Month: August 2021

Why did Magellan High Conviction Trust (ASX:MHH) just morph into an active ETF?

green etf represented by letters E,T and F sitting on green grass

Magellan Financial Group Ltd (ASX: MFG) is well known for providing a slate of investment options for its Australian customer base. You don’t become one of the largest fund managers in the country without a comprehensive suite of investment options, after all.

But something strange has happened to one of Magellan’s flagship funds today. That would be regarding the Magellan High Conviction Trust (ASX: MHHT). As the name implies, this fund holds only Magellan’s “highest-conviction ideas”, with a “concentrated portfolio invested in 8 to 12 of the world’s best global stocks”. In contrast, the popular Magellan Global Fund (ASX: MGF) has a portfolio of “20 to 40 of the world’s best global stocks”.

In exchange for the higher management fee of 1.5% (compared to the 1.35% for the Global Fund), the concentrated High Conviction Trust has no benchmark. It instead focuses on “risk-adjusted returns”. It also has unlimited hedging capacity, as well as no limit on its minimum or maximum cash position.

Papa’s got a brand new… ticker code

But investors in Magellan’s High Conviction Trust may have noticed something strange this morning. They have woken up with a different investment from what they had when they went to sleep. That’s because, as of today, the Magellan High Conviction Trust has changed from a closed-ended Listed Investment Trust (LIT) to an open-ended actively managed exchange-traded fund (ETF). To reflect this change, this fund now has the new ticker code of ‘MHHT’, as opposed to the old ‘MHH’.

This move shouldn’t have been unexpected though. Magellan first flagged it back in early July, and gave the final green light on 26 August after receiving approval from the ASX.

So why is Magellan changing one of its popular funds? Well, Magellan’s CEO Brett Cairns told us why back in July:

On balance, we believe the benefits for unitholders of reducing the trading discount in MHH outweighs the benefits of MHH remaining as a closed-ended fund. We believe transitioning the fund to an open-ended Active ETF is in the best interests of investors as it will allow direct access to the fund for applications and redemptions and see the units in the fund trade at a tight spread to net asset value going forward.

Why has the Magellan High Conviction Trsut changed its structure?

This makes sense for investors. As a closed-ended structure, the old High Conviction Trust had the potential to trade for less than the fund’s actual worth. This it did, and habitually. The gap between this fund’s net tangible assets (NTA) and share price became so apparent that units of the fund were acquired by Geoff Wilson’s new Listed Investment Company (LIC) WAM Strategic Value Ltd (ASX: WAR). As we covered at the time of this purchase, WAM Strategic Value’s whole purpose is to find undervalued assets in similar scenarios.

However, the new open-ended structure will allow the Magellan High Conviction Trust to consistently trade in line with the NTA of the underlying fund, as Mr Cairns pointed out above.

This shift in strategy seems to be working too. Magellan’s High Conviction Trust last traded under its old ticker and structure on 26 August. Back then, the unit price for MHH shares closed at $1.775 a unit. Today, upon the new MHHT debut, this now-ETF is asking a unit price of $1.825 at the time of writing. That’s pretty much in line with its current NTA per unit.

The post Why did Magellan High Conviction Trust (ASX:MHH) just morph into an active ETF? appeared first on The Motley Fool Australia.

Should you invest $1,000 in Magellan High Conviction Trust right now?

Before you consider Magellan High Conviction Trust, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Magellan High Conviction Trust wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

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Motley Fool contributor Sebastian Bowen owns shares of Magellan High Conviction Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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Brokers give their verdict on the Altium (ASX:ALU) share price

Businessman holding bear figurine in one palm and bull figurine in other

It has been a volatile day for the Altium Limited (ASX: ALU) share price on Wednesday.

The electronic design software company’s shares have been up as much as 1% to $30.19 and down as much as 2.5% to $29.20.

At the time of writing, the Altium share price is down 0.5% to $29.73.

What’s going on with the Altium share price today?

The bulls and bears have been battling it out today after Altium was the subject of two broker notes with opposing opinions.

In one corner you have Citi, which believes the recent weakness in the Altium share price is a buying opportunity, and then in the other corner you have Macquarie, which is tipping its shares to fall further.

The bulls

According to a note out of Citi, its analysts have upgraded its shares to a buy rating with a price target of $35.40.

Based on the current Altium share price, this implies potential upside of 19% over the next 12 months.

Citi believes that Altium’s underlying business remains attractive and feels the pullback since its full year results release is an opportunity for investors. The broker also notes that the company’s guidance for FY 2022 was solid.

The bears

Over at Macquarie, its analysts feel very differently about the Altium share price.

In response to its full year results, the broker has downgraded the company’s shares to an underperform rating with a $27.60 price target. This implies potential downside of 7.2% over the next 12 months.

Macquarie was disappointed that Altium fell short of its guidance in FY 2021 just two months after reiterating it. The broker feels this may hit investor confidence, particularly in its ability to achieve its long term goals.

Altium is aiming to more than double its revenue to US$500 million by FY 2026, one year later than previously planned due to COVID-19 impacts.

Time will tell which broker has made the right call.

The post Brokers give their verdict on the Altium (ASX:ALU) share price appeared first on The Motley Fool Australia.

Should you invest $1,000 in Altium right now?

Before you consider Altium, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Altium wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor 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 and has recommended Altium. The Motley Fool Australia owns shares of and has recommended Altium. 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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Regional Express (ASX:REX) extends suspension of services and stand downs

aeroplane at an airport

The Regional Express Holdings Ltd (ASX: REX) share price has slipped into the red on Wednesday.

Shares in the domestic airline are on the way down after the company made an announcement concerning its operations.

What did ‘REX’ announce?

In a move that could weigh in on the company’s share price, its board was “left with no option but to extend the suspension of (its) domestic services and reduce regional services up until 10 October 2021″.

Regional Express had originally thought it would stand down until at least 12 September. However, given further extensions to lockdowns in Greater Sydney, the decision was made to continue the shutdowns and extend the furloughs until early October.

Regional’s operations are impacted by lockdowns that affect domestic travel. And remember, NSW has announced a further extension of lockdowns for Greater Sydney until the end of September 2021 and for Regional NSW until at least 10 September.

Therefore Regional Express is unable to operate, due to these restrictions on travel. It is a tricky situation that is no doubt made more complex by the nature of the COVID-19 delta variant, which has seen case numbers spike in NSW and Victoria over the last few months.

How does this impact the Regional Express share price?

Regional’s shares had originally made a swift recovery from the market selloff back in March 2020. By January of this year, they were at 5 year highs of $2.07 a share.

However, since then, amid the COVID situation in Australia and abroad, it’s been a steep slide down and Regional Express now trades at $1.19 each.

As such it’s been a difficult year to date for Regional’s shares, posting a loss of 42% since January 1.

Despite this, the Regional Express share price is still 10% in the green over the last 12 months.

What’s next for Regional Express?

A positive for the Regional Express share price is that the company’s FY21 results were well received by the market on reporting yesterday.

In it, the company recognised a 41% decrease in passenger revenue, however, the underlying loss before tax came in at $18.4 million, which is an approximate $9 million improvement on FY20.

The company is also uncertain about the future of its operations and the aviation industry as a whole, and thus did not provide any specific earnings guidance for FY22.

The post Regional Express (ASX:REX) extends suspension of services and stand downs appeared first on The Motley Fool Australia.

Should you invest $1,000 in Regional Express right now?

Before you consider Regional Express, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Regional Express wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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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SILK Laser (ASX:SLA) share price lifts 4% on acquisition update

a woman lies on a medical bed for a cosmetic lasering session with a hand held laser directing light onto her cheek area.

The SILK Laser Australia Ltd (ASX: SLA) share price is firmly in positive territory during Wednesday trade. This comes after the laser clinic company announced an update on its recent strategic acquisitions.

At the time of writing, SILK Laser shares are swapping hands for $3.97 apiece, up 3.52%, after earlier hitting an intraday high of $4.00.

What did SILK Laser announce?

According to its update, SILK Laser advised it has completed the acquisition of Australian Skin Clinics and The Cosmetic Clinic in New Zealand.

The agreement to acquire 100% of the ASC group involved an upfront cash consideration payment of $47 million. Furthermore, SILK Laser will pay up to another $5 million in ordinary shares based on the opening of certain new clinics.

SILK Laser noted that the acquisition will see 55 clinics added to its existing network of 63 clinics. This consists of 14 Victorian clinics and 14 New Zealand clinics which see the company enter into new geographical markets.

Both New South Wales and Queensland will effectively double their presence following the takeover with 23 clinics and 29 clinics, respectively.

SILK Laser plans to have a network of 150 clinics under its belt over the medium term.

SILK Laser CEO and co-founder Martin Perelman commented:

We’re delighted to welcome the ASC and TCC teams to SILK, and excited by the growth potential we see for our combined businesses.

With growing revenues, healthy margins, profitable operations and growing cashflows, SILK is in a unique position to support our growing loyal customer base, build exciting careers for our franchise owners, nurses and other team members, and deliver sustainable growth in shareholder value.

About the SILK Laser share price

Over the last 12 months, SILK Laser shares have posted a modest 12% gain for investors. The company’s share price reached an all-time high of $5.30 in March before pulling back in the months following.

Based on today’s price, SILK Laser presides a market capitalisation of roughly $206 million, with almost 52 million shares outstanding.

The post SILK Laser (ASX:SLA) share price lifts 4% on acquisition update appeared first on The Motley Fool Australia.

Should you invest $1,000 in SILK Laser right now?

Before you consider SILK Laser, you’ll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and SILK Laser wasn’t one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

More reading

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended SILK Laser Australia Limited. The Motley Fool Australia has recommended SILK Laser Australia Limited. 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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