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 10 Sep 2021
A rough old week on the markets, ASX up 52bps today but down 1.5% for the week, resources the main culprit but traditional defensive sectors like REIT’s and Staples were not left unscathed.
Markets generally going into that risk-off sort of mode I think, momentum fading and lots of crazy speculation going on – smells like mania to me.
Leading indicators both show a softening in future economic conditions.
CESI and US Leading Economic Indicator
And for those who don’t think this sh*t matters…
yoy% return on the ASX200 vs the US leading economic indicator.
Bond markets are also telling us expectations of future growth are slowing.
Saturday 04 Sep 2021
You can tell Melbourne is in lockdown because I’m writing all my notes on Saturdays… nothing better to do! ASX 200 up fractionally for the week, but as per last week’s note, plenty of ex-divs inside the top 20, so that’s dragging on index points.
Strong week for the Energy and Real Estate, the two sectors that really haven’t recovered since the pandemic started. National Storage (NSR +5.3%) led the REIT’s while Whitehaven (WHC +18%) guided to a strong outlook for thermal coal. Coal prices in general going vertical.
Looking back at August, it looked like this
The best and worst of the ASX 200 for the month.
From a fund managers perspective, market breadth is shrinking. For the uninitiated, on average, in a given year, 45% of companies on the ASX 200 will outperform the benchmark. When more outperform, it’s easier to generate excess returns for your investors.
Saturday 28 Aug 2021
The ASX 200 didn’t go up much in aggregate this week, with small and midcap stocks outperforming. Resources stabilised receiving a belting last week.
Coal stocks (WHC +12.68%, NHC +5.97%, SOL +5.84%) drove up the energy sector, while a +28% week for Blackmores (BKL) couldn’t cover losses in A2 Milk (A2M, -9.66%), Treasury Wines (TWE, -5.68%) and Metcash (-5%) which saw the Consumer Staples sector underperform.
In the macro, the trading environment is changing. Delta-strain induced lockdowns and poor vaccination rates are a drag on confidence and output. Work-from-home spending is slowing (only buy a new caravan/laptop/bedsheets once) and the iron ore price has fallen off a cliff (see last weeks note.) Profits on the ASX are rolling over.
Construction data out this week was a lot weaker than most expected, a negative forward indicator of property prices.
Saturday 21 Aug 2021
I started writing this note on Friday arvo but found myself hating every minute of it, so I’ve picked it up, rested, on a sunny Saturday morning and am ready to rip in! The ASX 200 had the worst week in quite some time, down 2.20%, largely a result of index heavyweight BHP falling 16%, but more on that later.
How far is the index likely to fall? The chart below is an intra-day chart, so only the last 30 days of the ASX 200 trading. We can see the next support level is around that 7240-mark and with Iron Ore falling a further 9.84% to $142 last night, it’s looking like it might get a nudge (that said, BHP was +1%, RIO +0.65% in London on Friday)
OK, some context. Iron ore has been on a tear for the last couple of years until it gave up 6 months of gains in 5 trading sessions.
Why is the iron ore price collapsing? There’s a lot of discussion about China reducing its steel production as it looks to cut back on pollution, though it also might be a function of the government cracking down on growth in the property sector.
The main driver is steel prices, which have fallen in China by c. 10%. Why?
The short answer is… it’s something to do with China, nobody really knows.
The result, however, is obvious. Stocks down 15-20% from the highs in late July. BHP & RIO down c. 15%, FMG down over 21%.
Friday 13 Aug 2021
The ASX 200 added 1.11% to 2pm on Friday, industrials outperformed industrials and were led by financials (+2.90%), specifically banks, but more on that in a minute.
All-time highs on the market again, pretty cool, especially when there’s still plenty of value around for those willing to look. On a global basis, the Aussie market has lagged the US, Europe, Asia and the MSCI All World over the last 2 years (once you normalise everything to AUD) – it just highlights the need for diversification.
On Wednesday CBA reported its full-year results. Cash profits up 20% and the bank announced a $6bn on-market buyback, yet the stock underperformed its peers this week, trading flat while NAB, WBC and ANZ were all up +3.50 to 4%… why?
Well, back in the day (2012-2015), CBA generated a higher return on every dollar of equity (return on equity), than the other 3 banks. 18% for CBA vs NAB at 12%, ANZ 15% and WBC 16%. This was exceptional on a global standard, with no other high street bank able to get close to them.
As a result, in this period, CBA’s valuation premium grew (out to about 2.6x price-to-book, vs peers under 2.0)