Even through tougher times, market opportunities knock for those who pay attention to fundamentals and are nimble in the way they trade, according to HALO Technologies founder Nicolas Bryon.

Bryon, who is also HALO’s (ASX:HAL) executive director and created HALO’s innovative global market analysis and trading software platform, is the esteemed fund manager at APSEC Funds Management with a reputation for timing the market.

That means his advice counts for a bit, especially as global economic conditions chop and change into territory unmapped for many years.

Bryon practices what he preaches when it comes to trading – using HALO Technologies’ platform to guide his decision-making, and in July APSEC’s fund realised 5.39% monthly growth – taking it to 17.9% for the full year. The five-crown rated fund sits in the top quartile of performance among managed investments tracked by Money Management across all of the tracked three-month, six-month, one-year, three-year and five-year time periods.

“What we saw in Australia through June was certainly an elongated tax loss-selling period,” he said.

“In those sorts of environments we generally do quite well, because a whole range of stocks move into this severe oversold state – if you look at them through the fundamentals of the companies, some of them are crazily mispriced.

“You usually get one bout of overselling, but sometimes you might get a second bout. In the case of one stock, 29M, it went through a third oversold state – I can’t remember a time in my career where I’ve ever seen that before.

“Generally, what happens after the double oversell is they snap back really quickly. In the case of 29M it certainly did after the third overselling.”

29M is the ASX-listed copper producer 29Metals (ASX:29M), which hit one-year lows of $1.16 in July and is currently trading around the $2 mark, with a 52-week high of $3.35. This, as well as Ansell (ASX:ANN), which hit a 52-week low of $21.11 from lofty heights of $39.25 and currently trades around $27, were identified by Bryon as standout picks of the period.

Bryon said within a month of the global selloff, the signs suggested the US market was in an overbought state, with natural selling beginning to emerge a sign of swift repricing in markets across the globe.

“You generally have to be quite nimble, because if you’re not getting out quick enough you get hit, and if you sell too early you get hit as well,” he said.

“Timing for us, not so much at a market level, but definitely at the stock level, is paramount. I’m able to do that using the tools of HALO to identify potential opportunities, then looking at live screens to implement them.”

HALO as a platform provides traders with a suite of signals in markets and stocks globally, including things like trend accumulation, mean reversion and volatility, to paint a picture of performance.

Bryon said the leads of the US market often indicated things to come elsewhere – an essential step in picking winners and knowing how to time the ride.

“Having all these signals at your fingertips puts you in a much better position to understand the future dynamics of the market,” he said.

Where value lies

Right now, Bryon said he saw significant value in mining, not at the big end of town, but in emerging producers particularly within the lithium space.

“If you look at the likes of BHP, we saw earnings coming off in fiscal year 22, and presumably again in fiscal year 23 – these sorts of big, quite static companies really represent your true cyclicals,” he said.

“But there’s a whole cohort of producers which on a forward basis, moving through FY23 or FY24, are predicting significant steps up in terms of earnings for various reasons.

“Whether that’s going from one mine to two or three, or building out production capacity within a single project – these are the companies we have a predisposition towards.

“We’re not sitting in the larger cap resource space. We tend to trade those without holding onto them for longer periods because that’s just the nature of the beast and we know earnings will come off.”

Production ramp ups through new mines or expanded capacity create opportunity for emerging producers to significantly improve their bottom line, provided they deliver to expectation.

Bryon said HALO analysis suggested companies like Karoon Energy (ASX:KAR), which started producing oil from its Bauna project last financial year, and lithium play Allkem (ASX:AKE), were prime candidates.

Despite pockets of optimism and opportunity Bryon said overall he was quite bearish on markets globally for the next six to 12 months, with caution driving decisions based on inflation leads in the UK and other parts of the world and the potential for bond rate rises in the US.

 

 

 

This article was developed in collaboration with HALO Technologies, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.

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