Feb 27, 2020 |

Recent recommendations provided to clients

As part of keeping you up to date on the recommendations that we are discussing with clients, which have been personalised and tailored to their specific circumstances through a personalised ‘Record of Advice’ (RoA), please find below a summary.

It is important to note that this is not specific advice to you but a summary of the main themes and some of the underlying investments that have changed or been recently recommended. As each piece of advice is tailored to every client not all of these recommendations will be or have been applied to clients in the same proportions.

Downer EDI (DOW)

In January PRIME recommended clients TAKE PROFIT in DOW with shares having outperformed the market by +27% since we initially recommended the stock.

DOW has benefited from ongoing demand for infrastructure services and DOW asset restructuring which will likely see DOW reveal the sale of both its laundries and mining services businesses in 2020.

Timing is everything and fortunately we recommended clients sell down their DOW holdings only 1 week before DOW downgraded guidance to reflect underperformance in its Engineering, Construction and Maintenance division.

We continue to like the DOW story, but feel that given its strong run, booking some profits was prudent.

Lucent Stewart St Brunswick East

In December PRIME offered our wholesale and sophisticated clients the opportunity to invest in Lucent Capital’s latest property development deal in Stewart St Brunswick East VIC.

This was PRIME’s second development project with Lucent following on from the success of our first deal together in Nicholson St, Brunswick East.

This project is the construction of 69 apartments over a 21-month term with a total return target of 20.25%. We remain comfortable with Lucent as a developer given their strong track record.

Lucent’s ability to pre-sell apartments is what provides us with such a level of comfort with 75% of these apartments having already pre-sold thereby reducing settlement and development risks.

International Equities & Emerging Markets

PRIME’s most recent recommendation to clients reiterated the need for international equity exposure.

We believe there are many reasons as to why international equity markets and emerging markets looks well placed to outperform.

The recent phase one trade deal and subsequent reduction of tariffs between the US and China, central banks globally cutting interest rates, the Federal Reserve’s further injection of liquidity, a re-election year in the US and weak currency performance all provide a positive backdrop for international equity markets.

Trinetra Emerging Markets Growth Fund

The Trinetra Emerging Markets Growth Fund is a dedicated emerging market (EM) equity fund with $125m in assets. Trinetra uses a highly differentiated research approach that focuses on ethnographic research – talking to real people in their normal environment – to identify and capture trends.

The Fund focuses on youth, women’s empowerment, health and migrants which we believe offer significant opportunities to investors.

This video link provides great insight into the way the Fund operates.

T Rowe Price Global Equity, Fidelity EM Fund and QUAL

The T Rowe Price Global Equity Fund has been one of the most successful global equity strategies in recent years and is one of the world’s largest asset managers with over US$1 trillion in funds under management

The Fidelity Global Emerging Markets Fund (FID0031AU) provides investors with a high conviction exposure to emerging market (EM) equities. Fidelity is one of the largest and most respected global equity fund managers with over US$300bn in client funds.

QUAL is an exchange traded fund (ETF) that seeks to deliver a portfolio of global equities with a “quality” focus. QUAL is a listed product that trades on the ASX providing investors with exposure to a portfolio of 300 high quality global international equities in developed markets.

NAB Hybrid Issue (NABPC & NABPG)

We also participated in NABs latest hybrid issue (NABPG) in February with new units to be issued in March 2020.

Given the deterioration in interest rates the latest offer was well sought amongst investors with NAB upscaling their initial $750m target raise to $1.95b.

The new Capital Notes issue seeks to provide investors with a gross yield of ~3.85%. PRIME ensured all existing NABPC holders whose holdings were due to mature in March were offered the opportunity to roll into the new issue and all clients received their full allocations here which was a positive.

Afterpay & Metrics (APT & MXT)

We strongly encouraged all existing APT shareholders to participate in the Share Purchase Plan (SPP) in which APT sought to raise further funds to proceed with its international expansion strategy.

Whilst the SPP was delayed due to an investigation into APTs business procedures, clients who participated in the SPP to the maximum value of $15,000 eventually booked in profits of around $1,000.

We recently recommended clients holding Metrics (MXT) not to participate in their latest rights issue. Whilst this latest raising will further increase liquidity in MXT units taking the market capitalization towards $2bn which is a positive we believe our portfolios are adequately positioned.

Antipodes Global Fund & Platinum Asia

Following a sustained period of underperformance, we recommended clients sell out of both Antipodes and Platinum Asia.

Whilst both funds remain well managed, we believe there are other opportunities and fund managers who are currently delivering better returns.

The information in this video and article contains general advice and is provided by Primestock Securities Ltd AFSL 239180. That advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs. You should obtain and read the Product Disclosure Statement (PDS) before making any decision to acquire any financial product referred to in this article. Please refer to the FSG for contact information and information about remuneration and associations with product issuers. This information should not be relied upon as a substitute for professional advice, and we encourage you to seek specific advice from your professional adviser before making a decision on the matters discussed in this article. Information in this article is current at the date of this article, and we have no obligation to update or revise it as a result of any change in events, circumstances or conditions upon which it is based.


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