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
I wish to endorse the work / advice I have received from Luke & the team at Seneca over the last 12 months. I have really appreciated the personal & efficient care they have conveyed to me. The bottom line , however, has been the financial results have bettered our proposed expectations with reduced risks. This includes all costs & charges. I have no hesitation in recommending Seneca for financial advice.
Dr Mervyn Cass
Friday 18 Oct 2019
Another flat-ish week. ASX 200 added 0.65%.
And has gone nowhere for the past 3 months.
Resources had a shocker, BHP/RIO -3%, FMG -6%. Looks like it’s getting worse as well if the ISM is a guide (which it is) in red, BHP and RIO yoy% change in share price in blue and green.
New Podcast Episode
Jordan and I recorded another podcast episode today where we cover Netflix, FNP, Z1P/APT, FLT/WEB. Give it a listen on your favourite podcast supplier. Links below.
Friday 11 Oct 2019
ASX200 up 59pts today (+0.91%) as energy, resources and healthcare bounced. Strong afternoon trade. Market plus 1.38% for the week and about square for the month.
It’s been a busy week, I thought I’d start by updating on DXN on the back of their fully underwritten rights issue announcement.
DXN Ltd (DXN), last trade 7.1cps
The company is offering existing shareholders an opportunity to increase their shareholding by 25% (1 for 4) at 5.5cps with a free attaching option at 10cps. The offer is fully underwritten and once finalised will deliver the company c.$5m to upgrade the power at Sydney and put some working capital aside for some of these bigger Module contracts that are in the pipeline.
Look, this has been a disaster. Previous management had exceedingly poor cost control, over-promised on what could be achieved from both a timelines and budget perspective and were removed by shareholders as a result.
The board has been partially refreshed, the new CEO, Matthew Madden, is doing a stellar job so far in my opinion and the quality of the people in the business is improving every day. If the company can start to consistently deliver sales in both the colocation and modular business units, this stock should significantly re-rate.
If you’re buying shares at 7c now, up until the 16th October, you’re still buying the stock cum-entitlement. So that means you can average down your position with 25% more stock at 5.5c and a free attaching option at 10c…. not a bad deal in my book.
Friday 04 Oct 2019
After 10 days away, I’ve been back on the desk since Monday, feeling refreshed and thinking about things with that special kind of clarity that only comes from breaking the routine of day to day life.
ASX 200 fell 2.5% while I was sipping coconuts. Well actually, it fell yesterday 2%, so not much happened while I was away.
Markets continue to be driven by interest rates (which as you probably are aware, were cut in Australia by 25bps on Tuesday). It’s not cheap by any metric except relative value to bonds. An earnings yield of 5% and a dividend yield of 4% vs bond yields of 1% means that anything with minimal earnings risk will catch a bid.
Equities sold off this on Thursday after some fragile survey data (PMI’s) out of the US. As regular readers of this note would know, these surveys have historically had a good general correlation with year-on-year equity market returns. Below is the long run (20y) Manufacturing and Non-Manufacturing ISM for the US with yoy% returns on the S&P500 (just for the uninitiated).
Friday 13 Sep 2019
ASX200 added a few points this week, +0.29% to 6667pts as I type this. Financials, Energy and Materials led the way as bonds sold off and global growth concerns eased.
Value Investors Rejoice
I thought the interesting take away for the week was the rotation from Growth to Value. There’s been a lot of talk about the “death” of value investing as growth names have outperformed for the last 5 years or so (S&P 500 Pure Value ETF vs Pure Growth ETF below).
I thought the interesting take away for the week was the rotation from Growth to Value stock. Same chart, now zoomed in for last 6 months. You can see the September rally in value.
What’s causing this? I think it’s got something to do with the yield curve and relevant growth and inflation expectations. My thesis is value stocks should outperform higher-quality growth stocks when ‘growth’ is readily available. If everything is going up, buy the cheapest stuff. This idea intuitively makes sense and matches up on the chart below. 10-2 year US yield curve vs Value/growth index (going up = value outperformance) over ten years.
Friday 06 Sep 2019
ASX 200 had a pretty solid week, adding 0.65%. A few decent gains today as the Trade War tea leaves drift from bullish to bearish.
To utilise a phrase from my good mate and colleague Zac Angove over in Perth, today “I’m getting active!” and getting stuck into some results, some specific companies and some ideas for the next 3, 6, 12 months or so.
As an aside, Zac is an absolute gun financial planner. He has a deep understanding of superannuation, transition to retirement and cash flow management in retirement. He’s also been helping clients refinance their investment properties, kids’ mortgages, farm equipment, you name it. If you want an introduction to the great man, drop me an email.
The caveats on what is to follow:
So, just like when I’m putting together portfolios for clients
Oh, and one final one. If this trade war worsens, which could cause the US to slide into recession, we’ll see commodity prices fall, and iron ore price drops. Australia will be next to fall into recession, resulting in all reasonable earnings forecasts collapsing. Look, it’s a scenario we’ve discussed over the past few weeks, but it’s still a real and present risk. I’m not going to go into again, but for mine, I’m watching that US Dollar Index closely.