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 07 Feb 2020
The ASX 200 down 38pts on the day and pretty flat on the week, 7014pts at the time of writing (about 1pm). Resources underperformed this weak with Energy the key drag as oil prices fell to under US$50.00 per barrel temporarily.
This February period last year contributed significantly to client returns and I always think the half year reporting is often more important than the full year. Christmas trading effects some names while strategy and planning days often occur in January and set the tone for public companies for the coming 12 months. Outlook statements, guidance and overall tone of management are key metrics that guide analyst revisions and sentiment.
With this in mind, here’s 5 stocks to own or avoid during reporting season (in no particualr order)-
Reliance Worldwide (RWC) – OWN
6%+ of the stock is short sold, coming off a downgrade at the full year result. I think their issues last year appear transitory, others are starting to agree with the stock rallying from $3.10 lows to $4.70 currently. Clearly expectation of a decent report now built into the share price, I think there’s a fairly good chance they will deliver and break through $5.00 again. 10% organic EPS growth, with upside risk from structural tailwind and strategy… I reckon it’s a stock that will do 25c-30c EPS in FY22, whack it on 20x (2x PEG) and you’ll get $5.00-$6.00. All time high is $6.38, with pre-downgrade price targets of c. $5.50. Current consensus PT is $4.70. We like the 3 upgrades into the result…
Friday 31 Jan 2020
The ASX 200 fell almost 1% this week, back to around 7000pts as resources sold off (BHP -2.48%, RIO – 3.8%, PLS -17%, ORE -12%) on Coronavirus-related growth fears.
The only type of Coronavirus I know anything about is curable with a Powerade and toasted sandwich, so I won’t pretend to understand how serious this might get. Very sad that 200+ people have died and a virus like this does have the potential to negatively impact consumer spending, investor confidence, earnings growth etc.
Market still is pretty expensive by historical terms, with the forward PE ratio at 18x
And the earnings growth outlook nothing to write home about
However, due to record low interest rates, bond yields have collapsed causing the market to rise and rise over the last 15 years
I’m no economist, but the consensus is for the target cash rate to fall to 0.50% this year and stay there until CY’22 (which is going to surely be revised down at some point in the next few months)
It seems pretty clear to me that while interest rates are low, look set to stay low and growth is in equities is above zero, valuations will remain supported. The tricky thing is avoiding sectors and stocks that are vulnerable to fickle consumer spending and/or aren’t supported by structural growth. I’m looking for companies that “essential”… for example:
Re-occuring revenue supported by low customer churn, high brand value, multi-product bundling, sole product usage (you don’t need MS Excel and Google Sheets).
Shares fell 38% this week after the company announced the loss of 4 enterprise customers in the US.
Friday 24 Jan 2020
I was reading an article in the Australian Financial Review this morning about Macquarie selling it’s back office function to Bell Potter and it reminded me of when I was moving all my clients from Shaw to Seneca and realising that most clients have no understanding of the plumbing that powers their transactions, the institutions that are responsible for their money and how interconnected the whole financial ecosystem is.
Today I thought I’d have a go at explaining it to you.
Where are shares held?
Shares are held by a custodian or directly in your own name.Custodians are regulated entities that are licensed by ASIC to hold assets for clients. Some brokers and most wrap platforms hold assets in custody for clients. This means you don’t actually own your shares directly, but they are held in trust for you. Some older clients might be familiar with the old “master trusts” well this has really evolved into the “platform” business now. BT Panorama, Hub24, Macquarie Wrap, Netwealth, AMPNorth to name a few.If you hold shares in your own name, you’ll likely be relying on the ASX to keep a record of those shares using CHESS (Clearing House Electronic Subregister System) – think of it as a big list of who owns shares in what (holder identification numbers, HIN) and ensures when you sell shares, someone pays (and vice versa).
International shares are often held in a custody via a nominee service facilitated by the broker. This saves you opening seperate trading accounts all around the world and having to maintain and pay for those accounts as an individual.
Why does this all matter?
To have access to CHESS, you need to “settle and clear” with the ASX. This means you’ve got to put a big $10m + deposit bond down with the ASX… not many firms want to do this anymore. Why not? because there’s no money in executing trades anymore. Retail investors used to pay 3-5% commission on every trade, for institutions 0.50-1% wasn’t uncommon. Now retail investors pay the old institutional rates, or trade for less online (c.0.35%). Institutional rates are now at 0.05-0.10%.
Friday 17 Jan 2020
The ASX 200 continues to rip higher on falling risk aversion and falling interest rates. At the time of writing, the index is up 28 points today, 7070 pts.
Worst Performers of 2019
Sometimes, the worst performers in one year can be the best performers in the following year. As an idea generator, lets look at stocks that:
underperformed last year (went up by less than 20%)
are forecast to grow their revenues and profits
and have a balance sheet that’s not in a complete shambles (4x net debt to EBITDA limit)
Worst Performers that meet our basic criteria have some clear common ground
Costa Group (CGC) down 43%, Ridley’s (RIC) down 19%, Elders (ELD) up 9%, Graincorp (GNC) down 9%, Incitec Pivot (IPL) down 4%, Nufarm (NUF) down 4%.
The drought clearly impacted these names over the course of the year, while Costa got itself into a right mess. If there’s a recovery in the rural economy this year, there could be some opportunity amongst these stocks, though in my opinion, agriculture is intrinsically speculative. The returns can be superb, but the volatilty of those returns through time I’d bet, with climate change, will likely increase. I’ll most likely leave it to the specialists.
Friday 10 Jan 2020
And we’re back! Happy New Year! 2020 kicks off to a ripping start, the ASX 200 making an all time high of 6927 at the time of writing.
Most sectors up…
$100,000 invested in the ASX 200 at the start of the decade, and with dividends reinvested, you’d have $520,000 today.
Below is the ASX200 Accumulation Index (dividends reinvested) and the ASX200 (no divs, just prices) indexed at 100.
Predictions for 2020
Surely you know me well enough by now that I don’t think “predicting” the index adds any value over the long-run. However, I think our thesis from late last year is largely playing out. Bond yields remain surpressed by accomodative central banks around the world (the RBA included), this is supporting the only asset class offering about a 3% yield… equities.