On Tuesday, the S&P/ASX 200 Index (ASX: XJO) was on form again and charged higher. The benchmark index rose 0.65% to 7,009.7 points.

Will the market be able to build on this on Wednesday? Here are five things to watch:

ASX 200 expected to sink

The Australian share market looks set to have a day to forget on Wednesday after Wall Street had its worst session since June 2020. According to the latest SPI futures, the ASX 200 is expected to open the day a massive 162 points or 2.3% lower this morning. On Wall Street, the Dow Jones fell 3.9%, the S&P 500 dropped 4.3%, and the Nasdaq sank 5.2%. Investors were panic selling after US inflation failed to cool.

Oil prices fall

Energy producers Beach Energy Ltd (ASX: BPT) and Woodside Energy Group Ltd (ASX: WDS) could have a subdued day after oil prices fell overnight. According to Bloomberg, the WTI crude oil price is down 0.2% to US$87.60 a barrel and the Brent crude oil price has fallen 0.55% to US$93.45 a barrel. Traders were selling oil following the release of disappointing US economic data.

Coles downgraded to sell

The Coles Group Ltd (ASX: COL) share price is overvalued according to analysts at Goldman Sachs. This morning the broker downgraded the supermarket giant’s shares to a sell rating with a $15.60 price target. Goldman made the move due to Coles being a laggard in digital transformation, which it expects to result in market share losses. It also fears that its entrance into a high investment cycle will further pressure margins.

Gold price tumbles

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a difficult day after the gold price tumbled lower overnight. According to CNBC, the spot gold price is down 1.55% to US$1,713.6 an ounce. Higher than expected inflation in the US has sparked fears of aggressive rate hikes.

ASX 200 shares going ex-dividend

A number of ASX 200 shares are due to trade ex-dividend this morning and could drop even more into the red. This includes appliance manufacturer Breville Group Ltd (ASX: BRG), horticulture company Costa Group Holdings Ltd (ASX: CGC), and fashion jewellery retailer Lovisa Holdings Ltd (ASX: LOV).

The post 5 things to watch on the ASX 200 on Wednesday appeared first on The Motley Fool Australia.

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More reading

• Here’s why brokers are bullish on these ASX growth shares
• What’s driving ASX 200 consumer shares on Tuesday?
• Supermarket shakeup: Do Coles shares offer better dividends than Woolworths?
• 5 ASX All Ords shares going ex-dividend on Wednesday
• 62% upside: Expert names 2 ASX shares looking beautiful right now

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 positions in and has recommended COLESGROUP DEF SET. The Motley Fool Australia has recommended COSTA GRP FPO and Lovisa Holdings Ltd. 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 Liontown Resources Limited (ASX: LTR) share price is having a mixed year.

While the lithium developer’s shares are beating the struggling ASX 200 index with a 1.4% year to date gain, this pales in comparison to some of the gains being recorded in the lithium industry.

But could its shares start roaring in the coming months?

Where next for the Liontown share price?

According to one leading broker, the Liontown share price is potentially heading a lot higher from here.

A note out of Bell Potter reveals that its analysts have a speculative buy rating and $2.87 price target on the company’s shares.

Based on the current Liontown share price of $1.78, this implies potential upside of 61% for investors over the next 12 months.

Why is the broker positive?

Bell Potter highlights that while Liontown is not producing lithium at present, its Kathleen Valley lithium project is under development. It expects the Liontown share price to start to gain investor attention as the project development de-risks and production gets closer. Particularly given its offtake agreements with major players Ford, Tesla, and LG Energy Solution.

The broker explained:

LTR’s Kathleen Valley lithium project in Western Australia is currently in development and has the backing of major downstream EV participants. The project’s scale and mine life lend optionality to future product value-adding though downstream lithium refining.

ESG is at the forefront of LTR’s development strategy, particularly across employing renewable energy and ensuring strong engagement with traditional owners. We expect LTR’s value to respond to Kathleen Valley’s de-risking through project development and with further consideration of potential downstream developments.

All in all, Bell Potter appears to believe this could be one for patient investors. Though, it does warn that “LTR is an asset development company with prospective operations and cash flows. Our Speculative risk rating recognises this higher level of risk and volatility of returns.”

The post When will the Liontown share price start roaring? appeared first on The Motley Fool Australia.

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More reading

• Liontown share price falls despite ‘milestone’
• Brokers name 3 ASX lithium shares to buy
• Why is the Global Lithium Resources share price rocketing 27% this week?
• 5 ASX 200 lithium shares with the lowest levels of debt
• Why are ASX lithium stocks having such a stellar run today?

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.

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The NIB Holdings Limited (ASX: NHF) share price has been a strong performer in recent weeks.

Since this time last month, the private health insurer’s shares have risen by almost 14% to $7.89.

This leaves the NIB share price trading within a whisker of its 52-week high of $8.20.

Why is the NIB share price on form?

Investors have been buying the company’s shares since the release of its full year results last month.

For the 12 months ended 30 June, NIB reported a 7.2% increase in revenue to $2.8 billion. This was driven by the company’s Australian Residents Health Insurance (ARHI) business, which grew well ahead of industry expectations thanks to strong premium revenue growth. This was despite the company deferring the 2022 annual premium increase.

And while NIB reported a 16.6% decline in net profit to $133.8 million, this reflects investment losses of $81.8 million and was still slightly ahead of consensus estimates.

Also giving its shares a lift was management’s outlook commentary. It appears cautiously optimistic on FY 2023. It said:

While wary of broader macro-economic conditions and ongoing COVID-19 threats, nib expects favourable market conditions for each of its businesses in FY23 and beyond.

Can its shares keep rising?

Unfortunately, most brokers appear to believe the NIB share price has now peaked.

The most bullish broker I’m aware of is Morgans with its hold rating and $8.36 price target. This implies potential upside of 6% for investors from current levels.

Its analysts are also expecting its shares to provide a fully franked 3.5% dividend yield in FY 2023. This stretches the total potential return to almost 10%, which isn’t bad for a hold rating.

The post Why has the NIB share price leapt 14% in a month? appeared first on The Motley Fool Australia.

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More reading

• Why is the NIB share price having such a lousy start to the week?
• Keen to bag the latest NIB dividend? Time is running out
• These ASX 200 shares are going ex-dividend on Monday
• Here are the top 10 ASX 200 shares today
• 3 ASX All Ords shares cracking new highs on Monday

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 recommended NIB Holdings Limited. 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 Chalice Mining Ltd (ASX: CHN) share price had a Tuesday to remember.

The mineral explorer’s share price closed 9.81% higher to $4.59. For perspective, the S&P/ASX 200 Index (ASX: XJO) gained 0.65% today.

Let’s take a look at what could be impacting the Chalice Mining share price.

What’s going on?

Chalice Mining is exploring nickel, copper, gold, cobalt, and platinum group elements (PGE) at the Julimar Project in Western Australia.

Today, the nickel price lifted 6.87% to US$24,536.5 a tonne, Trading Economics data shows. Gold prices also gained 0.7% after the US dollar fell from its record high while copper prices increased 1.3%.

The S&P/ASX 200 Materials Index (ASX: XMJ) also lifted 0.5% today.

As well, news from Chalice Mining’s joint venture partner Venture Minerals Ltd (ASX: VMS) may have fuelled investor optimism.

The two are developing the South West nickel-copper-PGE project in Western Australia.

Today’s news from Venture related to its nearby 100%-owned Kulin project. Venture confirmed the project is prospective for magmatic nickel and copper sulphide. The company said it has commenced an AEM survey along “two highly prospective ultramafic intrusive complexes” that sit along strike of the belt that hosts Chalice’s project.

The Venture Minerals share price finished the day flat after jumping nearly 4% in earlier trade.

Meanwhile, today Chalice advised the UBS Group ceased to be a substantial holder of Chalice Mining shares on 8 September.

Share price snapshot

The Chalice Mining share price has fallen 31% in the past year, while it has dropped 52% year to date.

For perspective, the ASX 200 has lost 5.6% in the past year.

Chalice has a market capitalisation of about $1.7 billion based on its current share price.

The post Why did the Chalice Mining share price leap 10% on Tuesday? appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Chalice Mining share price lifts on positive exploration results today
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Monica O’Shea 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.

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If you’re wanting to invest in exchange traded funds (ETFs), then you may want to look at the ones listed below.

These ETFs provide investors with access to some very exciting tech companies from across the globe. Here’s what you need to know about them:

BetaShares Asia Technology Tigers ETF (ASX: ASIA)

The first ETF for investors to consider is the BetaShares Asia Technology Tigers ETF. This ETF gives investors exposure to many of the largest tech companies in the Asian market. These tigers are the Asian equivalent of companies like Google, Facebook, and Amazon. This includes Alibaba, Infosys, JD.com, Kakao, Meituan, Pinduoduo, Samsung, Taiwan Semiconductor, and Tencent.

In respect to Tencent, it is a multinational technology conglomerate and one of the world’s largest companies. The company is best known for its WeChat app, which has over a billion users. This super app allows users to text message, voice message, order food, shop, video conference, play video games, share photographs and videos, and make payments.

Another inclusion in the fund is Pinduoduo. It is an e-commerce platform provider that offers a wide range of products from daily groceries to home appliances. Its platform connects distributors with consumers directly through an interactive shopping experience, allowing shoppers to team up to buy items in bulk at lower prices. It has an active customer base closing in on 1 billion.

BetaShares Global Cybersecurity ETF (ASX: HACK)

Another exciting ETF for ASX investors to look at is the BetaShares Global Cybersecurity ETF. This popular ETF gives investors exposure to the leading companies in the global cybersecurity sector.

You only need to look at recent attacks, such as the sophisticated Sunburst attack, to see that online threats are getting greater and smarter. This may not bode well for internet users, but it does for the companies in the fund, which include both global cybersecurity giants and emerging players. They look set to benefit greatly from increasing demand for cybersecurity services.

Among the companies you’ll be owning a slice of are Accenture, Cisco, Cloudflare, Crowdstrike, Okta, Palo Alto Networks, and Splunk.

CrowdStrike, for example, is the company behind the popular Falcon platform. This platform delivers incident response and forensic analysis services that are designed to help businesses understand whether a breach has occurred. It then allows the user to respond and recover from a breach with speed and precision to remediate the threat.

The post 2 excellent ETFs for ASX investors to buy this month appeared first on The Motley Fool Australia.

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• I rate these top ASX growth shares as buys in September
• Down 25% this year, is the Betashares Asia Technology Tigers ETF (ASIA) cheap?
• 2 popular ETFs that could be buys for ASX investors
• Why I’d buy these 2 ASX ETFs right now
• 3 fantastic ETFs for ASX investors to buy in September

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 BETA CYBER ETF UNITS. The Motley Fool Australia has positions in and has recommended BETA CYBER ETF UNITS. The Motley Fool Australia has recommended BetaShares Asia Technology Tigers ETF. 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 commodity trade of 2022 continued on Tuesday with several ASX 200 mining shares clipping their 52-week gains in today’s trading.

Lithium was the flavour of the day with the battery metal advancing back to its record highs, levels not seen since March of this year. Let’s take a closer look.

Pilbara Minerals Ltd (ASX: PLS)

Shares of Pilbara Minerals shot to intraday highs of $4.79 by midday today and then levelled off to finish trading at $4.74 apiece.

The share has caught a strong bid lately and set a number of new highs to its latest destination in today’s session.

Brokers like it too, with analysts at Macquarie recently prescribing a $5.60 price target on the lithium share.

This is backed by a strong outlook for the price of lithium, which Barrenjoey Markets has tipped to gain around another 80% over the coming 2 years.

Pilbara shares are up 115% in the last 12 months of trade.

Mineral Resources Limited (ASX: MIN)

Shares of Mineral Resources shot to 52-week highs today despite no market-sensitive news from the miner. After reaching a high of $75.65, it finished the day trading at $73.80.

Noteworthy however is a broker note from UBS projecting tremendous upside for the share should its rumoured demerger plans go ahead.

As we noted earlier today, the broker assigned “a price target of $83 was provided along with a rating of buy”.

After whipsawing from December to July, Mineral Resources shares finally broke out to the upside on 18 August and surpassed a key resistance level it had faced 3 times before that.

It now trades at its highest level in more than 5 years and shows no signs of slowing down at this pace.

Allkem Ltd (ASX: AKE)

Allkem also shot to its 52-week high today, clipping the $16 per share mark before settling back down to $15.99 at market close.

The $10.20 billion company by market capitalisation also caught a bid today following a bullish broker note from Bell Potter.

Analysts at the firm have reassigned their buy rating on the share and value it at $20.04 apiece, implying around a 25% potential upside at the current price.

Chief to the broker’s thesis is its forecasts on the price of lithium. It believes the market will continue rallying the battery metal into the coming years as well.

With that, Allkem extended its gains out to 54% for the year to date today and 74% for the last 12 months.

The post 3 ASX 200 mining shares that smashed all-time highs on Tuesday appeared first on The Motley Fool Australia.

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More reading

• Why did the Core Lithium share price leap another 6% on Tuesday?
• Why Allkem, MA Financial, Neuren, and Vulcan Energy shares are pushing higher
• Are Yamaha and Toyota about to upend the ASX lithium share party?
• Runaway train? Pilbara Minerals share price leaps to yet another all-time high
• With most investors thinking the next big move in the stock market is down, Warren Buffett says times like these are your friend

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.

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Are you interested in adding some ASX growth shares to your portfolio this month? If you are, you may want to look at the two listed below that have recently been named as buys.

Here’s what you need to know about them:

Breville Group Ltd (ASX: BRG)

The first ASX growth share to look at is Breville. It is the leading kitchen appliance manufacturer behind a growing portfolio of brands such as Breville, Kambrook, Lelit, and Sage.

Thanks to a winning combination of acquisition, international expansion, and its consistent investment in research and development, Breville has been growing its sales and earnings at a solid rate for years.

The good news is that Goldman Sachs expects this solid form to continue for the foreseeable future and is forecasting a EBITDA compound annual growth rate of 7% between FY 2023 and FY 2025. It recently commented:

We see BRG as having a three-pronged growth strategy: 1) building on secular growth of the portioned and roast & ground (R&G) coffee market and achieving market share gains; 2) new market entry; and 3) options – ecosystem revenue streams.

Goldman has a buy rating and $24.70 price target on its shares.

Jumbo Interactive Ltd (ASX: JIN)

Another ASX growth share that analysts say investors should buy is online lottery ticket seller Jumbo. It is the company behind the OzLotteries website/app and the Powered by Jumbo software-as-a-service (SaaS) platform.

Morgans is very positive on the company. It was impressed with its FY 2022 results and believes it is well-placed for more of the same in the coming years thanks to the diversification of its growing SaaS business.

FY22 was a year of solid growth in revenue and earnings for JIN. The business continued to diversify its earnings base, with SaaS now making up nearly half of group EBITDA. There were few surprises in the numbers, given JIN pre-announced headline earnings in July. We have made no material changes to our earnings estimates. […] We reiterate our ADD rating. We expect JIN to continue to achieve steady growth in the years ahead through a combination of organic contract wins, M&A and diversification.

Morgans has an add rating and $17.50 price target on the company’s shares.

The post Here’s why brokers are bullish on these ASX growth shares appeared first on The Motley Fool Australia.

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More reading

• What’s driving ASX 200 consumer shares on Tuesday?
• 5 ASX All Ords shares going ex-dividend on Wednesday
• Brokers name 3 ASX shares to buy today
• 3 ASX shares I’ll be buying and holding for years to come
• Why Breville, Incitec Pivot, Magellan, and Super Retail shares are dropping

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 Jumbo Interactive Limited. The Motley Fool Australia has recommended Jumbo Interactive Limited. 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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Investors eyeing off the Australian Foundation Investment Company Ltd (ASX: AFI), or AFIC for short, this September, might have some questions about what exactly they might be investing in.

AFIC is a listed investment company (LIC). This means that it doesn’t really function like a normal ASX company that one might expect to find on the share market. Instead of selling goods or services, AFIC invests its capital on behalf of its shareholders, similarly to a managed fund.

AFIC is arguably ASX royalty. The company first opened its doors way back in 1928 and has been investing on behalf of its shareholders ever since.

But with the rise of the index exchange-traded fund (ETF), many investors might be wondering what an investment in AFIC represents. Well, let’s dig in.

So unlike an ETF, AFIC doesn’t have to blindly mirror an index. Instead, it has its own investment team that picks, chooses and actively manages a portfolio of shares. Fortunately, the compnay publishes a list of the largest shares in its portfolio every month. So let’s take a look at AFIC’s latest data.

So as of 31 August, AFIC’s top ten holdings were as follows:

1. Commonwealth Bank of Australia (ASX: CBA)
2. CSL Limited (ASX: CSL)
3. BHP Group Ltd (ASX: BHP)
4. Transurban Group (ASX: TCL)
5. Macquarie Group Ltd (ASX: MQG)
6. Wesfarmers Ltd (ASX: WES)
7. National Australia Bank Ltd (ASX: NAB)
8. Westpac Banking Corp (ASX: WBC)
9. Woolworths Group Ltd (ASX: WOW)
10. Mainfreight Limited (NZE: MFT)

So many familiar names there (apart from Mainfreight, a New Zealand company). But what stands out is the subtle but important differences to the S&P/ASX 200 Index (ASX: XJO).

For example, an ASX 200 ETF would not have Transurban, Woolworths or (obviously) Mainfreight in its top ten holdings. An index fund would also have BHP in the top position, not CBA. Additionally, NAB and Westpac would occupy the fourth and fifth spots, not AFIC’s seventh and eighth.

Last year, we also learnt that AFIC has initiated a small portfolio of international shares. We don’t know too many details about this, except that it makes up approximately 1.1% of AFIC’s overall portfolio (according to the FY22 annual report). But again, those would be assets not found on the ASX.

So that’s what you’re getting in a nutshell with an investment in AFIC. This LIC has managed to outperform the S&P/ASX 200 Accumulation Index over the past ten years. On AFIC’s data, it has delivered an average of 11.9% per annum, versus the benchmark’s 10.3% per annum.

The post Looking to buy AFIC shares in September? Here’s what you’d be investing in appeared first on The Motley Fool Australia.

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More reading

• How do Argo shares measure up to other LICs like AFIC?
• Are AFIC shares outperforming the ASX 200 this year?
• How has the AFIC ASX share portfolio changed over FY22?

Motley Fool contributor Sebastian Bowen has positions in CSL Ltd. and National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL Ltd. The Motley Fool Australia has positions in and has recommended Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. 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 Incannex Healthcare Ltd (ASX: IHL) share price has had a tough 2022, losing 50% of its value year to date.

That’s far lower than the S&P/ASX 200 Health Care Index (ASX: XHJ), which is down 5.24% for the same period.

However, Incannex is not alone among ASX cannabis shares. Emyria Ltd (ASX: EMD) has shed 42% while Cronos Australia Ltd (ASX: CAU) is down a painful 215% so far this year.

Let’s make sense of what may have impacted Incannex’s performance lately

What’s going on with Incannex Healthcare?

The company is now included in the S&P/ASX 300 Index (ASX: XKO) as part of S&P Global’s quarterly rebalancing that took place at the beginning of the month.

In August, Incannex also completed its acquisition of APRIx Pharmaceuticals for US$93.3 million after the companies reached an agreement in March this year.

When the deal went through, Incannex claimed it now held “the world’s largest portfolio of patented medicinal cannabinoid drug formulations and psychedelic treatment protocols”.

Earlier in August, Incannex released an investor presentation giving an overview of its operations and other aspects of the business.

At that time, it noted it had an estimated $290 billion total addressable market for its lead drug candidates and another $2 billion per year in potential revenue from psychedelic treatment therapies.

And finally, the company posted its results for FY22, noting that its net loss from ordinary activities increased 31% to $14.9 million from the prior reporting period while also recording no revenues.

Icannex share price snapshot

The Icannex share price finished 6.78% higher today at 31.5 cents, a long way from its 52-week closing high of 73 cents in early March.

The company’s current market capitalisation is around $479 million.

The post Have Incannex Healthcare shares been a good investment in 2022? appeared first on The Motley Fool Australia.

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• Bell Potter slaps buy rating on this profitable, dividend-paying ASX cannabis share
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Motley Fool contributor Matthew Farley 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.

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The Magellan Financial Group Ltd (ASX: MFG) share price has been dropping recently. It’s down 12% in the last month.

Sadly for shareholders, this means it has given up most of the gains the company made since mid-July.

But, could this decline mean that Magellan shares are an opportunity? Is another rebound on the cards?

Magellan share price falls after FY22 result

Investors may have been buying shares of the fund manager leading up to the release of the 2022 financial year report. But, it has largely been negative since then.

There weren’t many positives in the result.

Adjusted net profit after tax (NPAT) fell 3% to $399.7 million, while profit before tax and performance fees of the funds management business fell 11% to $470.6 million.

While average funds under management (FUM) dropped 9% to $94.3 billion, the FY22 FUM finished at $61.3 billion.

As the company pointed out, the funds management business made a profit before tax and performance fees of $29.5 million in the first half and $177.1 million in the second half, a drop of 40% half over half.

The fund manager warned that material outflows of FUM meaningfully impacted profitability in the second half “and will affect FY23”.

Any positives?

While the Magellan Global Fund (ASX: MGF) showed underperformance of its global benchmark of 5.6% per annum over the three years to 30 June 2022, the Airlie Australian Share Fund generated outperformance of the S&P/ASX 200 Accumulation Index (ASX: XJOA) of an average of 4.7% per annum over the three years to June 2022.

The Australian investment performance and FUM is going well. In the August FUM update, the Australian shares FUM increased over the month from $8.3 billion to $8.4 billion. That came as total FUM dropped from $60.2 billion to $57.6 billion at 31 August 2022. August saw net outflows of $1.3 billion.

Another positive is that Magellan’s share buyback is improving the situation for existing shareholders. The company is buying back up to 10 million shares. At 30 June 2022, it had bought back 626,960 shares at an average price of $12.43. That’s slightly lower than where it is today.

Is the Magellan share price a buy?

I’m not sure that it is. The fund manager has taken a large hit of confidence and I think it’s unlikely that FUM will come flooding back even if Magellan starts achieving a bit of fund outperformance, though that is an important step to regain some momentum.

Active fund managers are facing a lot of competition from cheaper exchange-traded fund (ETF) investment products. Magellan itself has launched cheaper ETFs. The trend could mean that Magellan’s margin drifts lower in the coming years.

CMC Markets puts the current Magellan share price at 11x FY23’s estimated earnings. If Magellan can stop the monthly outflows of over $1 billion, then that could be a boost for Magellan shares. But, I wouldn’t want to buy shares right now. As a ‘value play‘ I’d want to see the forward price-to-earnings (p/e) ratio under 10 before thinking about it.

I’m not sure if the fund manager will be able to generate the same sort of returns as it did for investors in the 2010s.

The post The Magellan share price has fallen over 10% in a month: Is it time to buy the dip? appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Magellan Global Fund. 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.

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