# Sectors - who to believe?



## Eager (5 June 2022)

I have my eye on Aussie Broadband (ABB). I have noticed that it is described as being in the Communication Services sector on CommSec, but it is described as an IT stock on Fresh Equities. Which is right?

It only makes a difference to me as far as diversification by sector goes. Thoughts?


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## divs4ever (5 June 2022)

Bell Direct  describes it as 

Aussie Broadband Limited (ABB) is a national carrier of telecommunications services in Australia focused on providing National Broadband Network (NBN) and other networks' broadband services to residential and business customers together with related products and services.

 now the 'tangible assets '  took a ( upward ) jump in 2021  so maybe it bought some infrastructure in the 2021 financial year  , before that it looks very much like a reseller  ( unlike say SWP , or TPG that had their own networks , and tech )

 check if they own towers , network gear , cables etc.   those buys may be only 2 years old ( as ABB assets )

 either one has it's advantages and flaws ( tech infrastructure equals solid assets , but also maintenance costs  , upgrades  , extra staff , etc )

 check out SPK ( i hold ) or CNU ( i have held in the past  but had a very good ride  , on it ) IMO the Oz government  has  found a 'bandwidth cash-cow' which it is very likely to milk hard 

( i also hold TPG and TUA )


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## Value Collector (6 June 2022)

Eager said:


> I have my eye on Aussie Broadband (ABB). I have noticed that it is described as being in the Communication Services sector on CommSec, but it is described as an IT stock on Fresh Equities. Which is right?
> 
> It only makes a difference to me as far as diversification by sector goes. Thoughts?



I don’t think it matters what sector people classify a stick in, what matters is that you look at their business and think about whether it’s a business you want to invest in.


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## divs4ever (6 June 2022)

Value Collector said:


> I don’t think it matters what sector people classify a stick in, what matters is that you look at their business and think about whether it’s a business you want to invest in.



 i disagree , but Eager might be trying to slice the pie to thinly  

 sure trying to spread the holdings  ( deliberately ) between agricultural  , miners , banks  etc. has it's logic  but how many shades of grey do you need  , some companies already blur the line ( or will do in the future )

 and telcos for instance are liable to be a pain in the butt that way in Australia with the NBN likely to be the backbone of most networks  whether you are talking mobile  and maybe even satellite ( sure you uplink to satellite in your remote home  , but by the time it gets to Sydney to connect to your bank it will probably via the NBN )

 while CNU in NZ  laid out it's own fibre network so will have tangible assets  in the future


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## Eager (7 June 2022)

Which sector a stock belongs in is a consideration for me, not necessarily a deciding factor. That said, if (hypothetically) I already had a bunch of telcos, why would I want yet another one?


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## divs4ever (7 June 2022)

Eager said:


> Which sector a stock belongs in is a consideration for me, not necessarily a deciding factor. That said, if (hypothetically) I already had a bunch of telcos, why would I want yet another one?



 A. diversity  ( some love it and some don't ) across that sector  ( others would buy ALL the BIG 4 banks as an example )

 B. you understand the sector fairly well so you buy into all the GOOD companies in the sector 

C. you think the sector has a good mid-term/long term future , and most of the mediocre players will be taken-over ( so you buy many , hopefully dodging the  absolute duds )

 now early in my investing adventure ( in 2011 )  i bought an ETF the covers  all the REITs in the ASX 200  later i bought into the companies i liked best and sold the ETF 

 i am not saying you are wrong in your choices ( whatever you do ) just suggesting strategies , that might work for you 

i went for telcos that had infrastructure assets  , others prefer  cost/maintenance light companies ( like service resellers )   compare ABB with SWP ( SWP has some infrastructure assets  to base the customers services around )

 ( i hold neither ABB or SWP )

i also now look for telcos that mostly operate outside Australia 

 cheers


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## Gretsch (8 June 2022)

divs4ever said:


> now early in my investing adventure ( in 2011 )  i bought an ETF the covers  all the REITs in the ASX 200  later i bought into the companies i liked best and sold the ETF



I like that strategy.


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## Value Collector (8 June 2022)

Eager said:


> Which sector a stock belongs in is a consideration for me, not necessarily a deciding factor. That said, if (hypothetically) I already had a bunch of telcos, why would I want yet another one?



So if you already have a bunch of “telcos” and don’t want another one, you should should simply look at the companies main business and decide for yourself whether it’s a telco or not and whether it fits into where you want your portfolio to be.

If it has telecommunication assets then it’s a telco regardless of what sector some one else puts it in.


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## Craton (9 June 2022)

Eager said:


> I have my eye on Aussie Broadband (ABB). I have noticed that it is described as being in the Communication Services sector on CommSec, but it is described as an IT stock on Fresh Equities. Which is right?
> 
> It only makes a difference to me as far as *diversification by sector* goes. Thoughts?



Interesting conundrum as I.T. and Communications are often blurred together (IT&C).

As you do specify Sector and not Industry Group, I'd be looking at the ASX sectors for a definitive answer, i.e. if the stock is listed under Information Technology: XIJ or Communication Services: XTJ sector.

From what I can tell ABB is under the following classifications:-
Sector: Communication Services within the Industry Group: Telecommunication Services                 

Seems Comsec has it right.


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## Eager (12 June 2022)

divs4ever said:


> now early in my investing adventure ( in 2011 )  i bought an ETF the covers  all the REITs in the ASX 200  later i bought into the companies i liked best and sold the ETF



I've kinda done that.

I have holdings in two LIC's (MIR and SNC) and was seriously looking at QVE because of the multitude of different companies to those two LIC's that they invest in (some other LIC's seem to mimic them).  But, being a loony leftie with green tendencies, I couldn't handle their heavy focus on AZJ/ORI/ALD or their holding of CWN, which to me is an unethical company. So, to add diversity to my existing portfolio which is currently spread across five sectors, I have created a shortlist of some of the small and midcap companies that QVE invest in that interest me. But, I am yet to commit. This has nothing to do with my interest in ABB however.

Back to topic, my LIC's give me diversification and the other companies that I invest in with my own money are not the typical large caps that my super is probably full of, so I'm already spreading risk. ABB interests me because I previously held them, sold them for a decent profit but missed out on an exceptional one, and I have noted their recent weakness, which might provide an opportunity to re-buy. Through research I discovered the anomaly with sector description so I questioned myself about which of the two sectors was more worthwhile per se.


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## divs4ever (13 June 2022)

Eager said:


> I've kinda done that.
> 
> I have holdings in two LIC's (MIR and SNC) and was seriously looking at QVE because of the multitude of different companies to those two LIC's that they invest in (some other LIC's seem to mimic them).  But, being a loony leftie with green tendencies, I couldn't handle their heavy focus on AZJ/ORI/ALD or their holding of CWN, which to me is an unethical company. So, to add diversity to my existing portfolio which is currently spread across five sectors, I have created a shortlist of some of the small and midcap companies that QVE invest in that interest me. But, I am yet to commit. This has nothing to do with my interest in ABB however.
> 
> Back to topic, my LIC's give me diversification and the other companies that I invest in with my own money are not the typical large caps that my super is probably full of, so I'm already spreading risk. ABB interests me because I previously held them, sold them for a decent profit but missed out on an exceptional one, and I have noted their recent weakness, which might provide an opportunity to re-buy. Through research I discovered the anomaly with sector description so I questioned myself about which of the two sectors was more worthwhile per se.



 well CWN ( i have held CWN in the past , but no J.P. running it was   a good reason to leave ) will be taken over ( i believe the question is by whom  )  AZJ/ORI/ALD  ( i have held CTX which evolved into  ALD in the past )  never quite make the cut to hold individually   , my main reasons for holding QVE is the 3 monthly divs.  and QVE invests mostly in ASX 200 companies  , i cannot justify an individual  holding in 

does your ABB  have to fit into  just one sector  , take my holding in PME  i bought it as an IT/software play  , and by coincidence  it was a software play leveraging the healthcare sector 

 does your ABB need to be a pure play   ALTHOUGH  a business that has two ( or more ) streams of income MIGHT demerge later ( TAH => TLC  , ILU => DRR  , WOW => EDV  as examples )  if you are less favorable to one of the split companies you can always sell/reduce 

take TPM as an example  it merged then demerged into TPG and TUA  i kept the TPG  but added to the TUA holding 

 i think harsh times are coming to the investment world , and it will be a battle for survival for many companies 

 cheers


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## over9k (13 June 2022)

Communications. It's not actually making computer gear.


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