Last week saw the ASX announce which companies will be accepted into various indices ranging from the S&P/ASX20 through to the S&P/ASX300 and All Tech, and which will be dumped out.

It’s a big deal for those promoted – additions generally result in a positive price influence, and obviously the smaller plays are most affected. This year, for example, there were no movements in or out of the S&P/ASX20 and S&P/ASX 50.

Nadine McGrath’s run the ruler over the additions here, but some of the notables include Johns Lyng Group (ASX:JLG), the insurance builder which posted a 57.5% increase in revenue to $895 million and an EBITDA increase of 58.9% to $83.6 million in FY22.

Charter Hall Social Infrastructure REIT (ASX:CQE) is the largest Australian ASX listed real estate investment trust (A-REIT), and it made the 200 after a stonking year in which it reported statutory profit of $385 million for FY22, up $184.4 million on pcp.

And vertically integrated low cost-jeweller Lovisa Holdings (ASX:LOV) got a leg-up after a solid FY22 that included sales growth of almost 20%. It added 85 new stores during FY22 – including 55 in the US. Oh, and it’s also a top pick for 8020 Invest investment manager Angie Ellis.
 

Guy Le Page

RM Corporate Finance

“Rutile” is not a word you come across a lot in general conversation. But you might, soon, because supply of it is in danger of “falling off a virtual cliff”, according to Stockhead’s Josh Chiat.

Natural rutile is a high quality titanium feedstock, used in markets such as pigment, aerospace and welding. And some big names have been increasing their interest in it lately, namely Tribecca and Regal Funds, who took advantage of recent IPO Sierra Rutile’s (ASX:SRX) 33% fall from its 40c list price.

It’s still sitting at 31c and Guy Le Page can’t see any reason why, with an enterprise value in the order of $60 million, it doesn’t present a medium term opportunity.

“FY 2022 guidance of approximately 140Kt of rutile at an operating cost of US$892/tonne … should generate (assuming steady state production) an EBITDA in the order of +$75 million,” he notes.

“I can envisage 7 to 8 times uplift in the current price of 30 cents (+$2.10/share) on its successful commissioning over the next 2-3 years.”
 

JAMES WHELAN

VFS Group

Remember 60/40 portfolios? The “easiest” to own since forever?

Bzzt. They’re down 13.99% in 2022, the worst year since records began in 1976. Just the eighth year they’ve recorded a loss, and it’s close on twice as bad as the next worst, back in 2002.

Whelan’s hoarding cash, waiting for the right time to stash a huge allocation to bonds (“basically mandatory”). And an equity allocation, but picking that bottom is still a long way off if, like Whelan, you’re watching the S&P 500 Bear Market Allocation Peak to Trough since 1927. The average decline is 37.1% and we’re about halfway there.

Or, if you prefer your falls in days, we’re about 170 days into runs that have lasted for as long as 350 days (2009), or 630 days (2002, and the Big One, 1932 – a +80% fall).

Sticking with history, Whelan’s mate Jonathan Pain notes S&P 500 Index returns are pretty flat for September, then fall off a cliff from the 19th onwards.
“Having this much cash on the sidelines isn’t something I do often and hasn’t been this large since the early pandemic days,” Whelan admits.
 

Quick hits

One of Japan’s biggest financial institutions isn’t waiting for Myer (ASX:MYR) to release the strong results it flagged in late July. Mitsubishi UFJ wants a piece of the action, and became a substantial holder on August 29, buying 5.01% of the iconic retail stock. Solomon Lew also snapped up an extra 3%.

Cassius Mining (ASX:CMD) announced in July it was joining the lithium game, had acquired four contiguous prospecting licences in central Tanzania, and was hunting funds to dig it up with. It found them this week when high profile lithium battery manufacturer Magnis Energy Technologies (ASX:MNS) chairman Frank Poullas picked up ~5% stake.

And nearly two years to the day after BNPL Splitit (ASX:SPT) hit its $1.85 high, noted tech investor Alex Waislitz swooped in at it near all-time lows of 13.5c, grabbing a 6.63% substantial shareholding through Thorney Technologies.

You can read more about those and other trading moves here.
 
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.

Featured Companies

You might be interested in