Author: therawinformant

Australia’s leading investment platform provider CommSec has just released data on the five most traded ASX shares on its platform from last week.

Once again, the usual suspects are populating the list this week, with buy now pay later (BNPL) and tech shares heavily featured.

Here’s the data:

Brainchip Holdings Ltd (ASX: BRN)

BrainChip was the most traded share on the CommSec platform last week by some distance. The ultra-low power high performance artificial intelligence technology provider’s shares accounted for a whopping 8.4% of trades on the platform. Approximately two-thirds of these trades came from buyers, helping to drive the BrainChip share price 30% higher over the period. Investors have been buying shares this month after it announced a potential program collaboration with NASA.

Zip Co Ltd (ASX: Z1P)

This BNPL provider was very popular with ASX investors again last week. Zip shares accounted for 3.4% of total trades made on the CommSec platform over the five days, with 61% coming from buyers. However, this wasn’t enough to stop the Zip share price from dropping notably lower. Concerns over PayPal’s entry into the BNPL market and a tech selloff weighed on its shares.

Afterpay Ltd (ASX: APT)

This payments company’s shares accounted for 2% of trades on the CommSec platform over the period. The buying and selling was largely even last week, with 47% of trades coming from the buy side. The Afterpay share price dropped 5.5% lower over the week due to the tech selloff.

BetaShares NASDAQ 100 ETF (ASX: NDQ)

This popular exchange traded fund (ETF) made the list for a second week in a row. The BetaShares NASDAQ 100 ETF was involved in 1.6% of trades on the CommSec platform last week. Once again, the majority of these trades came from the buy side, with 88% coming from buyers. Investors appear to believe the tech selloff on Wall Street has created a buying opportunity (I agree).

CSL Limited (ASX: CSL)

CSL has re-entered the top five with 1.5% of trades on the CommSec platform attributed to its shares. Last week the company announced plans to manufacture COVID-19 vaccines for Australia should one be successfully developed. Investors appeared to like this, with 72% of trades coming from buyers. The CSL share price edged higher over the five days.

More reading

• BNPL shares like Afterpay (ASX:APT) and Zip (ASX:Z1P) are soaring today. Here’s why
• Why the BrainChip (ASX:BRN) share price is crashing 21% lower today
• Why Beach, BrainChip, Cleanaway, & Credit Corp shares are sinking lower
• ASX 200 flat: Afterpay (ASX:APT) rebounds, Cleanaway (ASX:CWY) sinks, big four banks lower
• Why Afterpay, Clinuvel, Mesoblast, & Uniti shares are storming higher

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 BETANASDAQ ETF UNITS, CSL Ltd., and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended BETANASDAQ ETF UNITS. 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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ASX gold and resources miner Red 5 Limited‘s (ASX: RED) share price is up 3.81% in early afternoon trading today.

The company emerged from yesterday’s trading halt after releasing the final feasibility study on its King of the Hills project in the Eastern Goldfields region of Western Australia.

Red 5’s volatile share price year

After enjoying a stellar 2019, which saw the Red 5 share price soar in 12 months, 2020 has seen shareholders endure some sharp price swings in both directions.

Like most ASX shares, Red 5 was battered by the wider market selloff driven by COVID-19. From 24 February through 3 April, the Red 5 share price fell 50%. Since the April low, the share price has gained 83%, though by no means in a straight line higher.

Following today’s gains, year-to-date Red 5’s share price is right where it started 2020, at 33 cents per share.

In comparison, the All Ordinaries Index (ASX: XAO) is down 11% over that same time.

What did Red 5’s final feasibility study reveal?

Red 5 said the final feasibility study at its King of the Hills project would usher in Australia’s next major goldmine. It forecasts total life of mine (LOM) production of 2.5 million ounces at all in sustaining costs (ASIC) of AU$1,415 per ounce starting in 2022.

The company said it would take some steps before making a final investment decision in ‘coming months’. These include early site works, acquiring the final permits and project financing, alongside major contract tenders.

The feasibility study indicated updated ore reserves of 64.6Mt @ 1.15g/t Au for 2.4M ounces of contained gold. Red 5 plans a processing rate of 4 million tons per year over the initial 16-year life of mine plan, with the first production scheduled for June quarter in 2022.

Red 5’s managing director Mark Williams said:

The completion of this high-quality final feasibility study, delivering a 2.4 million ounce ore reserve, is a pivotal moment for Red 5 shareholders, for our hard-working team and for communities in the Leonora-Leinster region of the Eastern Goldfield.

Based on a gold price of AU$2,500 per ounce, Williams added:

With strong production in the early years of the mine, the project is well placed to benefit from the favourable gold price environment – with a capital payback period estimated at 25 months for the project’s capital requirement of A$226 million.

With the final investment decision on the mine yet to come, the Red 5 share price will be one to watch.

More reading

• The Mayne Pharma (ASX:MYX) share price leaps almost 8% higher
• Auscann (ASX:AC8) share price up 6% on phase I study results
• How the China rift could spur these ASX tech share prices to new records
• ASX 200 Weekly Wrap: ASX 200 hits 4 straight weeks of losses
• Why the Retail Food Group (ASX:RFG) share price is up 4%

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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.

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Magellan Financial Group Ltd (ASX: MFG) is often regarded as one of the best fund managers in the country. As such, I like to keep close tabs on which companies Magellan, and its chief investment officer, Hamish Douglass, are interested in every month.

Well, Magellan has recently released the shares that its flagship Magellan Global Trust (ASX: MGG), as well as the high-octane Magellan High Conviction Trust (ASX: MHH), are currently holding. Magellan Global Trust (and its unlisted equivalent, the Global Fund) aims to hold 20-40 shares in a balanced and well-diversified portfolio. Meanwhile, the Magellan High Conviction Trust (and its unlisted sibling, the High Conviction Fund) instead aims to hold 8-12 shares in a concentrated, high-conviction strategy.

So, without further ado, here are that top shares, in alphabetical order, that the Global Trust was holding, as of 31 August:

1. Alibaba Group Holding Ltd (NYSE: BABA)
2. Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
3. Atmos Energy Corporation (NYSE: ATO)
4. Facebook, Inc. (NASDAQ: FB)
5. Mastercard Inc (NYSE: MA)
6. Microsoft Corporation (NASDAQ: MSFT)
7. Reckitt Benckiser Group Plc (LON: RB)
8. Tencent Holdings Ltd (OTCMKTS: TCEHY)
9. Visa Inc (NYSE: V)
10. Xcel Energy Inc. (NASDAQ: XEL)

And here are the top 5 stocks that the High Conviction Fund is holding, as of 31 August:

1. Alibaba Group
2. Alphabet Inc
3. Facebook Inc
4. Microsoft Corporation
5. Tencent Holdings

What can we learn from Magellan’s share picks?

It’s interesting to note that Magellan is still betting big on the giant United States tech shares that have come to dominate the US markets over the last few years. FAANG stocks Facebook and Alphabet make up large proportions of both portfolios, as does fellow tech giant Microsoft. Magellan is also investing heavily in Chinese e-commerce, represented by the online titans Tencent and Alibaba.

Interestingly, both funds remain far from being fully invested. The Global Fund holds a 16% cash position, while the High Conviction Trust is 20% in cash. This tells us (in my view anyway) that Magellan is keeping a foot in both camps and is keeping some cash handy for any upcoming market volatility.

The Global Fund is also notably holding a number of defensive shares, such as utilities Xcel and Atmos, and consumer staples giant Reckitt Benckiser (who you might know as the maker of Dettol and Mortein products).

Magellan seems to be sticking with a philosophy of ‘keeping winners and letting them run’. Many of these shares have been in Magellan’s portfolios for years now. So it’s nice to see the company isn’t killing the geese that keep laying golden eggs.

All in all, I think there are many interesting and useful insights we can glean from Magellan’s August stock holdings. I hope you agree.

More reading

• Tesla (NASDAQ:TSLA) and Nikola (NASDAQ:NKLA) among most traded US shares last week
• 3 ASX 200 shares I’d buy right now
• 3 personal finance tips to help strong investing
• 3 exotic ASX tech ETFs you might want to add to your portfolio today
• 2 top notch ASX shares for beginners

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Magellan High Conviction Trust, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, Mastercard, Microsoft, and Visa and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Facebook, and Mastercard. 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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Magellan Financial Group Ltd (ASX: MFG) is often regarded as one of the best fund managers in the country. As such, I like to keep close tabs on which companies Magellan, and its chief investment officer, Hamish Douglass, are interested in every month.

Well, Magellan has recently released the shares that its flagship Magellan Global Trust (ASX: MGG), as well as the high-octane Magellan High Conviction Trust (ASX: MHH), are currently holding. Magellan Global Trust (and its unlisted equivalent, the Global Fund) aims to hold 20-40 shares in a balanced and well-diversified portfolio. Meanwhile, the Magellan High Conviction Trust (and its unlisted sibling, the High Conviction Fund) instead aims to hold 8-12 shares in a concentrated, high-conviction strategy.

So, without further ado, here are that top shares, in alphabetical order, that the Global Trust was holding, as of 31 August:

1. Alibaba Group Holding Ltd (NYSE: BABA)
2. Alphabet Inc (NASDAQ: GOOG)(NASDAQ: GOOGL)
3. Atmos Energy Corporation (NYSE: ATO)
4. Facebook, Inc. (NASDAQ: FB)
5. Mastercard Inc (NYSE: MA)
6. Microsoft Corporation (NASDAQ: MSFT)
7. Reckitt Benckiser Group Plc (LON: RB)
8. Tencent Holdings Ltd (OTCMKTS: TCEHY)
9. Visa Inc (NYSE: V)
10. Xcel Energy Inc. (NASDAQ: XEL)

And here are the top 5 stocks that the High Conviction Fund is holding, as of 31 August:

1. Alibaba Group
2. Alphabet Inc
3. Facebook Inc
4. Microsoft Corporation
5. Tencent Holdings

What can we learn from Magellan’s share picks?

It’s interesting to note that Magellan is still betting big on the giant United States tech shares that have come to dominate the US markets over the last few years. FAANG stocks Facebook and Alphabet make up large proportions of both portfolios, as does fellow tech giant Microsoft. Magellan is also investing heavily in Chinese e-commerce, represented by the online titans Tencent and Alibaba.

Interestingly, both funds remain far from being fully invested. The Global Fund holds a 16% cash position, while the High Conviction Trust is 20% in cash. This tells us (in my view anyway) that Magellan is keeping a foot in both camps and is keeping some cash handy for any upcoming market volatility.

The Global Fund is also notably holding a number of defensive shares, such as utilities Xcel and Atmos, and consumer staples giant Reckitt Benckiser (who you might know as the maker of Dettol and Mortein products).

Magellan seems to be sticking with a philosophy of ‘keeping winners and letting them run’. Many of these shares have been in Magellan’s portfolios for years now. So it’s nice to see the company isn’t killing the geese that keep laying golden eggs.

All in all, I think there are many interesting and useful insights we can glean from Magellan’s August stock holdings. I hope you agree.

More reading

• Tesla (NASDAQ:TSLA) and Nikola (NASDAQ:NKLA) among most traded US shares last week
• 3 ASX 200 shares I’d buy right now
• 3 personal finance tips to help strong investing
• 3 exotic ASX tech ETFs you might want to add to your portfolio today
• 2 top notch ASX shares for beginners

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Magellan High Conviction Trust, Mastercard, and Visa. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares), Alphabet (C shares), Facebook, Mastercard, Microsoft, and Visa and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. The Motley Fool Australia has recommended Alphabet (A shares), Alphabet (C shares), Facebook, and Mastercard. 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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Okay. We’re a bit early with this one. Almost three months early, in fact. But as long-term investors, it pays to look ahead and position your portfolio of ASX shares accordingly.

What we’re looking ahead to is Christmas 2020. Specifically, the three or so trading weeks before Christmas.

That’s because in the runup to Christmas, ASX share prices have a tendency to rise. You may have heard this referred to as the Santa Claus rally.

Why do share prices often rise in the weeks before Christmas?

Good question.

We’re told the phenomenon is driven by positive sentiment as people embrace the Christmas spirit. Or that our consumer-focused economies and share markets get a welcome boost from all the holiday shopping. Or that institutional investors move to settle their books before tuning out for a few weeks.

Most likely all three of these factors work together to have a positive impact on ASX share prices.

Not that there’s any guarantee share prices will go up in December. But taking a look back at the past five years, the Santa Claus rally proved out on the All Ordinaries Index (ASX: XAO) 80% of the time.

Here are the rounded gains and losses for the All Ords in the three (or so) weeks before Christmas since 2015:

• 2015 gained 1%
• 2016 gained 3%
• 2017 gained 2%
• 2018 lost 1%
• 2019 gained 2%

There you have it. While the big man himself may not be real (don’t tell the kiddies!) the rally named after him appears to have legs.

And 2020, if the stars align as hoped, could see a December rally that you’ll be talking about for years to come.

How these 3 stars are aligning for a record Santa Claus share price rally

There’s a lengthy list of factors I believe could see the All Ords gain 5% or more in December, with select shares enjoying far higher share price gains. In the interest of time (and word count) I’ll stick to my top 3 factors today.

First, the politics in the world’s biggest economy, in which its own share market moves have a massive influence on ASX share prices.

The United States presidential election takes place on 3 November. The divisive campaigning from both the Democrats and the Republicans is causing renewed jitters in investment markets. These jitters are likely to last for several weeks beyond the election date as both sides contest the outcomes of voting results in states that didn’t go their way.

But by early December, that ruckus should thankfully be fading into history. And investors’ pre-election jitters will calm once markets have certainty as to who will be in the White House for the next four years.

Both the other stars I believe will align to drive a record Santa Claus rally relate to COVID-19.

First, summer is coming Down Under. That means baking heat reducing the time the coronavirus can survive on outdoor surfaces subjected to the good old Aussie sun. It also means more open windows and more time spent outdoors, rather than indoors where the virus can spread more easily.

Now we know summertime alone won’t spell the end of the pandemic, though it should help. 

Second, the silver bullet to stop the pandemic is a vaccine. And on that front, US pharmaceutical giant Pfizer Inc. (NYSE: PFE) announced it’s in advanced stages with an expanded trial, and could know whether its vaccine is effective by October.

Pending subsequent approval from the US Food and Drug Administration (FDA), Pfizer’s CEO, Albert Bourla believes it’s likely his company’s vaccine will be rolled out in 2020.

In other words, just in time to fuel a record Santa Claus rally.

2 ASX shares that could see their share prices boom

If the stars align as outlined above, a lot of ASX shares should benefit. But of course, some will see their share prices gain far more than others.

One share that’s already had a great year but could be in for more hefty gains is online retailer Kogan.com Ltd (ASX: KGN). The Kogan share price is down 17% from its 18 August all-time highs. Year to date, the share price is still up 155%, and, at the time of writing, it’s up 2.5% in trading today. The shift to online shopping won’t end overnight with the rollout of a vaccine. But if sentiment is running high, consumers may spend big this holiday season, which should be a boon for the Kogan share price.

Other shares to consider are those in the beaten down travel and leisure industries.

Macquarie has recommended several shares in these industries it believes will outperform during the recovery.

In the travel industry, the investment bank is tipping Sealink Travel Group Ltd (ASX: SLK). The Sealink share price has already managed to claw back the huge losses suffered during the pandemic panic selling earlier this year. Year to date, the share price is up 4.7%. But once travel restrictions are lifted, Sealink should benefit from its domestic operations.

These are just two ASX shares to keep a close eye on or add to your shareholdings today. If the Santa Claus rally kicks into high gear as hoped, a host of other ASX shares could rocket into Christmas.

More reading

• Can the Harvey Norman (ASX:HVN) share price push higher in 2021?
• Buy and hold these stellar ASX growth shares for 10 years
• The best ASX stocks to buy for the COVID-19 recovery play
• Forget day trading and get rich with these top ASX shares
• Where to invest your JB Hi-Fi (ASX:JBH) dividends today

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com 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.

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Every week, we Fools like to have a look at which shares Aussies are taking the most interest in. Today, we’ll be looking at the most traded US shares. Commonwealth Bank of Australia‘s (ASX: CBA) CommSec platform shares this data on a regular basis. It lists the international shares (which are almost always US shares) that ASX investors have been buying and selling on its platform, this time between 7-11 September.

Top US shares

Tesla Inc (NASDAQ: TSLA)

Will nothing take Tesla’s crown? This electric car and battery manufacturer has topped this list for the last several weeks (if not months). Elon Musk’s controversial company never seems to be far out of the spotlight and made headlines again this week for some extreme volatility. Tesla shares were up 13% last night alone and are up more than 18% over the past week.

Apple Inc (NASDAQ: AAPL)

Apple is also a share that’s been attracting a lot of attention recently, helped by the company’s recently executed 4-for-1 stock split. Apple shares have also been rather volatile in recent months. Apple was up 3% last night and is up a staggering 52% year to date. No wonder ASX investors are interested in this company.

Microsoft Corporation (NASDAQ: MSFT)

Mr Softy was the 3rd most popular US share last week. Microsoft shares are down almost 10% in September so far, so perhaps ASX investors are seeing a buying opportunity here. Even so, Microsoft is also up a healthy 28% in 2020 so far, so it’s not hard to see why ASX investors can’t leave this tech pioneer alone.

Amazon.com, Inc (NASDAQ: AMZN)

Amazon is never far from the action and once again makes the top 5 this week. Investors still can’t get enough of Jeff Bezos’ baby, despite the astronomically high share price of US$3,102.97 that the shares are currently sitting at (representing a price to earnings (P/E) ratio of 119.27).

Nikola Corporation (NASDAQ: NKLA)

Nikola is a fellow electric car and battery manufacturer which competes with Tesla, both in name (after inventor Nikola Tesla) and in the next-generation vehicle space. I say ‘compete’ lightly because Nikola has yet to have a vehicle actually on the market but has just announced a new partnership with car titan General Motors Company (NYSE: GM).

Nikola has been on the nose recently after a short-seller attack sent the shares down more than 20% over the past week. Even so, it appears many ASX investors are seeing a bargain here, with CommSec showing 73%-13% ratio of buyers to sellers.

More reading

• Why the Tesla (NASDAQ:TSLA) share price zoomed 12.5% higher
• How the China rift could spur these ASX tech share prices to new records
• Did Apple and Tesla stock splits signal the stock market top?
• How to tell if this is the end of the ASX bull market
• 3 ways Aussies can buy Tesla (NASDAQ:TSLA) shares

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Microsoft, and Tesla and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. The Motley Fool Australia has recommended Amazon and Apple. 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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On Monday I looked at three ASX shares that brokers have given buy ratings to this week.

Unfortunately, not all shares are in favour with them right now. Three that have just been given sell ratings are listed below.

Here’s why these brokers are bearish on these ASX shares:

Galaxy Resources Limited (ASX: GXY)

According to a note out of Ord Minnett, its analysts have downgraded this lithium miner’s shares to a sell rating with a 90 cents price target. The broker made the move largely on valuation grounds. Although it believes that lithium prices have now bottomed, it feels that a recovery is more than priced into its shares. In light of this, it doesn’t see value in its shares at the current level. The Galaxy share price is changing hands for $1.39 on Tuesday afternoon.

Sandfire Resources Ltd (ASX: SFR)

Analysts at Goldman Sachs have retained their sell rating and $4.60 price target on this copper producer’s shares. Although Goldman is positive on copper, it has concerns over the short mine lift of the Degrussa copper mine and expects its overall production to take a step down in the future. Goldman is also forecasting a significant increase in C1 unit costs, which could weigh on its margins. The Sandfire share price is trading at $4.64 this afternoon.

Xero Limited (ASX: XRO)

A note out of UBS reveals that its analysts have retained their sell rating but increased their price target on this business and accounting software platform provider’s shares to $72.00. UBS has been looking into the sector and notes that Xero is highly rated by accountants. Its research also reveals that cloud penetration growth remains solid. However, its survey of accountants shows that they believe business closures may be higher than normal over the next 12 months. This could weigh on customer growth in the short term. The Xero share price is fetching $91.00 on Tuesday.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• Investing $1,000 into these ASX shares could be a very smart move
• How to tell if this is the end of the ASX bull market
• ASX 200 down 0.95%: Rio Tinto (ASX:RIO) CEO exits, Nearmap (ASX:NEA) sinks lower
• This ASX tech share is still cheap to buy

James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Xero. 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.

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The Macquarie Group Ltd (ASX: MQG) share price retreated for a second day following its shock profit warning. Is the pullback a buying opportunity?

Shares in the investment bank declined 0.6% to $119.48 during lunch time trade when the S&P/ASX 200 Index (Index:^AXJO) is holding at breakeven.

Macquarie share price hit by profit warning

The drop in the MQG share price today takes its fall from grace to just over 5% this week after management warned of a 35% slump in first half FY21 profit.

This stands in contrast to management’s previous guidance of profits being slightly down. What is also a shock is that the profit downgrade is not what investors have come to expect from the Millionaires’ Factory.

Macquarie built its reputation on under promising and overdelivering!

Price target upgrades

But brokers are pretty relaxed about the profit downgrade and some have even increased their price target on the stock.

Morgan Stanley is one that lifted its fair value estimate on Macquarie to $133 from $120 a share.

Management’s profit downgrade actually came in better than what the broker was anticipating. This led Morgan Stanley to lift its FY21 and FY22 earnings forecast by 1% to 2%.

Larger earnings skew to latter half

It’s also expecting a larger earnings skew to the second half. This means Macquarie’s full year profit is anticipated to fall a more modest 17% in FY21 from the year before.

“While timing of lumpy items is clouding underlying earnings trends, we raise our earnings forecasts on lower impairments and more confidence in asset realisations,” said the broker.

Meanwhile, UBS also upgraded its price target on Macquarie share price to $125 from $105 a share.

While it believes the high level of uncertainty that’s fuelled by the COVID-19 pandemic will impinge on transaction activity, which is the earnings blood for Macquarie, it thinks the bank has a growth lever it can pull.

Profit boost from asset sale

This is Macquarie’s 70% stake in data security software company Nuix that it can sell to boost profits.

“Given the increase in Nuix’s revenue and earnings, as well as the multiples currently being paid for technology companies, we believe this could lead to a substantial ‘gain on sale’ for MQG,” said UBS.

“In this scenario, we would expect MQG to sell its position down in tranches, which would help support gains on sale revenue in coming periods.”

Morgan Stanley reiterated its “overweight” recommendation while UBS kept is “neutral” rating on Macquarie.

More reading

• ASX 200 flat: Afterpay (ASX:APT) rebounds, Cleanaway (ASX:CWY) sinks, big four banks lower
• KGL Resources (ASX:KGL) share price surges on big upgrade
• Borrowers on loan holidays are ignoring ASX bank communications
• Can the Harvey Norman (ASX:HVN) share price push higher in 2021?
• Top ASX dividend shares to buy in September 2020

Motley Fool contributor Brendon Lau owns shares of Macquarie Group Limited. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. 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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The Blue Sky Alternatives Access Fund Ltd (ASX: BAF) is about to have a face off kind of event. Not a confrontation per se, a face off in the style of the 1997 John Travolta/Nicholas Cage film. In that film (of questionable quality), Nicholas Cage’s character assumes the face of John Travolta in order to do some sinister things. Sorry if that was a spoiler for anyone.

Well, Blue Sky is about to have a different face as well. It is set to rebrand as WAM Alternative Assets very shortly. So should we pick up shares in Blue Sky before it changes its face? Recent data indicates there might be a decent buying opportunity here.

What is Blue Sky?

The Blue Sky Alternatives Access Fund is a listed investment company (LIC) with something of a sordid past. Its original mandate was a focus on ‘alternative assets’, which refers to any assets outside the conventional circles of ASX shares, bonds and cash, such as water rights, infrastructure or venture capital. Many investors find these alternative assets attractive due to their low correlation to shares and the prospects of income in our low interest rate world.

However, Blue Sky has been in trouble for a couple of years, ever since a short-seller report exposed alleged problems and overvaluations regarding several of its underlying assets. Receivers were appointed in May 2019 to try and work through these issues, which has led the company into the arms of Wilson Asset Management (WAM).

Enter WAM

WAM is a company that has built a stellar reputation as an LIC manager. It currently offers six different ASX LICs which range from a focus on small or micro-cap ASX shares with WAM Microcap Ltd (ASX: WMI) to international growth companies with WAM Global Ltd (ASX: WGB). Its flagship LIC, WAM Capital Limited (ASX: WAM), has been around since 1999 and has delivered an average return to its investors of 16.1% per annum since (before fees and taxes).

WAM has been courting Blue Sky for a while now, but investors finally gave it the go-ahead for a takeover during an extraordinary general meeting earlier this month. As such, Blue Sky Alternatives Access Fund is set to become WAM Alternative Assets (ticker symbol to be WMA) in the near future (although an exact date has yet to be named). Under the agreement WAM struck with shareholders, the company will guarantee that the new WMA shares will return to being priced in line with its underlying net tangible assets.

Since shares of an LIC are traded in the public market, they can sometimes be priced at a level that is either above or below the value of the underlying assets. And Blue Sky has been underwater for a while now, likely reflecting the uncertainty of its future until recently.

So WAM has promised investors that if the new WMA shares don’t trade at a premium to their underlying NTA for no less than one month at least three times during the next five years, shareholders will have the right to terminate the agreement with WAM.

Should investors buy BAF shares today?

So, it looks like Blue Sky has a very promising path back to potential glory. But let’s look at the numbers. So, as I mentioned earlier, an LIC often trades at a premium or a discount to its underlying value. Recently (as of yesterday), Blue Sky has notified the markets of its underlying NTA for the month of August. The company advised that each share represented $1.084 in value on a pre-tax basis. At the time of writing, Blue Sky shares are going for 86 cents each. That means you can effectively purchase $1.08 worth of assets for 86 cents today in Blue Sky shares. That’s a rough 20% discount to the assets’ true value.

As such, I think there is definitely a value case for Blue Sky shares today. WAM is an astute and well-regarded steward of capital that I think can turn around Blue Sky’s fortunes under the new name. We have here a compelling long-term value opportunity in my view.

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Motley Fool contributor Sebastian Bowen owns shares of WAMGLOBAL FPO. 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 new WAM Alternative Assets LIC a buy? appeared first on Motley Fool Australia.

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In afternoon trade the S&P/ASX 200 Index (ASX: XJO) is fighting hard to get into positive territory. At the time of writing it is just falling short and is trading broadly flat at 5,897.9 points.

Four shares that have been acting as a drag on the market today are listed below. Here’s why they are sinking lower:

The Beach Energy Ltd (ASX: BPT) share price is down over 1.5% to $1.33. Investors have been selling the energy producer’s shares after oil prices dropped lower overnight. Oil prices came under pressure amid subdued demand and news that Libya was on the verge of resuming production.

The BrainChip Holdings Ltd (ASX: BRN) share price has continued its slide and is down 6.5% to 62.7 cents. The artificial intelligence technology company’s shares have come back down to earth after rocketing higher in recent weeks. This appears to be down to the realisation that its shares were vastly overvalued given its billion-dollar market capitalisation on next to no revenue.

The Cleanaway Waste Management Ltd (ASX: CWY) share price has tumbled 5.5% lower to $2.21. The waste management company’s shares have continue to slide after it confirmed reports of poor workplace behaviour by its CEO, Vik Bansal. Although the board has given Mr Bansal a final warning, it appears as though the market doesn’t believe it went far enough given the allegations of bullying.

The Credit Corp Group Limited (ASX: CCP) share price has dropped 2.5% lower to $17.19. This appears to have been driven by a broker note out of Macquarie this morning. Its analysts have downgraded the debt collector’s shares to a neutral rating and cut the price target on them down to $18.50. It believes near term trading conditions could be tough for Credit Corp due to delays in new debt sales.   

More reading

• ASX 200 flat: Afterpay (ASX:APT) rebounds, Cleanaway (ASX:CWY) sinks, big four banks lower
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises by 0.7%, Cleanaway (ASX:CWY) shares dumped
• Cleanaway (ASX:CWY) share price plummets 7% today. Time to buy?
• ASX 200 up 0.4%: Macquarie guidance disappoints, Cleanaway sinks on CEO behaviour reports

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Why Beach, BrainChip, Cleanaway, & Credit Corp shares are sinking lower appeared first on Motley Fool Australia.

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