Category: Stock Market

The S&P/ASX 200 Index (ASX: XJO) is having a better session on Friday. In afternoon trade, the benchmark index is up a solid 0.65% to 7,811.1 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are falling:

Abacus Group (ASX: ABG)

The Abacus share price is down 3% to $1.15. This has been driven by the commercial property company’s shares going ex-dividend this morning for its upcoming final dividend. Last week, the company declared a 4.3 cents per share unfranked dividend. This brought its total dividends for FY 2024 to 8.6 cents per share. Eligible shareholders can look forward to receiving this final dividend in a couple of months on 30 August.

Bannerman Energy Ltd (ASX: BMN)

The Bannerman Energy share price is down 9% to $3.26. This ASX uranium stock is falling today after it received firm commitments for a two-tranche placement of approximately 25.8 million new shares to new and existing institutional and sophisticated investors. Bannerman Energy advised that these funds were raised at a 7.8% discount of $3.30 per new share, which will raise gross proceeds of approximately $85 million. The funds raised from the placement will be applied towards the development of the Etango-8 Project in the Erongo Region of Namibia.

Immutep Ltd (ASX: IMM)

The Immutep share price is down a further 9% to 30.5 cents. Investors have been selling this clinical-stage biotechnology company’s shares since the release of topline results from the TACTI-003 Phase IIb Trial on Thursday. Immutep’s trial is evaluating eftilagimod alfa (efti) in combination with anti-PD-1 therapy Keytruda (pembrolizumab) as first-line treatment of recurrent/metastatic head and neck squamous cell carcinoma patients (1L HNSCC). Although the company reported positive results, it didn’t include a p-value with them. This decision seems to have left investors fearing that the results were not statistically significant.

Pilbara Minerals Ltd (ASX: PLS)

The Pilbara Minerals share price is down 3% to $3.16. This is despite there being no news out of the lithium miner today. However, it is worth noting that ASX lithium stocks have been rebounding this week. Today’s decline could have been driven by profit taking from some investors. Especially after lithium miners on Wall Street tumbled into the red during overnight trade. Pilbara Minerals’ shares are down by a disappointing 33% since this time last year amid concerns over falling lithium prices.

The post Why Abacus, Bannerman Energy, Immutep, and Pilbara Minerals shares are falling today appeared first on The Motley Fool Australia.

More reading

• Why is this ASX 300 uranium stock sinking 10% on Friday?
• Will the blistering rally for ASX uranium shares charge on into FY 2025?
• Macquarie names 6 ASX shares to buy in July after tax-loss selling
• Why APA Group, Immutep, NAB, and Immutep shares are sinking
• Why did this ASX healthcare stock just crash 47%?

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. 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 Scott Phillips.

Insider buying often signals confidence in a company’s future, and a few cheap ASX shares have caught investor attention recently due to notable insider activity.

This kind of buying activity can be a strong indicator of growth potential – especially when it comes from those with deep knowledge of the business. While each of these shares discussed here has faced recent challenges, the recent insider purchase could signal this belief.

Here’s a look at these five cheap ASX shares being bought by insiders this week.

IDP Education Ltd (ASX: IEL)

IDP Education has been facing headwinds, with its share price down 23% in 2024 and 37% over the past year. Changes to student visa rules have disrupted the student placement and education company’s key markets.

Despite this, non-executive director Tracey Horton bought 1,300 shares on 7 June for around $15.15 each.

Further, Citigroup also purchased around 3.27 million IDP shares in June, bringing its stake to more than 18.87 million shares, or 6.77% voting power.

Currently, the seemingly cheap ASX share is valued at $15.37 apiece, having climbed 3% into the green so far this week.

Deterra Royalties Ltd (ASX: DRR)

Deterra Royalties recently experienced a 10% drop after announcing a significant acquisition in the lithium sector.

The company noted it made a $276 million offer to UK company Trident Royalties Plc in June, equal to roughly 93 cents per share.

Despite the initial market reaction, the company’s shift towards green metals looks like it’s being viewed favourably by institutional investors.

Mandatory filings show The Vanguard Group starting an initial position in Deterra, purchasing 26.59 million shares of the company through its various entities.

This sees it owning 5.029% of the company as of 21 June 2024. The cheap ASX share is priced at $4.02 each at the time of writing.

BUBS Australia Ltd (ASX: BUB)

Bubs Australia has been in the headlines following strong sales growth in the United States. According to my colleague Bernd, Bubs’ weekly scan revenues have surpassed US$1 million, and the company has become the top-selling infant formula product on Amazon USA.

CEO Reginald Weine is optimistic about sustained demand and future growth. On 24 June 2024, Weine acquired 50,000 shares at $0.125 each. Bubs Australia shares are currently trading at $0.128 each, down 10% in the last month.

Starpharma Holdings Ltd (ASX: SPL)

Starpharma Holdings has also faced challenges in 2024. The cheap ASX share is down nearly 47% this year and 68% in the past 12 months.

Recent filings show that as of 21 June 2024, investment fund Allan Gray reduced its voting power to 9.28% after disposing of 5.35 million shares from its position this week.

Some of this new supply looks to have been soaked up by two directors – Lynda Cheng, and Robert Thomas – who this week purchased 110,555 shares at 9 cents per share, and 200,000 ordinary shares at 8.9 cents apiece respectively.

Currently, Starpharma shares are priced at $0.087 each.

WAM Leaders Limited (ASX: WLE)

WAM Leaders has seen steady insider buying from director Geoffrey Wilson. Mr Wilson is also the chairman of listed investment company (LIC) WAM Capital Ltd (ASX: WAM).

Between 24 June and 27 June 2024, Wilson acquired over 18,000 shares. The purchases were made on market across several trades, ranging in size from $11.1 million to $15.6 million.

The investments bring Wilson’s stake to 13.05 million shares in the cheap ASX share. Today, WAM Leaders is valued on market at $1.28 apiece with a trailing dividend of 9.1 cents per share.

The post 5 potentially cheap ASX shares being bought by insiders appeared first on The Motley Fool Australia.

More reading

• Macquarie names 6 ASX shares to buy in July after tax-loss selling
• These are the 10 most shorted ASX shares
• Top ASX passive income shares to buy before June 30
• Insiders are buying these ASX shares after selloffs
• These are the 10 most shorted ASX shares

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Idp Education. 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 Scott Phillips.

Concerns about the supermarket industry could be overdone according to analysts at Goldman Sachs.

Its analysts note that “investor sentiment on supermarkets has been soft calendar year to date.”

However, the broker is “more optimistic vs the market” and feels now is a great time to snap up Woolworths Group Ltd (ASX: WOW) shares.

What did Goldman say about supermarkets?

There have been two dark clouds hovering above Woolworths and other supermarket operators in recent months. One is the regulatory review of the industry, and the other is concerns over negative jaws. In respect to the regulatory review, Goldman said:

Regulatory review headwind on Supermarkets benign to date with latest Senate Inquiry recommendations largely expected by the market and the adoption of the mandatory code of conduct with suppliers to not materially impact current ways of working (note the ACCC inquiry is still ongoing). Our earlier report showed the last supermarket inquiry resulted in immaterial EPS impacts for WOW and MTS. Similar to what we observed in 2008, WOW began re-rating post trough in May 2024, ~ T+80-100 days after the announcement of ACCC/Senate inquiry.

As for negative jaws, which is a term to describe costs rising quicker than sales, the broker feels this concern is overdone. It explains:

“Negative Jaws” concern overdone as our analysis and channel checks suggest still resilient ~3% industry topline supermarket growth from improving volume and positive response on NPD while there are ample levers for GPM expansion through business model mix (eComm and Retail Media) and margin optimisation levers (NPD, Private Label, Cost-Out) to offset still mid-single digit opex inflation. Net net, we expect across the 3 stocks ~2-4% EBIT growth in FY25 then to accelerate to ~6-8% CAGR for FY24-27e.

Buy Woolworths shares

In light of the above, the broker has reiterated its buy rating with an improved price target of $40.20.

Based on the current Woolworths share price of $34.06, this implies potential upside of 18% for investors over the next 12 months. Goldman concludes:

Based on GS latest forecasts, we observe WOW is trading at a 12m forward PE of 22.7x vs historical avg (since 2016) of 23.6x while COL is trading 21.4x 12m forward PE compared to avg since listing of 21.5x. This 1.3 PE point premium for WOW relative to COL compares to LT avg of 4.1. Given WOW 8.2% EPS CAGR for FY24-27e vs COL of 6.5%, we believe this represents an attractive buying opportunity for WOW.

The post Supermarket concerns ‘overdone’: Buy Woolworths shares appeared first on The Motley Fool Australia.

More reading

• 3 super strong blue chip ASX 200 shares to buy in July
• Where to invest your Westpac dividends
• 2 ASX 200 retirement shares to buy in July
• Top brokers name 3 ASX shares to buy next week
• The Woolworths share price is down 16%: Time to buy the stock?

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. has positions in and has recommended Goldman Sachs Group. 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 Scott Phillips.

Sometimes, people like me can make investing seem way too complicated.

Hopefully not me, personally – over the last dozen years of my professional life, I’ve aimed to make investing as simple as possible for our readers and members – but the finance industry writ large is built on algebra, jargon and a lack of transparency!

After all, if you could do it yourself, why would you need to pay massive fees (every year, and often calculated as a percentage of your portfolio!) to someone in a fancy office to do it for you?

(Before the financial advisers write in, there is absolutely a role for advice on getting started, staying the course, and making sure you have your financial house in order. But the aggregate fees charged by the industry are astronomical, compared to the value most people will get, over time. And yes, partly that’s the compliance burden… a topic for another day!)

Anyway… back to my point: investing doesn’t need to be anywhere near as complicated as it can seem, from the outside.

To wit, today’s headline, ‘How good are stocks, hey?’, comes not from me, or from a member of the investing team.

Instead it comes from Ed, the producer extraordinaire of one of our podcasts, The Good Oil.

We were chatting (by text message… Ed is a bit younger than me!) about investing, this morning. We talked about how easy it is to buy shares, how good low-cost, broad index-tracking ETFs are, and the beauty of shares compounding away in the background without us having to do any work to make it happen.

Which is when Ed replied: “How good are stocks, hey?”.

Now, in the interests of full disclosure, Ed did suggest we make that the new Motley Fool company slogan… which I’m not sure will pass muster with the marketers… but he’s not wrong.

And sometimes it’s as simple as that.

No, not entirely: you do have to open a brokerage account, and choose your ETFs and/or shares, of course. And you do have to have the patience to leave them alone to compound away over time (resisting the urge to tinker can be hard!), hopefully adding money regularly.

But that’s really not much, when you think about it.

Then all you have to do is wait. Go to work, hang out with friends, play with the kids, go for a walk, watch TV… just live your life, and let your shares do their thing.

To what end?

Well, here are two stats I’ve shared over and over: 

1. A hypothetical $10,000 invested in an ASX-tracking ETF three decades earlier would have turned into more than $130,000 by June 30 last year.
2. A hypothetical $10,000 invested in an ETF tracking the US market three decades earlier would have turned into more than $176,000 by June 30 last year.

Absolutely astonishing numbers. And how could you have got that return?

Just by reinvesting the dividends and otherwise leaving it alone.

And if you’d added more, over the duration, you’d have even more, today.

How good are stocks, hey?

Now, the corporate cop would – very reasonably – expect me to mention that shares can be (are!) volatile over the short term. And some lose money. A few lose a lot of money.

All true. That’s the risk you take if you try to speculate over short time periods and/or don’t diversify your portfolio appropriately.

And there is no guarantee that the future will look like the past, either.

So there’s that.

But also, unless humanity has reached its creative and productive peak, I think it’s pretty likely that we’ll continue to find new ways to improve our lives and the lives of others, and that our system of democratic capitalism is far from done.

In which case?

In which case, I think it’s likely that, to quote Twain again, history may not repeat, but it’ll rhyme.

If it does, that means there are gains on offer for the patient, consistent, diversified investor. 

How good are stocks, hey?

Fool on!

The post How good are stocks, hey? appeared first on The Motley Fool Australia.

More reading

• Supermarket concerns ‘overdone’: Buy Woolworths shares
• Why did the BHP share price go backwards in June?
• Why is this ASX 300 uranium stock sinking 10% on Friday?
• Guess which ASX All Ords stock Mitsubishi just bought 5% of?
• IAG shares jump 7% after cutting a deal with Warren Buffett’s Berkshire

Motley Fool contributor Scott Phillips has no position 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 Scott Phillips.

The BHP Group Ltd (ASX: BHP) share price is in the red on this last trading day of June.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed yesterday at $43.15. In morning trade on Friday, shares are swapping hands for $42.86, down 0.7%.

As for the month almost past, shares in the ASX 200 miner closed out May trading for $44.51.

With less than one full day of trade left in the month, the BHP share price is down 3.7% in June.

For some context, the ASX 200 is up 1.3% over this same period.

Here’s what’s been happening.

What pressured the BHP share price in June?

With no price-sensitive announcements released over the month, the underperformance of the BHP share price is largely due to the retrace in iron ore and copper prices.

Iron ore, BHP’s number one revenue earner, ended May trading for US$117 per tonne. Today that same tonne is trading for US$106 per tonne, down 9% in June.

The steel-making metal came under renewed selling pressure over the month amid ongoing weakness in China’s economy. China’s struggling, steel-hungry property market remains a core of that concern, with the government’s stimulus measures to date failing to reignite the sector.

With iron ore inventories rising in the Middle Kingdom, prices fell, and investors responded by bidding down the BHP share price.

Copper, BHP’s number two revenue earner, wasn’t spared either.

The copper price ended May at US$10,135 per tonne and dropped 6% in June to currently be trading for US$9,516 per tonne.

On the copper front, BHP will need to look for new avenues to become the largest copper miner on Earth. Investors learned at the end of May that the ASX 200 miner’s $74 billion takeover bid for global miner Anglo American (LSE: AAL) would not proceed.

On 30 May, following Anglo’s rejection of BHP’s third sweetened bid, BHP CEO Mike Henry closed the door on further negotiations.

What else happened in June?

On 12 June, investors were alerted to legal action being taken by the Mining and Energy Union (MEU).

The MEU filed applications with the Fair Work Commission regarding BHP’s Peak Downs, Saraji, and Goonyella Riverside coal mines. The union is seeking pay rises for 1,700 labour-hire workers at the coal mines based on the “same job, same pay” orders.

The BHP share price closed down 0.6% on the day.

The race for the biggest ASX company

When the iron ore price topped US$200 per tonne in November 2021, the BHP share price joined in the rally.

This saw the ASX 200 miner overtake Commonwealth Bank of Australia (ASX: CBA) as the biggest company listed on the ASX.

But June saw BHP’s lead shrink to the point where analysts began speculating that CBA could once more take the crown.

With the CBA share price up 28% over 12 months, Australia’s biggest bank has a current market cap of $213.3 billion.

And with the BHP share price down 6% over 12 months, the ASX 200 miner has a current market cap of $217.3 billion.

The race is on.

The post Why did the BHP share price go backwards in June? appeared first on The Motley Fool Australia.

More reading

• 4 ASX 200 dividend giants to buy in July
• 5 things to watch on the ASX 200 on Thursday
• BHP shares fall on decarbonisation update
• CBA share price outpacing BHP shares on Monday in the race for biggest ASX stock
• Top 10 most traded ASX shares and US stocks in May

Motley Fool contributor Bernd Struben has no position 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 Scott Phillips.

Bannerman Energy Ltd (ASX: BMN) shares are having a disappointing finish to the week.

In morning trade, the ASX 300 uranium stock is down 10% to $3.23.

Why is this ASX 300 uranium stock sinking?

The good news for investors is that this weakness is not due to a bad update or a collapse in uranium prices.

Instead, this ASX 300 uranium stock is falling today after it received firm commitments for a two-tranche placement of approximately 25.8 million new shares to new and existing institutional and sophisticated investors.

These funds were raised at a 7.8% discount of $3.30 per new share, which will raise gross proceeds of approximately $85 million.

Why is it raising funds?

Management advised that funds raised from the offer will be applied towards the development of the Etango-8 Project in the Erongo Region of Namibia.

This includes detailed design, early works (including construction infrastructure, earth works and selected long-lead items) and general working capital.

Upon completion of the placement, the company expects to have cash reserves of approximately $100 million after costs.

The ASX 300 uranium stock’s executive chairman, Brandon Munro, was pleased with the placement. He said:

Proceeds from this Placement will enable us to further progress our Etango-8 Project, following positive outcomes from the recently announced Front End Engineering and Design (FEED) and Control Budget Estimates (CBE) processes, which confirmed the high quality of technical evaluation and design from the December 2022 Definitive Feasibility Study (DFS).

We have commenced detailed design work and early works construction, and the Placement will enable us to advance further works including the procurement and manufacturing of select long-lead items, product marketing and project financing activities. These activities are all directed towards advancing Etango to a targeted positive Final Investment Decision (FID) during H2 2024.

The company’s chair then adds:

We are excited by the support that we have received from investors for both our Etango-8 development pathway and the approach the Company has taken to stewarding this asset into the rapidly strengthening uranium market environment. I would also like to welcome our new shareholders through the raising and look forward to building a strong relationship with them.

The good news for shareholders is that despite today’s pullback, Bannerman Energy’s shares are still smashing the market on a 12-month basis.

In fact, since this time last year, the uranium stock has more than doubled in value thanks to booming prices of the chemical element.

The post Why is this ASX 300 uranium stock sinking 10% on Friday? appeared first on The Motley Fool Australia.

More reading

• Will the blistering rally for ASX uranium shares charge on into FY 2025?
• How the ‘nuclear renaissance’ could send ASX uranium stocks like Paladin through the roof
• What Bill Gates, ASX uranium shares and the AI revolution have in common
• 3 reasons ASX uranium stocks can keep charging higher into 2025

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. 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 Scott Phillips.

FleetPartners Group Ltd (ASX: FPR) shares are trading 3% higher in morning trade on Friday after it was confirmed Mitsubishi Motors has acquired a 5% stake in the company.

The Japanese automotive giant announced on Monday that it has acquired the position in FleetPartners to expand its sales presence in Australia.

The ASX All Ords stock is up 36% in the last 12 months and is currently swapping hands at $3.59 per share. Let’s take a look.

Mitsubishi likes this ASX All Ords stock

FleetPartners shares hit the headlines this week after Mitsubishi Motors acquired a 5% stake in the company on 19 June 2024.

Founded in 1987, the FleetPartners boasts a fleet of around 90,000 vehicles. The ASX All Ords stock provides fleet management services to corporations in Australia and New Zealand.

The automotive player’s move is said to align with its strategy to expand business operations in Australia. Mitsubishi Executive Tatsuo Nakamura said Australia is a key zone for the company’s growth plans.

Australia is one of our core markets, and we have made this investment to further expand our sales channels and business opportunities in the country. We look forward to working with FleetPartners to grow our businesses.

Meanwhile, FleetPartners’ CEO Damian Berrell said he wasn’t against market consolidation as long as it benefitted the ASX All Ords stock.

“We’re a strong supporter of market consolidation and would be open to any form of market consolidation provided that it’s accretive to our investors and the synergies would certainly justify it,” Berrell said, according to The Australian Financial Review.

Analysts at MST Marquee originally fuelled speculation about potential acquisition activity. The firm argued that SmartGroup Corporation Ltd (ASX: SIQ) could merge with FleetPartners at a 10-15% premium.

It said such a merger could deliver “earnings accretion of 20%,” per the AFR. As to today’s announcement, there is no saying what it means for FleetPartners’ fundamentals.

Despite recent market fluctuations, analysts remain optimistic about FleetPartners. Morgan Stanley recently increased its price target on the stock to $3.90 per share.

According to my colleague Bernd, the broker maintains an ‘overweight’ rating on the ASX All Ords stock. This suggests an 11% upside from current levels.

The consensus of analyst estimates on FleetPartners is a buy according to CommSec. There is 1 sell and 1 hold rating against 4 buy recommendations.

Foolish takeaway

Mitsubishi’s investment has focused attention on this ASX All Ords stock. Many investors are questioning what this means for growth in the vehicle leasing sector.

In the last 12 months, FleetPartners shares are up 36%. This is ahead of the S&P ASX 200 Index (ASX: XJO) by more than 28% in that time.

The post Guess which ASX All Ords stock Mitsubishi just bought 5% of? appeared first on The Motley Fool Australia.

More reading

• Supermarket concerns ‘overdone’: Buy Woolworths shares
• How good are stocks, hey?
• Why did the BHP share price go backwards in June?
• Why is this ASX 300 uranium stock sinking 10% on Friday?
• IAG shares jump 7% after cutting a deal with Warren Buffett’s Berkshire

Motley Fool contributor Zach Bristow has no position 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 Scott Phillips.

Insurance Australia Group Ltd (ASX: IAG) shares are up 7.4% in early trade on Friday after the insurance firm posted an update before the open.

The insurer announced it has entered into a significant deal with US-listed Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B). The agreement is said to provide IAG with reinsurance protection against natural perils.

IAG shares have had a good run in 2024. They are currently swapping hands at $7.16 apiece, up 17% this year to date.

IAG shares up on deal with Berkshire Hathaway

IAG shares are in focus today as the company secured a comprehensive five-year reinsurance agreement with National Indemnity Company, a subsidiary of Berkshire Hathaway Inc., and Canada Life Reinsurance.

If you didn’t know, Berkshire is investment hall-of-famer Warren Buffett’s conglomerate. Buffet originally bought Berkshire – a then textiles company – in 1965 before restructuring it as an insurance and investment vehicle in the 1970s. The rest is history.

Today’s reinsurance agreement provides IAG with up to $680 million in additional protection annually starting in July 2024, totalling $2.8 billion over five years.

It aims to cap IAG’s natural perils costs at $1.28 billion in FY 2025, significantly mitigating the financial impact of extreme weather events.

For reference, “reinsurance” is a type of cover purchased by insurance companies. It is purchased from other insurers directly or from investors who underwrite the risk.

Insurers use this type of cover to protect against natural disasters, which, in many instances, could wipe out a company due to the sheer size of the claims.

It is quite literally insurance for insurance companies, to protect against natural disasters.

According to IAG’s modelling, the reinsurance deal is expected to provide material downside protection for “future earnings volatility”, particularly as extreme weather events become more frequent and severe.

IAG’s CEO, Nick Hawkins, stated:

This long-term agreement will help provide greater certainty over natural perils cost as extreme weather events become more frequent and severe. For our shareholders, this transaction builds on IAG’s comprehensive reinsurance strategy, providing greater earnings stability and reducing our capital requirements

Additional long-tail protection

The ASX financial stock has also entered into an adverse development cover (ADC) with Cavello Bay Reinsurance Limited, a subsidiary of Enstar Group Ltd. This may also be impacting IAG shares today.

This cover provides $650 million in protection for IAG’s long-tail reserves, including portfolios such as Product & Public Liability, Compulsory Third-Party Motor, Professional Risks, and Workers’ Compensation.

IAG’s Chief Financial Officer, William McDonnell, noted the additional protection “further demonstrates IAG’s ongoing effort to reduce financial risk, capital requirements, and earnings volatility”.

As earnings are related to changes in stock prices, some may view this as a positive for IAG shares.

The company also expects a reduction to its prescribed capital amount of around $350 million. This is subject to approval by ASIC. Management expects this to enhance IAG’s financial flexibility and capital efficiency, contributing to an improved return on equity (ROE) target of 14%-15%.

Analyst views on IAG shares

Analysts have taken note of IAG’s recent moves and their potential impact. Citi analyst Nigel Pittaway recently rated IAG shares over Suncorp, citing IAG’s cost-cutting opportunities.

Goldman Sachs – which is neutral on IAG – made some interesting points in its April note on the company.

It observed a strong rate cycle in Australia and earnings growth in its insurance business. Goldman also highlights IAG’s capital flexibility and potential benefits from a decrease in interest rates.

Goldman has a 12-month price target of $6.30 for IAG shares. In contrast, Citi is more optimistic, projecting a $6.75 price target on IAG shares.

Foolish takeaway

IAG shares have caught a bid in 2024. The deal with Berkshire Hathaway should provide protection against natural perils and enhance earnings stability. At least, that’s what management projects.

In the past 12 months of trade, IAG shares have climbed more than 25% into the green.

The post IAG shares jump 7% after cutting a deal with Warren Buffett’s Berkshire appeared first on The Motley Fool Australia.

More reading

• Which ASX shares to buy if interest rates rise (and which to avoid)
• Where Aussies are spending their money, and the ASX shares that could benefit
• 3 ASX 200 shares going gangbusters on Friday
• IAG shares caught in a storm as millions join ‘loyalty’ lawsuit

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway and Goldman Sachs Group. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

One ASX lithium stock is catching the eye with a very strong gain on Friday.

In early trade, the Delta Lithium Ltd (ASX: DLI) share price is up a whopping 37% to 31.5 cents.

This is despite the rest of the lithium industry looking like a sea of red at the time of writing.

Why is this ASX lithium stock rocketing?

Investors have been scrambling to buy Delta Lithium’s shares today thanks to a golden announcement.

According to the release, the lithium explorer could be sitting atop a very lucrative gold deposit.

This follows Delta Lithium’s recent exploration activities at its 100% owned Mt Ida Project, which is a shovel ready lithium and gold project in the Eastern Goldfields Province of Western Australia.

The release reveals that its recent mineral resource estimate has significantly increased the contained gold at Mt Ida, demonstrating the presence of a large gold system.

Pleasingly, all mineral resources at the Mt Ida Project are located on granted mining leases. This would allow the company to start mining immediately if studies support this outcome.

The upgrade represents an 82% increase in contained gold for the Baldock Deposit to 4.8Mt @ 4.4g/t gold for 674,000 ounces. In addition, the maiden mineral resource estimate for the Golden Vale Prospect is 27,000 ounces @ 1.7g/t Au.

Overall, the ASX lithium stock revealed that the mineral resource estimate for gold at Mt Ida (inferred and indicated) is now 6.6Mt @ 3.5 g/t Au for 752,000 ounces.

As a reminder, the current spot gold price is US$2,338.3 an ounce. This means it has potentially discovered a very valuable deposit.

‘A wonderful result’

The ASX lithium stock’s managing director, James Croser, was very pleased with the news. He said:

This is a wonderful result for Delta shareholders, reaffirming our long-held belief that the gold system at Mt Ida has significant scale and upside. The Baldock is fast becoming one of very few, large high-grade undeveloped gold deposits in WA in excess of 500koz. The commencement of open pit mining has been approved, and the underground approval with the Department is submitted and pending.

We are investigating the best options for Delta shareholders to crystalise value from our gold, which can then be applied to further developing our core lithium business. The efforts of Delta’s Geology team have been tireless and driven toward this success. We have already started follow up gold drilling at Mt Ida to target resource growth beyond 1Moz.

The post Guess which ASX lithium stock is rocketing 37% on a golden announcement appeared first on The Motley Fool Australia.

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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. 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 Scott Phillips.

ANZ Group Holdings Ltd (ASX: ANZ) shares are pushing higher on Friday morning.

At the time of writing, the banking giant’s shares are up 0.5% to $28.42.

Why are ANZ shares rising?

The big four bank’s shares are rising on Friday after its proposed acquisition of the Suncorp Group Ltd (ASX: SUN) banking operations took a giant step towards completion.

This morning, ANZ announced that the Federal Treasurer’s has approved the proposed acquisition of Suncorp Bank under the Financial Sector (Shareholdings) Act 1998 (FSSA). This is subject to a number of conditions, which are normal for FSSA approvals for bank acquisitions.

One is that ANZ will maintain its and Suncorp Bank’s regional branch numbers throughout Australia for three years.

There will also be no net job losses in Australia as a direct result of the acquisition for three years. ANZ notes that these conditions are consistent with its plans for integrating Suncorp Bank and its customers.

It must also continue its ongoing best efforts to reach an agreement with Australia Post, on a commercial basis, to offer Bank@Post services to its customers.

Management notes that these conditions are not anticipated to impact the benefits expected to flow from the acquisition. Furthermore, ANZ has worked with Suncorp to agree to contribute towards the impact of additional approval related imposts. This has seen Suncorp Group agree to waive its brand licensing fee and contribute to some additional integration costs.

‘A significant milestone’

ANZ’s CEO, Shayne Elliott, was very pleased with the Federal Treasurer’s approval. He said:

This is a significant milestone in our plans to expand our presence in Queensland and bring the best of ANZ to Suncorp Bank customers. Queensland is thriving. With strong economic growth, high workforce participation and more interstate migration than any other state or territory, we’re excited about the opportunities Queensland presents for ANZ and our customers.

We are another step closer to welcoming Suncorp Bank customers into the ANZ Group. Suncorp Bank customers will continue to receive the same great service, from the same exceptional Suncorp Bank staff. Over time, we’ll make available to them ANZ’s leading technology, giving them access to the very latest in banking services.

Today’s approval follows the decision of the Australian Competition Tribunal to authorise the proposed acquisition on 20 February 2024, and passage of the State Financial Institutions and Metway Merger Amendment Bill in the Queensland Parliament on 14 June 2024.

Completion of the acquisition remains subject to the commencement of the Queensland State Financial Institutions and Metway Merger Amendment Act. If all goes to plan, ANZ expects the acquisition to complete at the end of July.

ANZ shares are up more than 20% over the last 12 months.

The post ANZ shares higher on ‘significant’ $4.9b Suncorp Bank acquisition approval appeared first on The Motley Fool Australia.

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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. 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 Scott Phillips.