst I’ve been busy operating our business, Seneca has been able to provide us with a diversified set of direct and indirect investment opportunities, provide timely and strategic advice and educate us on our behavioural biases, resulting in excellent compounding returns. We’ve been strong supporters of Seneca since day 1 and enjoy the high-touch, often daily interactions we have with the team and appreciate the respect they show us and our money. We look forward to a long associate with Luke, John, Victoria and the rest of the team.
Anton Barton - Executive Chairman, BioAg
As retirees, the staff at Seneca have done a wonderful job managing our super fund and our additional family financial assets. Their attention to detail, willingness to go the extra mile and friendship is something we value immensely.
Stan W. - Family Office, VIC
The team at Seneca are a refreshing mix of capital markets expertise and client-centric wealth and investment advisory. They have an ability to deeply and quickly understand equity capital market transactions and work with the corporate advisor, such as Cadmon, to devise a client-focused, favourable deal structure, find the appropriate investors and support a company from its first external capital injection through the various stages of development. We continue to enjoy working with Luke, John and the team.
Cameron Low - Managing Director, Cadmon Advisory
Friday 19 Nov 2021
The ASX 200 fell 0.80% over the past week (to lunchtime on Friday) with Commonwealth Bank (CBA, -9.1%) and BHP (BHP, -4.2%) causing the large-cap indices to underperform their smaller compadres. I’m not going to both to do the calc but I’d be willing to bet the market might have actually been up this week ex those 2 names given their heavy index weights. Midcap 50 up 1% and Small Ords flat.
Healthcare and technology names bounced back this week as bond yields came off a bit (Aus 5y Government bond yield fell 4.4%, though still up 354% over last 12 months.)
Earnings growth has peaked, but the PE of the ASX200 has already adjusted and ‘the market’ (in aggregate) looks about fair value – if you can buy something with double-digit growth on 18x, you’d probably be uncovering some value
Keep in mind our key tenant of “everything’s relative”. Here’s how the Equity Risk Premium is looking.
Friday 12 Nov 2021
The ASX 200 is pretty flat on the week, but up 0.93% today (as I type this about lunchtime.) Resources bounced back this week, with Gold miners the big winner.
Inflation is going up (we talked about this last week) and now gold has broken out of the range.
Gold stocks last week
We own EVN and RMS in the Seneca Australian Shares SMA.
Not all technology companies are made equal
I thought given US technology names reporting at the moment, I’d do a bit of a case study comparison of two “darling” technology names to highlight the difference between high and low-quality businesses.
Peloton is a subscription fitness business built primarily around a piece of hardware (a spin bike) and exclusive, on-demand fitness content, delivered via its app. It listed in late 2019 at USD $29 and reached highs of $171.09 during the pandemic as at-home fitness demand exploded.
Friday 05 Nov 2021
The ASX 200 was up +1.81% this week, as industrials significantly outperformed resources stocks.
The telecommunications sector the best performer (well, telco because it includes media stocks) REA Group (REA +10.4%) and NewsCorp (NWS +11.6%) both reported strong Q1 results.
The property sector was also a leader, with Charter Hall (CHC, +11.25%) was up on upgraded guidance and Goodman Group (GMG, +8.40%) on its Q1 trading update.
We own REA, CHC and GMG in the Seneca Australian Shares SMA.
3 charts to help you be a better investor
I want you to be a better investor. I’m trying to help you not make all the dumb mistakes I’ve made (while trying not to make the dumb mistakes I’ve made, again!)
Anyway, inspired by a question from a young man this week, and a conversation with a prospective client, here are 3 charts that you can rely on to help you navigate investment markets until the end of time.
#1: The Gold Price follows the US TIPS – it makes sense, gold is, first and foremost, a store of wealth when wealth is being eroded by inflation. US TIPS are a good measure of inflation expectations and inflation is, to a degree, self-fulling.
What’s interesting to me is the little gap that’s opened up right now. I think Gold stocks have some upside and we’ve got 2 in the model portfolio (which is rare!)
Saturday 30 Oct 2021
The Australian stock market was down this week, falling 1.2% with only the most defensive stocks spared, healthcare the main positive with a nice earnings upgrade from Resmed (RMD)
But I know why you’re all here this week so without further ado….
For those living under a rock, Vulcan (VUL) raised c.$200m recently at $13.50 from institutional and sophisticated investors. We participated in the placement. The stock drifted lower for a couple of weeks (not dissimilar to the previous placement at $6.50) and then rallied as the company announced another, very large binding offtake with a global leader in cathode production, Umicore (UMI, listed in Brussels).
On the back of a placement, hedge funds often use the increased supply of shares to “short”.
For the uninitiated, shorting a stock is selling shares that you’ve borrowed off someone in the hope the price declines. This allows you to buy back the stock you owe for less than you sold it, return the shares and keep the profits. The risk is the stock goes up and/or your interest cost of borrowing exceeds your win.
Saturday 23 Oct 2021
The ASX 200 added 0.73% for the week and futures are pointing up 0.41% for Monday despite a pretty flatish / mixed day in the US on Friday. Facebook (FB) stock fell 5%, as did shares in Twitter (TWTR, -4.8%). Intel (INTC) was whacked -11.68% as supply chain issues hurt their chip business.
Closer to home, Property sector heavyweights Goodman Group (GMG +4.8%) dragged that sub-sector to the top of the pops. Energy stocks hit hard after a recent good run, in particular, Whitehaven Coal (WHC, -11%) as they reported Q1 sales slumped 23%.
Short note today as its a Saturday and I’ve got work to catch up on.
The market continues on its merry way higher and is still pretty much grinding away on this uptrend.
Volatility has subsided again as markets have digested the move higher in bond yields. Australian 10y government bond yield vs ASX 200 Volatility Index.