Firstlinks Edition 491
Dividend growth; Buying Magellan; Nuclear bull; Tech mirrors shale; Rosy Australian outlook; Inflation risks; EV's problems.
In this week's edition ...
Matt Reynolds of Capital Group says investors should look beyond high yielding stocks to include dividend growers – stocks that pay and consistently grow a dividend. He believes these stocks will more sustainably increase dividends and generate real long-term returns.
Magellan Financial Group has been in the wars, though Andrew Brown of East 72 sniffs an opportunity. He sees deep value in the stock and thinks the impact of institutional fund outflows has been overplayed. Brown also raises the intriguing possibility of Magellan teaming up with Barrenjoey to build an investment banking 'powerhouse'.
John Abernethy is licking his lips after the market fall. He says economic growth, profit growth and therefore dividend growth in Australia is fairly assured over the next decade and the chance for patient investors to benefit is enhanced by the recent correction.
It's great to welcome one of Australia's best international investors, Willy Packer, to Firstlinks. Packer's fund has had only three negative returning years since inception 28 years ago (and was positive in 2022). He also predicted the 2000 tech crash, the 2008 GFC and the popping of last year's 'everything bubble'. Today, Packer remains cautious, though sees bright prospects for nuclear energy, oil and cheap China plays.
GQG Partners were one of the few international investors to pivot away from tech stocks before last year's crash. The research team sees more downside for software companies, drawing on lessons from shale oil's boom and bust in 2014-2016. It suggests software and shale oil represent excesses of the last decade driven by easy capital, as well as the dangers of ignoring capital cycles.
Stephen Miller of GSFM is concerned that the RBA and interest rate markets are underestimating inflationary pressures. Combined with a government intent on increasing wages, there's a risk of entrenching higher inflation in Australia compared to elsewhere.
And Peter Zeihan is back with a unique take on the rise of electric vehicles. Zeihan predicts they're not going to be a large part of our transport future for at least the next decade, probably closer to three decades.
In this week's white paper, Cromwell Funds Management looks at how hybrid work and ESG will transform the office property market.
Graham Hand is back from sabbatical leave next week. Thank you for putting up with me while Graham has been away. I'll continue to help edit Firstlinks and contribute articles.