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 15 May 2020
Wrote this on Friday but proof read it on Saturday. The ASX 200 closed the week reasonably flat, still 5385 pts. Gold stocks (+8%) and other defensives had a good week while Energy (-4.3%), Banks (-3.06%) & Tech (-2.85%) underperformed. US markets closed fractionally up on Friday and the futures are fractionally down.
Some small, green shoots starting to appear from the COVID19 wasteland that we previously called the economy.
Nike (NKE) provided an update on its operations on Thursday, stating that 100% of NIKE-owned stores and over 95% of partner stores in Greater China and South Korea are open, though some still operating with reduced hours.
They told us that retail traffic trends are progressing and while physical store traffic remains below prior year levels, this is largely offset by higher conversion rates and continued strong digital demand.
Nike have gradually reopened a small number of NIKE-owned stores in th US and Europe as states and countries within each of these areas ease quarantine measures. This includes Germany, France, the Netherlands, Brazil and the United States.
Mastercard (MC) also provided its Q2 operating update, stating they see a transition underway from the “Stabalization Phase” into the “Normalization Phase” when these restrictions are relaxed and spending begins to gradually recover from the new lower levels, with some sectors recovering faster than others. Below chart is from their release show the rate of change in their transaction volume by type.
Saturday 09 May 2020
I really need to stop kidding myself that I’m going to get this note out by Friday night! What do they say about goals… They need to be specific, measurable, attainable, relevant and time-based?
That being said, while I’m working from home, work seems to be bleeding into life and life is bleeding into work, even more so than normal (other small business owners will understand what I’m talking about!) Funny thing is, not much I’d rather do on a rainy Saturday except sip a coffee, listen to Daniel Caesar and fiddle around with my spreadsheets.
The ASX 200 added 2.77% for the week, closing at 5391 on Friday. US markets up on Friday night, S&P 500 +1.69%, Europe up 1-1.35%, Japan +2.5% and Asia up about 1% elsewhere.
Another interesting week with lots to cover. I’ll try and quickly run through what’s relevant and if you want more information on anything specific, drop me an email.
All charts unless otherwise labelled are from Factset.
I think if you want to get a gauge on how the economy is re-starting, the traffic data is about as good of an indicator as you’re going to get. Lucky for us, Transurban (TCL) had a briefing on Monday and put out a few slides, so I thought I’d share the good news… looks like life is on it’s way back to normal (whatever that means).
In April the average workday traffic was down 42% on last year and weekend traffic was down 67%!
China looks like its back to almost business as usual
Saturday 02 May 2020
I tell you what, it’s been busy at Seneca the last couple of weeks! I’m struggling to get time during a Friday to get up and make a cup of coffee (my almond-milk, stovetop coffee maybe my favourite part of the iso-life), let alone write 1000 words of market jibberish for you lot!
The ASX 200 closed down over 5% on Friday, falling 100 points in the final hour and a bit of trading. The US markets closed down 2.81% on their Friday trading, despite the ISM Manufacturing Index beating estimates (41.5 vs 36.7). USD stronger against most currencies, the AUD included.
Despite the market going nowhere for the week, there was actually heaps going on and lots of news to digest.
The Federal Reserve held rates steady at 0-0.25% with the FOMC saying the ongoing public health crisis poses considerable risks to the economic outlook and reiterated that it will maintain rates at the current level until the economy is on track to achieve the Fed’s maximum employment and price stability goals. Chair Powell reckons elected officials could do more on the fiscal policy front, adding now is not the time to let deficit concerns get in the way of winning the battle.
Below is a chart of the US weekly jobless claims and the year-on-year growth in M0 money supply (how much currency the Fed has printed). If you want to learn about what M0 is, watch this video.
Saturday 25 Apr 2020
Pretty tough old week on the ASX, market down 4.4% with resources and utility stocks outperforming.
Earnings expectations have finally come down…
What’s been cut during April?
Volatility still elevated, both locally and in the US.
And I think while the US is getting its ass kicked by COVID-19 (with a deadbeat President talking about injecting disinfectant!) volatility will hang around… though there is a bit of hope for them yet, positive test % is starting to trend down. Still, doing 5m tests and 1m of them coming back positive is not good (should be about 100,000!) – imagine how many people are transmitting it unknowingly!
Friday 17 Apr 2020
The ASX 200 added 1.86% for the week, breaking through 5,500 points for a few hours today before closing off highs. Small and mid caps where the money is being made with c. 200bps+ of alpha on the table.
So what did particularly well, anything that did 15% or more for the week in the small ords
Afterpay (APT +31.82%) the only member of the midcap 50 (XMD) that breaches the threshold.
Interesting, among this group, median year rolling returns are -25% and median quarter rolling returns are -22%. The Small Ords Index is only down -16% on the year rolling and -23% on the quarter. Maybe the trading opportunities are in the overly beat up, low quality names?
As I occassionally need to point out to Harry-hindsight clients, it’s fantastic you know that you should’ve bought Seven West Media (SWM) at 5c last week (obviously it was too cheap!) but at what price would you sell it? This is a common mistake many wanna-be traders make… everyone’s got an strategy to buy, not many have a strategy to sell.
It’s actually why naturally pessemistic, short-biased traders tend to do better (from what I’ve seen). Short selling, as the cost of holding is more explicit, tends to result in more traders having an entry and exit plan.
With lots of new clients opening accounts at the moment, coupled with large moves in markets and news coverage (due to everything else being shut!) I’m getting a few more questions about “trading” recently. I do it the way I do it and I don’t offer that sought of advice to clients as its unscalable (for me) and unsustainable (for you – most of you don’t have the discipline or time for it.)
Scalping announcements, swing trading catalysts, shorting vol, selling gamma… none of it is particularly complicated.