Warren Buffett – usually regarded as one of the best investors of all time – hasn’t had a particularly good 2020.

Financially speaking, it’s been a difficult year for Buffett and his famous holding company Berkshire Hathaway Inc. (NYSE: BRK.A)(NYSE: BRK.B).

Not only has Berkshire not deployed a cent of its estimated US$137 billion cash pile (even on Berkshire stock buybacks), Buffett also sold Berkshire’s significant positions in 4 US airline companies at a hefty loss.

Adding to that, Berkshire shares have not recovered nearly as much as the broader US markets. For some context, since 23 March, the Dow Jones Industrial Average has risen by just under 35% – whilst Berkshire’s Class A shares have only recovered ~12.6%. The Berkshire Class B shares have fared even more poorly, banking only 11.23%.

According to the Australian Financial Review (AFR), Warren Buffett owns around 16% of Berkshire Hathaway, which means that his net worth has plunged around US$20 billion in 2020 to roughly US$69 billion.

The AFR also noted that Buffett is now worth considerably less than Facebook founder Mark Zuckerberg, whose 13% ownership of Facebook puts him at a net worth of US$86.5 billion.

Should Buffett fans be worried?

Not in my opinion. This is a man who has proved he knows how to take advantage of the share market over a very long period of time to build massive wealth.

In the past, such as during the dot-com bubble of the early 2000s, Buffett’s investing style has been out of favour for periods of time. Some new investors have dismissed him as ‘too old’ or ‘out of touch with technology’. Whilst it’s true Buffett hasn’t invested in some of the biggest US growth companies over the past decade, he has still generated meaningful returns for his shareholders at the same time as amassing one of the largest war chests on the market.

If I were a shareholder in Berkshire Hathaway, I would feel very comfortable knowing Buffett has over US$130 billion ready to go in these uncertain times.

Yes, Warren Buffett’s net worth (on paper) has fallen in 2020, but that doesn’t mean he’s a spent force or a ‘has been’. On the contrary, I think he’s one of the best investors to watch right now, and when he finally starts putting that US$137 billion to work, it’s a good hint to take!

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• 3 top Warren Buffett quotes to start off your week
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• 3 takeaways from Warren Buffett’s Berkshire Hathaway meeting

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares), short January 2021 $200 puts on Berkshire Hathaway (B shares), and short June 2020 $205 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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I think that having a little exposure to the small cap side of the market can be a good thing for a portfolio.

After all, if you unearth the next Afterpay Ltd (ASX: APT) when it is just starting out, you could generate significant returns.

With that in mind, I have picked out three small cap ASX tech shares which I think could be worth a closer look. They are as follows:

Audinate Group Limited (ASX: AD8)

Audinate is a digital audio-visual networking technologies provider. It was growing at a rapid rate prior to the pandemic thanks to the significant expansion of its Dante product offering and the increased adoption by Original Equipment Manufacturers. While the pandemic will put a dampener on its growth, given the benefits it offers end users, I expect demand to pick up once the crisis passes. In addition to this, the company has recently expanded its offering into the audio-video category and could soon revolutionise this market.

ELMO Software Ltd (ASX: ELO)

ELMO Software is a provider of cloud-based human resources and payroll software. Its increasingly popular unified platform allows users to streamline processes for everything from employee administration, recruitment, and payroll. It has been growing very strongly in the ANZ market and delivered a 42.8% increase in annualised recurring revenue (ARR) to $52 million during the first half. The good news is that the company has still only captured a small slice of the local market. I believe this provides it with a long runway for growth. In addition to this, as its platform is jurisdiction agnostic, I believe an international expansion is a real possibility in the future.

Serko Ltd (ASX: SKO)

Serko is a technology company with a focus on developing innovative solutions to address the challenges of corporate travel and expense management. It is a market leader in its category and has over 6,000 corporations and travel management companies using its platform. While Serko’s business has been negatively impacted by the pandemic, it is well-funded and appears to be positioned for a return to growth when travel markets normalise.

More reading

• Top broker says this ASX stock is a better buy than Afterpay
• After hitting $50, the Afterpay share price has pulled back. Is it good value?
• ASX 200 up 0.1%: Big four banks rocket, Afterpay sinks lower
• Why Afterpay, CSL, Fortescue, & Newcrest shares are dropping lower
• 3 easy rules for building a massive ASX share portfolio

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 Serko Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Elmo Software. The Motley Fool Australia owns shares of and has recommended AUDINATEGL FPO and Elmo Software. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Serko Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Are these exciting small cap ASX tech shares the next Afterpay? appeared first on Motley Fool Australia.

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The Ampol Ltd (ASX: ALD) share price has faced a turbulent past 12 months. Formerly known as Caltex Australia, the company’s recent change to its original name Ampol has meant the fuel convenience brand has largely flown under the radar in recent weeks.

Earlier this year, the Ampol share price nudged $36 per share as the prospects of a takeover by Canadian firm Alimentation Couche-Tard Inc appeared likely. However, the double-whammy of COVID-19 and the unprecedented oversupply of oil have put pressure on this blue-chip company in recent months. This pressure led to the Ampol share price halving in value to a low of $18.32 on 23 March.

With its shares having now rebounded to around the middle of their 52-week high/low range at $26.42, here are 3 reasons I believe Ampol may be heading back to the high 30s in the near future:

Greater fuel demand

The winding down of COVID-19 lockdowns across Australia will inevitably mean more cars on the road and domestic planes in the skies. That’s a good thing for Ampol.

In his presentation to the 2020 Macquarie Conference in early May, Interim CEO Matt Halliday confirmed that retail fuel volumes had decreased by 16% in 2020 alone. At the same time, demand for jet fuel had shrunk by a staggering 80–90%. In response to these downward pressures, the company has implemented rigorous cost-cutting measures. These include a reduction of retail staff hours and executives’ compensation, and limiting its capital expenditure (capex) to below $250 million in 2020.

Despite this challenging environment and the negative implications this may have for Ampol’s short-term cash flow, the company will benefit from the easing of restrictions. In particular, it is likely that people will use a private vehicle in their daily activities rather than take public transport, especially due to the lingering health threats of COVID-19. Additionally, the impending resumption of domestic air travel will positively impact jet fuel demand. This will allow Ampol to claw back some of its recent losses.

Overall, the renewed demand for fuel compounded by easing COVID-19 restrictions may result in a short-term spike in the company’s share price, seeing Ampol’s shareholders benefit from the gains of the S&P/ASX 200 Index (ASX: XJO) more broadly.

Strong future earnings outlook  

Although FY20 will likely see Ampol underperform due to the challenging economic environment, I believe the company’s strong financial position makes it likely to outperform in FY21 and beyond.

In its 2019 annual report to shareholders, the company showcased its robust balance sheet, featuring $35 million in cash, $2.1 billion in inventories and $1.4 billion in receivables. This substantial liquidity pipeline was also supported by the paying of 83 cents per share in fully-franked dividends, representing a handy 3.13% yield to shareholders. Whilst this yield may be on the smaller side, investors may be comforted to know the company hasn’t skipped a dividend payment since 2009.

In addition to its strong balance sheet, Ampol’s proposed initial public offering (IPO) of a 49% stake in 250 of its service stations represents a significant opportunity for shareholders. By placing these sites in a real estate investment trust (REIT) and maintaining a majority interest in the sites, the company estimates that rental payments of $80–$100 million in the first year alone will notably improve returns. These rental payments, projected to be in the form of long-term lease agreements, will likely provide a consistent stream of capital to shareholders, perhaps in the form of an increased dividend.

It appears as though Ampol’s management is looking to reduce its costs and provide innovative profitability opportunities – a good sign the company is heading in the right direction.

Lingering acquisition speculation

COVID-19 and the increased volatility of oil prices derailed a cash takeover of Ampol earlier this year. However, I believe re-negotiations between the company and Alimentation Couche-Tard appear likely in the coming months.

Alimentation had previously offered $35.25 per share for the company. It also assured the market on 20 April that no material issues had been revealed throughout due diligence. Despite being the wrong time and place for a major deal like the one proposed, the Canadian buyer continues to see Ampol as a “strong strategic fit” as part of its Asia-Pacific business. Consequently, I wouldn’t be surprised if both parties looked to re-negotiate a deal in the coming 12 months. A buyout would facilitate a premium return for shareholders.

Foolish takeaway

I think the Ampol share price will experience tailwinds from an easing of lockdown restrictions and its property IPO in the coming months. The company has tightened its belt and effectively conserved capital during COVID-19. This may allow it to emerge from the pandemic relatively unscathed.

More reading

• New to investing? Put $500 into these top ASX 200 shares
• Top broker says this ASX stock is a better buy than Afterpay
• If the ASX 200 crashes again, which shares should you sell?
• After hitting $50, the Afterpay share price has pulled back. Is it good value?
• The ASX 200 stock hit by the Brazilian COVID-19 wave

Motley Fool contributor Toby Thomas owns shares of Caltex Australia Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Is the Ampol share price in the buy zone? appeared first on Motley Fool Australia.

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