Day: January 3, 2021

Here’s why the BetMakers (ASX:BET) share price is zooming higher today

investor looking excited at rising asx 200 share price on laptop

The BetMakers Technology Group Ltd (ASX: BET) share price has started the year in fine form.

In afternoon trade the betting technology company’s shares are up over 5% to 70.5 cents.

Why is the BetMakers share price zooming higher?

Investors have been buying the company’s shares this morning after it released an update on its capital raising.

According to the release, the company has completed its placement and raised $50 million (before costs) from sophisticated and institutional investors at $0.60 per new share.

The proceeds received from the placement, in conjunction with existing cash, will be used to fund its acquisition of the racing and digital assets of UK-based online sports betting company Sportech PLC.

In addition to this, BetMakers has revealed that it is also currently negotiating commercial terms with several operators.

And while it is currently unable to determine the materiality of such negotiations, it intends to keep the market informed of such transactions in due course in accordance with its continuous disclosure obligations.

Why is it acquiring the Sportech assets?

The acquisition of Sportech’s racing and digital assets are expected to accelerate BetMakers’ international growth plans and significantly expand its global customer base and strategic position to fully capitalise on emerging opportunities in the U.S. market.

It will also be a huge boost to its earnings. Management revealed that on a pro-forma basis for FY 2020, the assets combined with BetMakers’ existing operations would have delivered $56.1 million revenue and $7.7 million EBITDA.

This compares to the stand-alone revenue of $9.2 million and EBITDA of $0.8 million BetMakers recorded in FY 2020.

At the time of announcement, BetMakers’ Managing Director, Todd Buckingham, commented: “This Acquisition will supercharge our entry into the U.S. and position the Company for substantial growth on the back of the emerging wagering opportunities in U.S. racing, including Fixed Odds, where we believe we are well placed.”

“The Acquisition would give us a meaningful presence in the U.S., including in 36 of the States and across more than 200 venues, 25 digital outlets and 9,000 betting terminals. It will also greatly expand our global customer base across the UK, Europe and Asia and provides us with an opportunity to expand our product offering at scale in these and other regions,” he concluded.

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Returns as of 6th October 2020

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Betmakers Technology Group Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Does the Rex (ASX:REX) share price have enough tailwind to keep soaring in 2021?

asx share price rise represented by red paper plane flying away from other white paper planes

The Regional Express Holdings Ltd (ASX: REX) share price has been last year’s big winner in the beaten down travel and transportation sectors, returning 75% over a year for shareholders.

In comparison, the Qantas Airways Limited (ASX: QAN) share price has dropped 30%, while the Webjet Limited (ASX: WEB) share price plummeted 46% during the same period.

So, can the Rex share price keep its momentum and fly to even greater heights in 2021?

What happened to Rex in 2020?

The regional airline was brought to its knees back in March as passenger numbers plummeted 90%. Rex subsequently announced a loss after tax of $19.4 million on a turnover of $321.8 million for financial year 2020.

However since then, things have been looking up.

In early December, the Rex share price smashed its 52-week high of $2.50. This came after the company announced it will break out of its regional roots and start servicing the “golden triangle” route starting in March 2021.

The Golden Triangle refers to the Sydney-Melbourne-Brisbane routes – among the busiest in the world.

Analysts see the entry of Rex into the domestic capital cities market as one of the biggest shake-ups in Australian aviation history.  To celebrate the new route launch, Rex offered 100,000 promotional fares for the Sydney-Melbourne services. 

All eyes on the annual general meeting (AGM)

In order to fund this expansion, Rex said back in May that it was in discussions with several interested potential parties.

Leading the pack was Asian investment firm PAGAC Regulus Holding Pte Ltd (PAG), which eventually signed an agreement with Rex in November 2020 to provide it with $150 million worth of fresh capital.

Rex had to jump a few regulatory hurdles to get its hands on the funds, the first being an approval it received from the Foreign Investment Review Board (FIRB).

In mid-December, the Australian Securities and Investments Commission (ASIC) declared that Rex could not utilise exemptions for reduced disclosure, and has ordered the airline to issue a full prospectus in order to raise funds from investors.

Finally and most importantly, Rex will need to get shareholder approval for the $150 million funding arrangements from PAG, which which could see it eventually own half of Rex.

Rex’s AGM will take place on Friday 29 January 2021. We will know by then whether shareholders have voted for or against the proposed funding from PAG.

If approved, Rex will commence its flights between the three Australian capital cities on 1 March 2021, with the maiden voyages being between Sydney and Melbourne. 

About the Rex share price

As mentioned, the Rex share price has gained more than 70% in one year.

It has been in business for 18 years, founded by former Ansett Australia employees who acquired Hazelton Airlines and Kendell Airlines and merged the two companies into Rex Airlines.

The Rex share price is currently trading up 1.94% at $2.10. At this share price, the airline commands a market cap of $227 million.

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Motley Fool contributor Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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My biggest regrets from 2020

investment regret represented by asx share investor slapping forehead

There are those of us who invest our own money in the share market as a side hustle, then there are those who do it for a living, making money on behalf of others.

But even the professionals don’t have a crystal ball. They don’t know precisely what will happen to share prices any more than the amateurs, your 6-year-old son or the cat next door.

This is why it’s always interesting to see what mistakes fund managers are willing to admit.

Here are 8 ASX shares that the professionals regretted buying (or not buying) in 2020:

Treasury Wine Estates Ltd (ASX: TWE)

The Australian winemaker has had well-documented troubles in the past year with China imposing a massive tariff to devastate Treasury’s thriving export business.

Paradice Investment portfolio manager Julia Weng watched in horror as the Treasury share price tumbled from $17.70 on Australia Day last year to now trade at just $9.55.

“Treasury had the trifecta of COVID, of oversupply in US Commercial Wine and then you have this 170% trade tariff,” she told Livewire.

“What else could go wrong really?”

Webjet Limited (ASX: WEB) and Corporate Travel Management Ltd (ASX: CTD)

Eley Griffiths portfolio manager David Allingham regrets not buying into these travel shares when they were going cheap in April and May.

“They were going down, they were collapsing — [but] they were going to recapitalise,” he said.

“We didn’t buy them. That was the mistake. I think we look back now 6 months post the crisis, and some of the market caps of these stocks are actually higher than they were pre the crisis.”

The Webjet share price has risen 89% since its April lows, while Corporate Travel has climbed a stunning 274% since March.

Allingham said this teaches you that when it’s the right time to buy, human nature will make you fearful of the commitment.

Temple & Webster Group Ltd (ASX: TPW)

The online furniture merchant has been a darling of the ASX in 2020, shooting up from $2.68 a year ago to now trade at $11.82.

Sage Capital portfolio manager Kelli Meagher regrets not buying in.

“I can’t believe I [overlooked it] because I’m a shopper and I shop online all the time,” she said.

“I was too finicky on my valuations and thought I was going to be too late to the party once they started running… I missed out on a huge amount of upside, which was very frustrating.”

Meagher admits she didn’t predict the huge surge in homewares after the pandemic arrived.

iSentia Group Ltd (ASX: ISD)

The media data company has caused Spheria Asset portfolio manager Matthew Booker no end of pain.

iSentia sold for 31 cents per share a year ago but now trades at 11 cents.

“We’ve owned iSentia for a long time. It’s been a difficult position for us,” he said.

“The industry has been challenging, with a couple of irrational competitors that continue to burn money. That industry construct has made it a difficult space for a company that’s profitable.”

However, Booker continues to hold iSentia shares as he reckons those upstart rivals will run out of cash eventually.

Elders Ltd (ASX: ELD)

The share price for this agriculture business has risen almost 60% in the past year. Not too shabby.

But Centennial Asset principal Matthew Kidman has been disappointed that he bought in in May rather than March or April.

“Elders is the best of breed in that sector, best management. You buy that at $10. It goes along, the season gets better, the momentum’s in the business, it puts out its result for September — guess what, it beats. It’s been sold ever since I’ve sat on the stock. When the market’s up 30%, it’s flat and it’s beaten every forecast.”

Elders now trades for $10.05.

Kidman admits he misread the situation and bought in when the demand for the shares was already hot.

“Did I learn anything? Not really, because I’ve done it a few times this year,” he told Livewire.

“So I rarely learn from my mistakes. I keep doing them, but luckily it wasn’t too dangerous in an upward moving market.”

Auckland International Airport Limited (ASX: AIA)

Auckland Airport is a quality company so it gave TMS Capital portfolio manager Ben Clark “headaches” when the share price plummeted in February and March.

“When you get hit from ‘left field’ events and big draw-downs, prices get very irrational,” he said.

“Markets aren’t always rational, and you want to be able to take advantage of those times.”

A lesson Clark learnt was strong businesses can access additional capital swiftly.

“In hindsight, they went hard on a raising and that was really the start of the return of confidence in AIA,” he said.

Sydney Airport Holdings Pty Ltd (ASX: SYD) left it a bit later and that price has lagged a bit more.”

oOh!Media Ltd (ASX: OML)

Similar to Auckland Airport, oOh!Media also raised emergency capital to survive the coronavirus recession.

Lennox Capital equity analyst Olivia Salmon said not participating in that round was her team’s “number one mistake” in 2020.

“That’s the time to buy, and we were just too uncertain on the earnings and the visibility of the earnings,” she said.

“This was a make-or-break capital raise for the company, and this was at the height of the pandemic. We were just too nervous about those earnings coming through.”

The share price sank to 59 cents near the end of March but has since recovered to $1.64.

Salmon’s team did end up buying in, but she regrets the timing.

“It just would have been great to get it at the absolute bottom,” she said.

“What you’ve obviously seen is the ad market improve out of sight. Outdoor media is one of these assets that I think will be around for the long term and is unlikely to really be cornered out by digital advertising any more than it already has been.”

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Returns As of 6th October 2020

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Tony Yoo owns shares of Corporate Travel Management Limited, Sydney Airport Holdings Limited, Temple & Webster Group Ltd, and Webjet Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited, Treasury Wine Estates Limited, and Webjet Ltd. The Motley Fool Australia has recommended Elders Limited, iSentia Group Ltd, oOh!Media Ltd, and Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Is it better to buy 2020’s best or the worst ASX stocks?

best and worse asx shares represented by green best button and red worst button

Much has been said about buying last year’s worst performers for their “cheap valuation”, but history shows you might be better off sticking with the winners instead.

This is great news for the Afterpay Ltd (ASX: APT) share price and Fortescue Metals Group Limited (ASX: FMG) share price – and I’ll explain in a moment.

Buying the top performers would run contrary to our tendency to buy low and sell high. After all, the best performing ASX stocks of 2020 are trading on very stretched valuations.

ASX dogs with surprising bite

But buying last year’s dogs is fraught with risks, as I have written about before. It might not feel that way to those who used this strategy in 2019 though.

High-profile Bell Potter trader Richard Coppleson found that buying the bottom 20 stocks of 2019 delivered returns of around 7.2% on average in 2020.

This is miles ahead of the circa 1.5% loss on the S&P/ASX 200 Index (Index:^AXJO) for last year.

From zero to hero

The Pilbara Minerals Ltd (ASX: PLS) share price contributed the most to the gains with a 212% surge in 2020 after losing more than half of its value the year before.

Other big contributors included the Costa Group Holdings Ltd (ASX: CGC) share price and Orocobre Limited (ASX: ORE) share price. Both of these 2019 underachievers rebounded by around 60% each in 2020.

Bargain hunters who indiscriminately buy members of the annus horribilis club would be further embolden by the 20.9% gain generated by this strategy over the past eight years.

Buying the worst ASX stocks vs. buying the best

This is the return you would have reaped if you bought the 20 worst ASX annual performers and sold them 12 months later starting from 2012 to 2019.

However, Coppleson pointed out that the data is skewed by the 70% plus return made in 2015 and 2016. These appear to be unusual one-off type events. If the two years were excluded, the returns drop to 3.6%. That’s what Coppleson believes this strategy should be generating.

This is because ASX stocks that suffer a bad year typically need more time to turn around its fortunes, he added.

Sticking with the ASX outperformers

In his opinion, a better strategy is to buy the top 20 stocks of any given year instead. These top performers generated an average annual return of 42.1% from 2012 to 2019.

Investors using this strategy would have generated a positive return in every one of those years, except for 2018 when the return was zero.

If history repeats, 2020’s best performing ASX stocks are likely to outperform again in 2021, at least on a collective basis.

Perhaps price shouldn’t be the biggest determiner for bargain hunters.

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When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.

*Returns as of June 30th

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Motley Fool contributor Brendon Lau owns shares of Costa Group Holdings Ltd. Connect with me on Twitter @brenlau.

The Motley Fool Australia owns shares of and has recommended COSTA GRP FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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