ARG - Argo Investments

[Belli]

At least we still kept the franking credits, without them it would be very difficult, many would be going onto a government pension IMO.

I suppose so. As for me it's not an issue apart from the relevant data needing to be included in my income tax return. It's the only time it has any impact.

Frankly (pun intended) I consider it unwise to rely on a tax refund to pay the bills.

And franking will likely be altered downwards in the next few years according to the program implemented by Treasury. So franking salivatos prepare for a reduction of some 5%.

Any whine about changing the goal post to be dismissed with the disdain it deserves - by me at least.

 

[sptrawler]

I suppose so. As for me it's not an issue apart from the relevant data needing to be included in my income tax return. It's the only time it has any impact.

Frankly (pun intended) I consider it unwise to rely on a tax refund to pay the bills.

And franking will likely be altered downwards in the next few years according to the program implemented by Treasury. So franking salivatos prepare for a reduction of some 5%.

Any whine about changing the goal post to be dismissed with the disdain it deserves - by me at least.

Well I will look forward to your thoughts, when you are made redundant at 55 and have to rely on your investments until you are 67.
Cant wait to see how you you fund that?
If you are receiving 1% on term deposits, the banks are paying minimal dividends, maybe you can suggest a way self funded people can make ends meet, I certainly am open to suggestions.
Maybe it is one of those hollistic things, you have saved, you have done without, now you have it so spend it.
I actually dont have a problem with that, I hope you dont.lol
The reality that is being created, is the reality the next generation have to live with, I hope they enjoy it.
I dont think they are smart enough to understand the ramifications, way too much brainwashing by the media IMO.
You dont get welfare before pension age, unless you have nothing.lol
So I have 1 year to go, how about you Belli?

 

[Belli]

Maybe it is one of those hollistic things, you have saved, you have done without, now you have it so spend it.
I actually dont have a problem with that, I hope you dont.lol

That's how it worked. Never got a redundancy as they wouldn't give me one but they had ways of making life unpleasant enough. Left with remaining long-service leave and holiday pay.

As for any tax refund, never spent it but treated it as a windfall not to be wasted and reinvested it in the market.

 

[dyna]

Quite a few LIC's are working their portfolios a fair bit harder,now.Maybe a clue there for the rest of us.Why wait for dividend streams to start flowing again? Take profits where you can,maybe drawing down capital will become the norm in our future........sorry kids,you still get the house....Not much else,though.

 

[Belli]

Broad conversation which may not be suited to this particular thread but I have known of some in their 80's sitting on $700k+ complaing about cash shortage. It's rough I know but at 80 life expectancy is...? Draw down of say $20k pa to assist would generally still leave around $500k at 90. Wouldn't worry about the accommodation bond issues at buggers would take the lot anyway.

 

[Belli]

8 February 2021 for ARG holders. Not as large a market cap at $6B compared with AFI but big enough.

 

[Belli]

ARG reported this morning.

No surprises. Profit down by 43% to $67.4m. EPS down 44% to 9.3c. Dividend 14c ff (down from 16c ff pcp) which is a 12.5% reduction so reserves were used to support the dividend (146% Payout Ratio).

Sold out of AMP and Ansell. Added Aurizon Holdings and Newcrest Mining.

Hold and will be adding more from MIR dividend which is payable shortly.

 

[Dona Ferentes]

There would be some optimism that dividend flow will be restored to trend,

With little earnings guidance from many listed Australian corporates, we are particularly focussed on the local reporting season, which has begun to get underway. Outlook statements for the coming year will be especially important, as businesses navigate their new operating and trading environments. We are encouraged by the prospect of company dividends to shareholders beginning to recover.

As well as adding to some holdings, I was intrigued by the 'toe in the water' approach to emerging sectors

The total number of stocks in Argo's diversified investment portfolio increased from 89 to 92 with some smaller companies in the digital payments, technology and battery commodities sectors added to the portfolio.

 

[Belli]

There would be some optimism that dividend flow will be restored to trend,

There is that for sure although I work on the basis until it happens it hasn't.

 

[peter2]

@Dona Ferentes This is another large cap fund manager that has started to include some small cap companies. Acknowledgement that growth will come from the smaller cap companies and that the demand for EV minerals and tech that improves productivity remains very strong.

 

[kenny]

I wonder where the small caps allocation is coming from? Are they reducing the size of deployment to every other stock pro rata or selectively?

 

[Dona Ferentes]

I wonder where the small caps allocation is coming from? Are they reducing the size of deployment to every other stock pro rata or selectively?

specific answer to that, @kenny. Not pro rata, but yes selectively. It's a myth they are buy n hold only, more that long term the case to let something go, has to be strong.

Any buying of small caps; Just toe in the water stuff, I'd reckon. A few mill out of $8B. The total positions are only revealed once a year, Annual report time, so it's wait and see.

I think it was Mirrabooka that stated they take a small entry and watch with the intention to add, when it comes to newcomers.

I'm glad they are doing this. And of course small caps are a broad category, some barely start-ups and some paying dividends, and everything in between. It's the growth trajectory that matters. Most large cap mature entities started small.

 

[Belli]

This is another large cap fund manager that has started to include some small cap companies.

Its always had what could be considered smaller cap companies (Reece, Automotive Holdings and stuff like that). With the change in personnel which has occurred over a period of time, they now seem to be willing to expand the investment world to a greater extent.

 

[kenny]

Any buying of small caps; Just toe in the water stuff, I'd reckon. A few mill out of $8B. The total positions are only revealed once a year, Annual report time, so it's wait and see.

So very similar to AFIC's "nursery stocks" where they initiate some exposure with the potential for more?

It will be interesting to see who in the Argo Investment Team are driving the selection and analysis.

 

[Belli]

ARG reported this morning. Dividend of 14c ff remains the same as pcp. Includes 8c LIC Capital Gain discount. Payable 17 September. DRP at 2% discount.

Profit down 12.8%. Hefty increase in reserves from $1,343m to $2,255m. Cash increased from $169m to $179m.

 

[Dona Ferentes]

So very similar to AFIC's "nursery stocks" where they initiate some exposure with the potential for more?
It will be interesting to see who in the Argo Investment Team are driving the selection and analysis.

The total number of stocks held increased slightly to 90. The larger movements in the portfolio were:
Purchases
Aurizon Holdings*
Downer EDI
EML Payments*
IGO*
Newcrest Mining*
Suncorp Group
Sydney Airport
The Star Entertainment Group
* New portfolio position

Sales
ANZ Banking Group
Boral (now out since EoFY)
Commonwealth Bank of Australia
James Hardie Industries
Vocus Group (takeover)
Washington H. Soul Pattinson

 

[Dona Ferentes]

The larger movements in the portfolio:

and, reading through the Annual Report, as well as the major moves in and out of the portfolio, ARG has taken some smaller positions on some new companies, while exiting others, including a couple of chronic underperformers like AMP and FNP.

New stocks added to the portfolio were Carbon Revolution (CBR), Endeavour Group (demerged from Woolworths), HUB24 (takeover of Xplore Wealth), Songtradr Inc and Superloop (SLC).

Other stocks exited were AMP, Ansell, Freedom Foods Group, Iluka Resources, Orora, Perpetual and Xplore Wealth (taken over by HUB24).

During the year, Argo outlaid $350 million on investment purchases and $358 million was received due to disposals and takeover proceeds (this turnover is only a bit over 5%, as ARG has > $6B under management). The total number of holdings in the portfolio increased slightly to 90.

 

[Dona Ferentes]

and, reading through the Annual Report, as well as the major moves in and out of the portfolio, ARG has taken some smaller positions on some new companies, while exiting others...... During the year, Argo outlaid $350 million on investment purchases and $358 million was received due to disposals and takeover proceeds. The total number of holdings in the portfolio increased slightly to 90.

And today is the day the Argo dividend is paid. A good predictable income stream, on top of market exposure.

The company has taken the opportunity to address matters, perhaps flying the flag for changes in this age of transformation, whilst assuaging those others wanting what they consider to be safety?

Argo has added a number of holdings to the portfolio with exposure to renewable energy and decarbonisation thematics. In particular, there are several new stocks exposed to the rapidly growing demand for electric vehicles (EVs) globally, including Novonix, IGO, Carbon Revolution and Lynas Rare Earths.

These growing companies sit alongside our largest holding, Macquarie Group, which is now one of the world's largest infrastructure managers and the owner of Green Investment Group, a leading provider of finance, development and advisory services in the renewable energy sector. Novonix, which experienced a share price jump of 75% in August alone, produces anode material for battery manufacturers. IGO mines for lithium and nickel, both important elements in battery manufacture. Carbon Revolution manufactures carbon fibre wheels, which are light and ideal for EVs. Lynas Rare Earths is the largest producer and processor of separated rare earths outside China, making it an important strategic supplier to many high tech and low carbon industries, including magnets for wind turbines, solar cells and EVs.

This growing area is not without risk, as share prices will be volatile and dividends relatively low for some time. However in the longer term we see these new technologies as an important part of achieving future capital growth for Argo shareholders, while we continue to provide reliable dividend income, driven by our more traditional blue chip holdings such as banks, healthcare and diversified resources giants Rio Tinto and BHP Group.

 

[Dona Ferentes]

Yep, these buy and hold outfits are so predictable:

 

[Dona Ferentes]

Argo comes out with its monthly NTA today, at $9.52 up from $9.29 at end November, and commentary includes

"Pleasingly, Argo's share price recently reached a new record high of $10.29"

And today, admittedly a strong day on the market, it moved 21c , up to $10.38

Top 20 holdings:
MQG .. 7.5%
CSL .... 4.9 %
WES ... 4.3 %
CBA ... 4.0 %
ANZ ... 3.3 %
RIO .... 3.0 %
WBC ... 2.6 %
SHL .... 2.5 %
NAB ...2.5 %
REH .... 2.2 %
ALL .... 2.2 %
RHC .... 2.1 %
SYD .... 2.0 %
WOW ...1.9 %
TCL ..... 1.8 %
NVX ..... 1.8 %
AUI ..... 1.7 %
APA .... 1.7 %
Top 20 equity investments 59.5%
Cash and cash equivalents 1.2%

Market cap. .... $7.4bn
Shareholders .. 95,200
Dividend yield .. 2.8%
MER ................... 0.14%