S&P/ASX 200 (XJO) - Block Inc listing

[InsvestoBoy]

Tomorrow APT will get booted off the XJO and Block Inc. aka Square CDIs will take its place.

Afterpay Limited to be removed from the S&P/ASX 200 Index

SYDNEY, JANUARY 14, 2022: S&P Dow Jones Indices announced today that it will remove Afterpay Limited (XASX: APT) from the S&P/ASX 200, as a result of the scheme of arrangement whereby the company will be acquired by Block, Inc. (NYSE: SQ). S&P Dow Jones Indices will remove Afterpay Limited from the S&P/ASX 200 effective prior to the open of trading on January 20, 2022. Afterpay Limited will be replaced by Block, Inc. CDIs (XASX: SQ2), in the S&P/ASX 200 effective prior to the open of trading on January 20, 2022.

Block has a market cap of ~60B USD. That's ~83B AUD at current AUDUSD rate. That is gonna put Block on the XJO just below NAB and just above ANZ on the index thanks to market cap weighting. APT is 20B cap today and even at their high was like ~45B.

I know, I know, I was just in the other thread talking about passive market cap weighting not being all that bad.

But this is bull****. Square has nothing to do with the Aussie economy, not even remotely, not even if Afterpay got 10x bigger.

I am pretty miffed, as you can guess. VAS currently makes up a full 50% of my equity allocation. I'd move into QOZ, which is immune to this kind of idiocy by construction but I am not a fan of BetaShares (they already screwed up QUS). Very likely I will be exiting VAS by the close today and moving into AFI or something.

 

[divs4ever]

Tomorrow APT will get booted off the XJO and Block Inc. aka Square CDIs will take its place.



Block has a market cap of ~60B USD. That's ~83B AUD at current AUDUSD rate. That is gonna put Block on the XJO just below NAB and just above ANZ on the index thanks to market cap weighting. APT is 20B cap today and even at their high was like ~45B.

I know, I know, I was just in the other thread talking about passive market cap weighting not being all that bad.

But this is bull****. Square has nothing to do with the Aussie economy, not even remotely, not even if Afterpay got 10x bigger.

I am pretty miffed, as you can guess. VAS currently makes up a full 50% of my equity allocation. I'd move into QOZ, which is immune to this kind of idiocy by construction but I am not a fan of BetaShares (they already screwed up QUS). Very likely I will be exiting VAS by the close today and moving into AFI or something.

am hoping VAS will bounce towards the end of the month ( now the DRP units have arrived ) , but like you i am looking for the exit ( for VAS and VHY ) my VAS exposure is much less than yours

my main reason for a NON-hurried exit is the lack of suitable parking places for the cash reserves i have ( i NEED my money working )

good luck picking a nice landing spot

 

[divs4ever]

what about SFY ( your have already owned STW in the past ) and do you really want to play Russian Roulette in a market meltdown , i can't see the big 4 banks doing anything impressive near-term BUT they are more likely to get bailed out than some other businesses

( i do not hold SFY or STW )

 

[InsvestoBoy]

my main reason for a NON-hurried exit is the lack of suitable parking places for the cash reserves i have ( i NEED my money working )

good luck picking a nice landing spot

To me large cap Aus exposure is all much of a muchness as long as it is actually large cap Aus and not fkn Block. Won't be long, literally plan to make the shift before todays close.

what about SFY ( your have already owned STW in the past ) and do you really want to play Russian Roulette in a market meltdown

SFY won't work, Block will be in the ASX50, it will be in the ASX20!

I just need some large cap Aus exposure in the equity portion of my portfolio, I'm not really worried about timing the market, so I don't really care if I switch from VAS to e.g. AFI and the market tanks 50% tomorrow. It would've tanked either way whether I was in one or the other.

 

[InsvestoBoy]

They are literally gonna put Block, which does 200M USD in earnings off 9.5B USD in revenue on a 130 P/E multiple



above ANZ which does 6B AUD in earnings off 18B AUD in revenue on a 14 P/E multiple

 

[divs4ever]

am trying to rack my brains but one ETF adds some extra parameters to market cap on the shares included in 'their index '

but one of the advantages of LICs is the managers can pick and choose the stocks they hold ( and when to divest them )

 

[InsvestoBoy]

Well, looks like AFI is currently trading at an absurd premium to NTA so, not going there.

 

[Belli]

Well, looks like AFI is currently trading at an absurd premium to NTA so, not going there.

Don't hold but maybe AUI and/or DUI? Both apparently under NTA and DUI has some international ETFs and managed funds presently.

 

[divs4ever]

the premium to NTA is the main reason i haven't bought any of the better conventional LICs ( ARG , AFI , AUI , etc )

 

[InsvestoBoy]

Don't hold but maybe AUI and/or DUI? Both apparently under NTA and DUI has some international ETFs and managed funds presently.

AUI actually looks like it might fit the bill, thanks. DUI looks a bit weird with the giant CSL holding and I already do my own international stuff, don't need them for that.

 

[divs4ever]

yes the increased international exposure make DUI less attractive to me also , and am waiting for specific geographies to play out first , i am mostly Asia-centric ( less so on China ) and watchful of Latin America

cheers

 

[InsvestoBoy]

Don't hold but maybe AUI and/or DUI? Both apparently under NTA and DUI has some international ETFs and managed funds presently.

@Belli the day you wrote this I spent the night doing DD into AUI to see if it would be an appropriate fit for my broad AU exposure, and the next day I dumped my entire VAS holding into AUI.



Being out of the garbage like SQ2 and other schlock like BRN that got mindlessly added to the index has been just plain fine.

ta.

 

[divs4ever]

Being out of the garbage like SQ2 and other schlock like BRN that got mindlessly added to the index has been just plain fine.

i see your logic , and that is probably one reason i chose index funds as 'an insurance strategy ' and not a 'core strategy '

however watching stocks mindlessly added or dumped from an index sometimes presents an opportunity

but the lure of reduced fees attracts many ( to the index funds )

 

[divs4ever]

AUI actually looks like it might fit the bill, thanks. DUI looks a bit weird with the giant CSL holding and I already do my own international stuff, don't need them for that.

giant holdings like that often reflect when the share was purchased in the portfolio ( for example if CSL was bought .. say . 10 years back and tripled in share price over the period it might be hard to justify the sell-down )

i had the same quandary with MQG ( and APE at times ) do you really want it as the dominant holding .. but wait it is up over 500% for me ( and pays divs )

one of the interesting quirks of LICs

 

[Belli]

Good to hear you've found a product which suits your approach @InsvestoBoy.

 

[Belli]

Good to hear you've found a product which suits your approach @InsvestoBoy.

Interesting with the Top 25 accounting for close to 90% of the assets - and there is exposure to DUI at around 5% of assets.

 

[InsvestoBoy]

Interesting with the Top 25 accounting for close to 90% of the assets - and there is exposure to DUI at around 5% of assets.

View attachment 144398

Much of a muchness, beta wise.

 

[InsvestoBoy]

Block shares drop after Hindenburg targets the fintech

Block said it would explore legal action against Hindenburg Research, calling the short seller’s report ‘factually inaccurate and misleading’.

www.afr.com

Shares in Block fell 14.8 per cent in New York trading after Hindenburg Research released a report that alleged the fintech company is a fraud. Hindenburg said it has placed a bet against the stock.​

In a lengthly online post on its website, Hindenburg said its conclusion about Block came after a two-year investigation which involved dozens of interviews with former employees, partners, and industry experts.

...

“The ‘magic’ behind Block’s business has not been disruptive innovation, but rather the company’s willingness to facilitate fraud against consumers and the government, avoid regulation, dress up predatory loans and fees as revolutionary technology, and mislead investors with inflated metrics,” the short seller’s post said.

 

[InsvestoBoy]

Being out of the garbage like SQ2 and other schlock like BRN that got mindlessly added to the index has been just plain fine.

Todays article in the AFR complaining about penny stocks in the index inspired me to check on junky crap like SQ2 and BRN since the last time I checked

It’s time to ban penny stocks from Australia’s flagship share index

The collapse of Lake Resources and poor performance of BrainChip and Imugene shows why there’s no place for penny stocks in a serious sharemarket index.

www.afr.com

 

[Dona Ferentes]

Good to hear you've found a product which suits your approach @InsvestoBoy.

good to see your approach maintains its incisive analytic rigour, IB,