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 30 Jul 2021
The ASX 200 is up fractionally on the week, at the time of writing (3pm Friday). Materials, specifically, Resources had a huge week as BHP added 5% and RIO added 6%.
Utilities were the worst-performing sector as electricity retailers Origin (ORG) and AGL Energy (AGL) declined.
Origin reported unexpected plant outages and higher home gas demand, as well as COVID-19, had impacted sales volumes. Encouragingly for the long term investors, the company saw electricity prices increasing which bodes well for a later-cycle recovery. ORG got over $700m from the APLNG business, a bit less than expected given weaker oil prices – again, should be better going forward.
Things that get you excited on a Friday
Good to see Francis & the team keeping the new company secretary busy!
Seneca Australian Shares SMA
The portfolio has been cooking this month, adding 2.25%. Starting to string together a pretty impressive set of numbers, which I’m really stoked with.
As a reminder, the portfolio comprises 20-40 stocks from the ASX 200 Index, by our Investment Committee. We review holdings every day, looking for opportunities, but generally, the turnover is reasonably low, with changes driven by fundamental, bottom-up analysis. We have a distinct quality and growth focus.
Investors get access to the portal, where you can see all the holdings, the price you paid for each, capital gains/losses, dividends and franking. Full transparency on each holding, at all times.
Here’s a screenshot of an actual customers login, with all the personal information removed, so you can see what it looks like. (Note: returns are from the day this particular client invested, not inception.)
Friday 23 Jul 2021
The ASX 200 closed the week up 0.63%, resources down, industrials up with healthcare the real winner, +4.71% (PNV +10%, FPH +8%, CSL +5%)
I’m not really in a note-writing mood + I’m working off my laptop so I’ll just cover some relevant news items and give you guys a few thoughts. Next week I’ll be back in the bedroom office, my natural habitat and I’m sure I’ll have some deeper insights
ANZ Bank (ANZ)
Announced they are undertaking a $1.5bn on-market buyback. Further support to our comments last week that ANZ, WBC and NAB are too cheap relative to CBA. ANZ prefers this way to return capital to shareholders as they’ve got a pretty low franking credit balance and it allows them to follow on and buy back more stock in the future.
Another strong quarterly report, with results across regions ahead of where I thought they’d be.
Quadpay (US) TTV accelerating +306% despite customer adds being reasonably consistent over the last 6 mths
Australia customers and volume growth ahead of most brokers expectations
Continue geographic expansion / brand consolidation – Canada, Mexico + Quadpay now called Zip in the US.
No comment on margins, except in the US with Quadpay fee margin being up 40bps to 7.5%
Bad debts at 1.82% in Australia (normal)
Monday 19 Jul 2021
The ASX 200 is down 0.84% today and down 61bps on this time last week. I’m sorry the note is late this week, I’m in Perth and had a busy weekend with family and friends.
Spark Infrastructure (SKI) takeover offer dragged up the utilities sector (only 5 stocks so a single stock move makes a big difference.) Otherwise defensive stocks essentially were/are the place to hide. In the broader context though, the market continues to go sideways…
and remains range-bound, at least while inflationary expectations continue to decline (demonstrated by the flattening of the yield curve).
I think most people believe, like I do, that core inflation is still pretty low and the inflation we are seeing, is more transitory, more related to “COVID catchup” or the result of structural shifts in preferences as a result of #pandemic-lyfe… any wage growth here in Australia is, as JB and I say (probably too often), “fugazi”.
I pinched the below from Andrew Mitchell at Ophir but I’m sure he won’t mind, I’m agreeing with him. The chart shows the composition of inflation in the US, essentially blue is “core” and the rest is “fugazi”.
Saturday 10 Jul 2021
The ASX 200 closed the week down half a per cent on last week, resources again had a better week than industrials, with energy stocks the real driver.
Generally though, we are still rangebound, as we discussed last week.
MDA Model Portfolio’s
At Seneca, we run Managed Discretionary Accounts or MDA’s. Our MDA portfolios comprise the best and brightest fund managers in each asset class, expertly curated on a monthly basis by our Investment Committee (IC).
Unlike most financial planning or wealth management firms that review investments quarterly, semi-annually or annually, clients who subscribe to our MDA models have their portfolio realigned to the IC’s latest views, manager preferences and strategy automatically, whenever a change is made. This ensures clients are always optimally invested.
We managed 5 multi-asset portfolios, similar to what you’d see on your industry super menu:
Capital Stable (invests in cash and money market funds)
Defensive (focused primarily fixed income funds)
Balanced (50/50 growth and defensive asset classes)
Growth (focused primarily on equity funds)
High Growth (almost exclusively invests in equity funds)
Our returns are below, since inception on 1 Jan 2019, before fees (we don’t actually charge Seneca clients to access the model portfolios, we just charge for our advice.)
Our high growth portfolio, for example, did 28.9% return over the last 12 months, versus:
Australian Super 24.35%
Host Plus 27.26%
Vanguard High Growth 26.96%
Unlike these competitors, the Seneca MDA offering is completely transparent. You can see every fund, security and the capital growth, income and franking associated with it, you also get access to your own dedicated advisor so you’ll never need to sit in a call centre wait queue ever again.
We offer this portfolio’s inside and outside of Superannuation and if you’d like some more information, please don’t hesitate to reach out.
Friday 02 Jul 2021
I’m away this weekend so you’ll have to deal with some midday numbers. The ASX 200 at noon is up 0.23% but still down -0.34% on this time last week. Small caps and industrials dragging while resources outperforming.
The market now firmly locked in a sideways trend as we await reporting season in August unless something changes on the macro-front, I’d expect the market to hold that 7250-level on the downside and struggle to breach 7350 on the upside.
I like to watch earnings revisions this time of year, it can throw up some great ideas but you need to understand that not all analysts are created equal and an upgrade from a guru isn’t the same as an upgrade from a spud. I’ve filtered out the stuff that’s below 1 (i.e. no changes or downgrade) and stuff that’s over 2 (i.e. assuming a 100% increase in earnings estimate relates to a just profitable company or acquisition.)
Sales revisions are also a good indicator of analysts being positive on the organic growth of a business (after you adjust for acquisitions, which I haven’t done here).
From a macro perspective, earnings revisions are still very positive and still improving.