With so many shares to choose from on the ASX, it can be hard to decide which ones to buy. The good news is that brokers across the country are doing a lot of the hard work for you.

Three top ASX shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Australia and New Zealand Banking GrpLtd (ASX: ANZ)

According to a note out of Macquarie, its analysts have retained their outperform rating and $30.50 price target on this banking giant’s shares. The broker has been looking at the banking sector following recent results releases. It believes ANZ’s shares offer investors the best value over the medium term. This is despite Macquarie not expecting ANZ’s second half performance to be as strong as the first due to increasing costs. The ANZ share price is fetching $27.39 on Monday morning.

TPG Telecom Ltd (ASX: TPG)

A note out of Ord Minnett reveals that its analysts have upgraded this telco’s shares to a buy rating but cut the price target on them to $6.45. The broker made the move largely on valuation grounds following a sharp pullback since announcing changes in its leadership. And while it notes that COVID-19 headwinds won’t be going away any time soon, it expects this to be offset by merger synergies. The TPG Telecom share price is trading at $5.20 this morning.

Xero Limited (ASX: XRO)

Analysts at Morgan Stanley have retained their overweight rating but trimmed their price target on this cloud accounting platform provider’s shares to $135.00. This follows the release of Xero’s full year results last week. According to the note, the broker feels the market has overreacted to Xero’s investment plans. It believes the strategy of reinvesting is the right thing to do and will help it maintain a leadership position over the long term. It points out that this strategy helped it unseat previous market leader MYOB in the past. The Xero share price is fetching $116.25 on Monday.

More reading

• US market bounces back, ASX 200 tech shares on watch
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• 3 great ASX tech shares to buy
• These were the worst performing ASX 200 shares last week
• ASX 200 rebounds, Treasury rises, Xero falls

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 Xero. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Tyro Payments Ltd (ASX: TYR) shares are edging higher on Monday after the company announced another solid transaction value update. At the time of writing, the Tyro share price is trading 0.27% higher at $3.69.

Tyro is Australia’s fifth largest merchant-acquiring bank by number of terminals in the market, behind the four major banks. Tyro derives a majority of its revenues from payment services via its EFTPOS terminals. The weekly updates provide key insights into how the business is performing. 

Solid transaction values 

The Tyro share price is in the green today after the company reported a 96% increase in transaction values between 1 to 14 May, compared to a year ago. This follows a 147% increase in the month of April. 

The strong transaction value increases throughout April and May are likely driven by easy comparables against a year ago, at the height of COVID-19 lockdowns. This was during a period when a majority of Tyro’s merchant base across hospitality, retail and health sectors were forced to operate at a limited capacity. 

However, from a year-to-date perspective, the company’s transaction values are up a solid 22% from $17.740 billion to $21.662 billion. 

Tyro share price outperforms ASX 200 tech index

The Tyro share price has surprisingly emerged as one of the top-performing tech shares this year. 

The S&P/ASX 200 Info Tech Index (ASX: XIJ) has slipped to an 8-month low and is down by 18.5% year to date. This follows significant share price weakness in tech heavyweights including Afterpay Ltd (ASX: APT), WiseTech Global Ltd (ASX: WTC) and Xero Limited (ASX: XRO). 

Despite the pressures facing the tech index, the Tyro share price has pushed around 15% higher year to date. Its share price has emerged stronger after its crippling EFTPOS terminal outages and scathing short-seller attack earlier this year.

According to Tyro, it continues to innovate in the payments landscape, with a number of strategic investments announced in its presentation at the Macquarie Australia Conference 2021 and a recent move to acquire Aussie health fintech, Medipass. 

More reading

• Why Crown, Fortescue, Nearmap, & Tyro shares are charging higher
• The Tyro (ASX: TYR) share price jumps 5% on 2 positive updates
• Why is the Tyro Payments (ASX:TYR) share price dropping today?
• Why Bubs, IDP Education, ResMed, & Tyro shares are dropping today
• The Tyro Payments (ASX:TYR) share price has gained 30% in 12 months

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tyro Payments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of AFTERPAY T FPO, WiseTech Global, and Xero. The Motley Fool Australia owns shares of and has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Bitcoin (CRYPTO: BTC) hype train has taken a sharp turn away from destination moon and is hurtling back to earth.

The all-father cryptocurrency has experienced a ~30% selloff since its all-time high of US$64,899 on 14 April. This marks its largest correction since the March 2020 COVID-19 selloff where prices halved from US$8,000 to as low as US$3,800 within two days. 

Why is Bitcoin sliding?

Last week, Tesla Inc (NASDAQ: TSLA) CEO Elon Musk (aka the “Technoking of Tesla”) announced that the company would no longer offer Bitcoin as a payment option.

Musk’s tweet said at the time: 

We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. 

He also tweeted the recent surge in energy usage over the past few months with regards to bitcoin electricity consumption.

On a slightly positive note, the tweet said that: 

Telsa will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. 

Within two hours of the tweet, bitcoin crashed from approximately ~US$54,500 to as low as ~US$48,500. 

Tesla exiting bitcoin speculation 

More recently, there has been speculation that Tesla may have planned or already sold its bitcoin holding. A Twitter user who goes by the handle @CryptoWhale said: 

Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings.

With the amount of hate @elonmusk is getting, I wouldn’t blame him…

To which Musk replied, “Indeed.”

A new cryptocurrency in town 

Musk appears to have turned his back on Bitcoin in favour of meme-inspired, dogecoin. Dogecoin has suffered a similar ~30% correction from 8 May highs of US$0.739 to US$0.506 at the time of writing.  

On 14 May, Musk tweeted: 

Working with Doge devs to improve system transaction efficiency. Potentially promising.

Which again, witnessed a significant surge in dogecoin prices. 

More reading

• Why I’m loving this ASX bank share at the moment: fundie
• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Elon Musk cancels Bitcoin! Is it gold’s gain?
• Tesla stops taking Bitcoin payments over fossil fuel concerns
• Could Dogecoin and Bitcoin be getting an extra push?

Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Shares in mid-cap ASX biopharmaceuticals company Starpharma Holdings Limited (ASX: SPL) have endured a volatile start to 2021. After surging to an all-time high of $2.52 by mid-February, the company’s shares have now plunged more than 35% to just $1.62 as at the time of writing.

While this still means they have risen close to 70% over the last 12 months, it’s a disappointing result for shareholders who may have thought 2021 would be a breakout year for Starpharma.

Company background

Before we look at the reasons behind the volatility, it’s probably worth taking some time to explain what Starpharma actually does – particularly since this is a junior healthcare company that may be flying under the radar for many investors.

Starpharma is an Australian healthcare company specialising in dendrimer-based nanotechnologies. Dendrimers are essentially man-made synthetic compounds: well-defined collections of molecules that have been created in a lab to serve a particular purpose. Because scientists can precisely select the molecules included in the dendrimer, they can be developed to address specific needs in medicine and life sciences.

Starpharma’s flagship product is called Viraleze, a nasal spray that has been shown to provide strong protection against a range of respiratory viruses, including the virus that causes COVID-19. Viraleze works by targeting areas in the nasal cavity where viruses typically multiply, providing a physical barrier against infection and preventing the virus from spreading to the lungs.

The company also develops a number of other products, including dendrimer drug delivery systems. Dendrimer technology can also be used to enhance the properties of other drugs by ensuring that they target the right areas of the body. The company’s dendrimer drug delivery products are currently being trialled with cancer patients.

What’s been going on with the Starpharma share price?

The February surge in the Starpharma share price came on the back of a flurry of company announcements.

First, Starpharma released its activities report for the quarter ended 31 December 2020. The report provided a number of positive updates, including that Viraleze was on track to be registered for use in Europe, and clinical trials of its other dendrimer-based products were also progressing. 

Shortly afterwards, Starpharma announced that a clinical trial of one of its drug delivery products was progressing to a global phase 1 clinical study. The trial was being run in partnership with international pharmaceutical company AstraZeneca (LSE: AZN) and was investigating the efficacy of Starpharma’s products for patients with forms of acute leukaemia.

Starpharma also announced it had signed a research agreement with US-based pharmaceutical company Merck & Co Inc (NYSE: MRK). Under the agreement, Merck & Co will seek to evaluate whether Starpharma’s dendrimer technology provides advantages for oncological medicine.

Despite these positive announcements – and a number of others since, including the news that Starpharma is set to partner with LloydsPharmacy for the UK launch of Viraleze – the Starpharma share price has continued to slide lower.

Although this might leave some loyal shareholders frustrated, it’s worth noting that Starpharma is still a young biotech. It is yet to book any meaningful sales revenue, and many of its products are still progressing through trial phases. This makes it a very speculative investment, and ups and downs in its share price are to be expected.

However, if the company can successfully launch Viraleze in Europe, the Starpharma share price could be worth watching over the next few months.

More reading

• The ASX shares poised to benefit from new spending in the 2021 federal budget
• Starpharma (ASX:SPL) share price slides despite COVID spray rugby deal
• Why Eclipx, Emeco, SeaLink, & Starpharma shares are storming higher today
• Starpharma (ASX:SPL) share price surges higher on COVID product update
• Why Dubber, PointsBet, Starpharma, & Westpac shares are storming higher

Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Starpharma Holdings Limited. The Motley Fool Australia has recommended Starpharma Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post The Starpharma (ASX:SPL) share price is 35% below its 52-week high appeared first on The Motley Fool Australia.

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Shares in ASX tech company Bigtincan Holdings Ltd (ASX: BTH) have had a disappointing start to 2021. The Bigtincan share price has already slid roughly 25% lower this year – and at their current price of $0.825, the software developer’s shares are not far off the 52-week low price of $0.69 they hit all the way back in June.

Company background

Bigtincan develops sales enablement software. Bigtincan’s flagship sales enablement automation platform is a centralised, integrated software solution designed to support its corporate clients throughout their entire sales and marketing lifecycle, from onboarding and training new staff, to engaging new customers and providing accurate reporting.

As with many other emerging ASX tech companies like Megaport Ltd (ASX: MP1), Dubber Corp Ltd (ASX: DUB) and ELMO Software Ltd (ASX: ELO), Bigtincan operates a software as a service business model. In other words, it sells its customers subscription-based licenses to access its software platform. This means that a lot of its revenue is recurring – customers will have to pay their subscription fees at regular intervals to maintain their access.

As an investor, this takes some of the risks out of an investment. As long as Bigtincan can keep customer churn low, it can develop regular income streams from subscription renewals.

This is why you’ll notice that a lot of these companies – particularly in their growth phase – will focus on annual recurring revenues and other similar metrics. The idea is that, while current cash receipts may still be low, these companies are locking in higher future revenues by growing their customer base.

Financials

For a growing company, Bigtincan’s financial performance has been pretty strong. First-half FY21 revenues were $18.4 million, an increase of 33% over the prior comparative period. And annualised recurring revenues – that key metric I mentioned before – jumped more than 50% over the first half of FY20 to a record $48.4 million.

This business momentum seems to have carried over into the third quarter. In an update issued at the end of April, Bigtincan reported that it had received $12.2 million in cash receipts for the March quarter – a quarter-on-quarter uplift of 13% – meaning it was on track to book the full cash value of its annualised subscription revenues.

However, shareholders must have been hoping for something more from Bigtincan’s third-quarter update, and it was sold off heavily again. On 30 April, the day the third-quarter update was released, the Bigtincan share price fell sharply, down almost 13% by the close of trade. They dropped a further 5% the next trading day as well.

Outlook

Bigtincan expects full-year FY21 revenues to come in towards the top end of its previously issued guidance of between $41 million and $44 million. Included in its third-quarter update was a slight upgrade, to between $43 million and $44 million. Annualised recurring revenues are also expected to be at the higher end of $49 million and $53 million.

This could mean a year-on-year increase of as much as 42% for revenue, and 48% for annualised recurring revenues – both pretty substantial rates of growth. It will be interesting to see what impact that will have on the Bigtincan share price if the company can hit – or even exceed – those targets.

More reading

• These are the 10 most shorted shares on the ASX
• 3 stellar small cap ASX shares to watch
• 3 exciting ASX growth shares rated as buys
• Little ASX software share to explode once everyone wakes up: fundie
• 3 buy rated mid cap ASX shares for the long term

Rhys Brock owns shares of BIGTINCAN FPO, Dubber, Elmo Software, and MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends BIGTINCAN FPO, Elmo Software, and MEGAPORT FPO. The Motley Fool Australia owns shares of Dubber. The Motley Fool Australia has recommended BIGTINCAN FPO, Elmo Software, and MEGAPORT FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The stock market has brought wealth to millions of investors over the long run. To claim your share of that wealth, however, you have to be able to endure just about everything Wall Street throws at you — and you’ll have to fight your own emotional responses in order to stick with your winning strategy.

Most investors understand that stock markets go up and down, sometimes violently. When the entire market takes a plunge, it’s painful, but it comes with the somewhat comforting feeling that just about everyone’s in exactly the same boat. Together, you can ride out the storm — like so many people did in early 2020 — and emerge stronger, wiser, and richer.

What can actually hurt more, though, is when your stocks seem to take the brunt of the damage. It can make you question your ability to choose stocks for the long haul. It can even make you give up on investing in great companies entirely. As understandable as that reaction is, it’s the wrong approach. There are ways to turn your gut reactions into actionable and valuable guidance, but first, you have to get some perspective and get your emotions under control.

When you feel like you’re missing out

The market over the past few months has been hard to handle. Big swings have taken major market benchmarks to record highs, only to fall back downward again. Even those investing in index funds have had to deal with volatility.

Yet investors who’ve identified pioneering and disruptive stocks in high-growth areas like technology have had to go through an even wilder ride. After seeing amazing returns throughout much of 2020, a lot of these former high-flying stocks have fallen 20%, 30%, or even 50% or more of their value in a very short period of time.

What’s more, many of these drops are happening even as these companies are announcing strong business performance. Growth is still there, and in many cases, future prospects look just as bright as they’ve been in the past. Yet share prices are falling.

3 things to do to keep your cool

When your stocks are falling more than the overall market, don’t panic-sell. Instead, follow this three-step plan to get your feet back under you and then take appropriate action.

1. Know why you own each stock in your portfolio

Every stock you own is in your portfolio for a reason. If you own a stock, you’re expressing your belief that the company’s fundamental business will thrive and prosper in the long run. So when you find yourself doubting that belief, it’s a good time to reacquaint yourself with the company’s business model and how it intends to grow and make money in the future.

Occasionally, that examination will reveal that there’s been a true change in the business environment that contradicts the original reason you bought the stock. More often, though, you’ll find that the same reasons you invested in the first place are still intact, and that’ll help give you the resolve to overcome the market’s inevitable volatility.

2. Look beyond right now

If you just bought a stock right before it dropped, then it’s easy to feel like your timing is horrible. But keep in mind that in most instances, you’ve made other investments before, and you’ll have new opportunities to invest in the future.

Say you’ve owned a stock for a year and it doubled in price before falling 25%. All told, you’re still up with a solid 50% gain.

Conversely, say you just bought a stock and it fell 25%. If it doubles in price from here, you’ll be up the same 50% on your original investment.

3. Take advantage of panic

Once you’ve gone through that calming process, you’ll often emerge feeling more confident about your stocks than ever. That shows the value of having some spare cash to invest during episodes like this because you can pick up the stocks you love even more cheaply.

When you’re first starting out, though, you’ll want to be prudent with your opportunism. It’s entirely possible that stock prices will fall even further. Investing a portion of your available cash while holding some in reserve for even bigger potential bargains down the road can be a good middle ground. You won’t always get that second chance to buy even more cheaply, but it can help you keep your wits about you if a downturn gets even more severe.

Fear is the mind-killer

No one wants to feel like they’re the ones losing the most money in the stock market. Unfortunately, even with great companies, downward moves like this happen. If you can get past them and stick to a long-term game plan, though, then you’ll have learned the secret that so many investors are never able to use to their advantage.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Why the EML Payments (ASX:EML) share price is in a trading halt
• Why I’m loving this ASX bank share at the moment: fundie
• Carsales (ASX:CAR) share price down 7% after raising $428 million
• Incitec Pivot (ASX:IPL) share price sinks 5% on half year update
• Aristocrat Leisure (ASX:ALL) share price jumps 9% on profit update

The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post How to stay calm when your stocks are dropping appeared first on The Motley Fool Australia.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The EML Payments Ltd (ASX: EML) share price won’t be going anywhere on Monday.

Prior to the market open this morning, the payments company requested a trading halt.

Why is the EML Payments share price in a trading halt?

This morning EML Payments requested a trading halt to facilitate an orderly market in its securities pending an announcement in relation to significant regulatory concerns notified by the Central Bank of Ireland.

According to the release, the company received notification of these concerns on Friday 14 May 2021. They relate to the Prepaid Financial Services business that EML acquired on 31 March 2020.

What is the Prepaid Financial Services business?

Prepaid Financial Services was founded in 2008 as a reseller of pre-paid cards. Since then it has evolved into a leading provider of white label payments and banking-as-a-service technology with a pan-European footprint.

The company notes that it provides payments and digital banking capabilities, e-wallets and payout/distribution programs, regulatory Electronic Money Institution status and flexible software to enable financial institutions and non-financial institutions to deliver feature-rich transactional banking and other payment services to their end-user base without becoming a regulated entity.

What are the concerns?

As things stand, neither EML Payments nor the Central Bank of Ireland have revealed the latter’s concerns publicly.

However, this isn’t the first time the Prepaid Financial Services business has faced regulatory scrutiny.

At the end of March, EML announced the resolution of regulatory action by the Payment Systems Regulator (PSR) in the United Kingdom against Prepaid Financial Services. This related to an investigation under the Competition Act 1998 into anti-competitive conduct. The two parties ultimately settled the matter with a maximum penalty of 0.92 million pounds.

It is unclear if the Central Bank of Ireland’s concerns are similar and what the potential penalties or impacts could be. The term “significant regulatory concerns” is somewhat ominous. 

The EML Payments share price is expected to return to trade by Wednesday at the latest, when all will be revealed.

More reading

• Fund managers have been buying EML Payments (ASX:EML) and this ASX share
• Little ASX software share to explode once everyone wakes up: fundie
• 2 impressive ASX shares to buy in May 2021
• 2 high-quality ASX 200 shares to buy today
• 2 compelling ASX 200 shares that should be in your portfolio

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends EML Payments. The Motley Fool Australia has recommended EML Payments. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the EML Payments (ASX:EML) share price is in a trading halt appeared first on The Motley Fool Australia.

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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In part 1 of our interview, Pengana Capital senior fund manager Rhett Kessler reveals why a big bank is one of his fund’s biggest holdings.

Investment style

The Motley Fool: What’s your fund’s philosophy?

Rhett Kessler: I run the Pengana Australian Equities Fund. I’ve been doing it for 14, almost 15 years. We started three months before Lehman’s went bust. So it was an interesting time.

Fortunately we made money that year, which probably set us up pretty well for the future. Our investment strategy is essentially to a: preserve capital in real Australian dollars; and b: to deliver a low volatility return of 6% above the risk-free rate.

Essentially the way we do that… is to look for companies that with a high degree of certainty, [and] produce robust after-tax cash earnings yields. That means that if I can build a well-diversified portfolio of ever-growing annuity streams, then we’ve fulfilled our investment strategy, and we’ll preserve capital, and make our clients a decent amount of money.

I’ve always felt that we offer – it’s maybe a bit boring – a safe place for people to put their money, particularly in times of volatility. So that they can go off and punt their Bitcoins (CRYPTO: BTC) and cryptocurrencies if they want, or whatever the latest flavour is. But knowing that when they come back to us, we’ll still be ticking along. 

MF: Starting the fund just before Lehman went bust must be the equivalent of someone setting up a fund at the start of last year just before the COVID-19 crash.

RK: Yeah, exactly. And you know, it helps you hone your ability to not only have high conviction but also to really test your ability to reach it. 

We call it reaching across the abyss. Buying things when the underlying fundamentals say you need to – but also get through your vomit factor, which is after you’ve bought something, wanting to walk around your desk and throw up. That’s the hard bit.

MF: To give our readers an idea, what are your two biggest holdings?

RK: The two biggest holdings at the moment are Telstra Corporation Ltd (ASX: TLS) and National Australia Bank Ltd (ASX: NAB). We’re a high-conviction fund, so there’s quite a few that approximate those holdings, but those are the two biggest.

We think [Telstra is] the lowest cost producer of gigs on mobile data, and they’ve got a very nice inflation bond embedded in the NBN recurring revenue stream. It’s a good business with a well thought through turnaround strategy by management.

MF: Is NAB more of a temporary cyclical play?

RK: We were very fortunate to be able to acquire a really big stake at the dip of the COVID crisis when they did that deep discount capital raising. We already had a holding, but that was really big. 

We’ve taken a view that all the banks significantly over-provisioned. Also, I firmly believe that there are two great banking franchises in this country – one is Commonwealth Bank of Australia (ASX: CBA)’s retail, and the other is NAB’s business banking franchise.

We think the new management has a plan, and the competency to be able to significantly improve the operating practices of the business, for our benefit as shareholders. 

What did The Australian say, it was a great quote? It said “You can almost feel the economy going boom” – and not in a bad way, in a good way. The NAB Business Survey, that came out today, certainly demonstrates that in spades, with every single metric going through the roof. And if you want to leverage to this via banks, NAB’s business bank again sits at the forefront of that.

Buying and selling 

MF: What do you look at closely when considering buying a stock?

RK: As a chartered accountant, we always think about 3 things. 

The first one is: Is it a good business? It’s not relative to other businesses but in an absolute sense. The 3 things we look for within ‘Is it a good business’ is: can I say with a high degree of certainty… in what I’m actually buying? So underlying the different earnings components and risk components. Secondly, can I predict with reasonable certainty what the future holds for the company? Thirdly, most importantly, who holds the power in every stakeholder relationship? That’s where we spend most of our time. 

Secondly: Is management trustworthy and competent? 

And then thirdly: Can we buy it at the right price?

There’s a lot of qualitative stuff we look at. And we spend a lot of time trying to understand the language that management is using in describing their business in order to gain confidence. That they’re focused on the right things and that their story is consistent.

MF: What triggers you to sell a share?

RK: For every investment we hold, we have an investment thesis that tells us how we’re going to preserve capital and make money. 

More importantly, we have milestones against which we test that investment thesis. At any stage, those milestones indicate [if] the investment thesis is not playing out as we anticipated, in a material way – then there’s no reason for us to hold it. 

So if it’s not going to be an annuity stream sometime in the future; if management has lied to us and therefore we can’t rely on anything they say; if the industry structure has changed; and sometimes quite simply, if the share price just gets so high that we can’t get an after-tax cash earning sealed commensurate with our requirements, then there’s no point holding it any more.

Tomorrow in part 2 of our interview, Kessler reveals the ASX healthcare share that’s set to explode.

More reading

• ASX 200 Weekly Wrap: After record high, ASX dips on inflation fears
• Top brokers name 3 ASX shares to sell next week
• 2 quality ASX dividend shares for income investors
• What drove the Commonwealth Bank (ASX:CBA) share price this week?
• Top brokers name 3 ASX dividend shares to buy today

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why I’m loving this ASX bank share at the moment: fundie appeared first on The Motley Fool Australia.

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The Carsales.Com Ltd (ASX: CAR) share price has returned from its trading halt this morning and is tumbling lower.

At the time of writing, the auto listings company’s shares are down 7% to $18.17.

Why was the Carsales share price in a trading halt?

Carsales requested a trading halt so that it could raise funds for a major new acquisition.

Last week the company signed an agreement to acquire a 49% stake in United States-based business Trader Interactive for approximately US$624 million (A$800 million). It also has a call option to acquire the remaining interest on specified terms in the future.

Trader Interactive is a leading platform of branded marketplaces in the US. It provides digital marketing solutions and services across commercial truck, recreational vehicle (RV), powersports, and equipment industries.

The business generated adjusted revenue of US$123 million and adjusted EBITDA of US$61 million in 2020. The latter means its EBITDA has now grown by a compound annual growth rate of 13% over the last five years.

Management notes that the acquisition represents a strategically compelling opportunity to further build out its international scale and industry diversification with exposure to attractive verticals in the United States. It is expected to be earnings per share positive on a pro-forma basis, with mid-single digit earnings per share accretion from year one.

Equity raising

This morning Carsales announced the successful completion of the institutional component of its $600 million pro rata accelerated renounceable entitlement offer with retail rights trading.

According to the release, the institutional entitlement offer raised approximately $428 million at the offer price of $17.00. This represents a 12.9% discount to its last closing price of $19.51.

Management advised that the offer was well supported by institutional shareholders, with a take-up of approximately 83% by eligible institutional shareholders.

Carsales’ CEO, Cameron McIntyre, said “We are very pleased with the level of support we have received from our institutional shareholders, in particular domestic institutional investors who took up 99% of their entitlements. We firmly believe that this acquisition creates compelling value for our shareholders through accelerating our international growth strategy by providing us with exposure to a significant market in the United States across attractive non-automotive verticals.”

The company will now push ahead with the retail component of the entitlement offer. This is expected to raise approximately $172 million, taking the total to approximately $600 million. The retail entitlement offer will open on Wednesday 19 May 2021 and close on Wednesday 2 June 2021.

More reading

• 5 things to watch on the ASX 200 on Monday
• Is the Carsales (ASX:CAR) share price in the buy zone after its acquisition?
• 5 things to watch on the ASX 200 on Friday
• Brokers name 3 ASX shares to buy now
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended carsales.com Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Incitec Pivot Ltd (ASX: IPL) share price is sinking lower on Monday morning.

At the time of writing, the industrial chemicals company’s shares are down 5% to $2.30.

Why is the Incitec Pivot share price sinking?

The reason for today’s weakness in the Incitec Pivot share price was the release of its half year results this morning.

For the six months ended 31 March, the company reported a 6.7% decline in revenue to $1724.1 million. This was driven by a 13% reduction in Dyno Nobel Americas revenue to $671.1 million and a 7% decline in Dyno Nobel APAC revenue to $455.8 million. This offset a 2% lift in Fertilisers APAC revenue to $628.3 million.

Things were worse for its earnings, with Incitec Pivot reporting earnings before interest and tax (EBIT) of $110 million. This was down 30.8% from $159 million in the prior corresponding period. However, this includes a $59 million impact from planned turnarounds and a $14 million impact from unplanned outages.

This led to a 44% decline in statutory net profit after tax to $36 million, earnings per share of 1.9 cents, and a fully franked interim dividend of 1 cent per share.

How does this compare to expectations?

As you might have guessed from the Incitec Pivot share price performance, this result fell short of expectations.

According to a note out of Goldman Sachs, its analysts were expecting the company to report revenue of $1,825 million, EBIT of $171 million, and an interim dividend of 2.2 cents per share.

Management commentary

Incitec Pivot’s Managing Director and CEO, Jeanne Johns, said: “Our first half result was impacted by the COVID delayed scheduled turnarounds as well as some unplanned manufacturing outages. Our underlying explosives and fertilisers business performance was strong, reflecting the continued uptake of our premium technology offering as well as the resilience of our end markets.”

“While the Waggaman plant has demonstrated it’s capable of very good production runs, the recent issues at our plant are clearly disappointing and our expert taskforce is working hard to get the plant back up and running at nameplate.”

She continued: “During the first half of the year, our Americas and Asia Pacific explosives businesses performed well on the back of growing momentum from customers for our premium technology. We are expecting technology growth pull though in our key markets of Australia and the US, along with other markets as they recover from the pandemic.

“Pleasingly, our fertiliser business returned to profit during the half as we responded to stronger seasonal outlook for rain and commodities. As we progress our strategy to become a soil health company, good rainfall events across eastern Australia position us well to deliver for the agricultural sector in the second half.”

Outlook

The company’s CEO, Jeanne Johns, believes Incitec Pivot is positioned for a stronger second half.

She said: ““We are well positioned to deliver a stronger second half, with reduced turnaround activity and favourable commodity pricing and conditions in our key agricultural and resources markets.”

However, no formal guidance has been given for the period or the full year. And judging by the Incitec Pivot share price, investors aren’t overly convinced this will be the case.

More reading

• Why a2 Milk, American Pacific Borate, Appen, & Incitec Pivot are tumbling lower
• Incitec Pivot (ASX:IPL) share price sinks 7% on Waggaman update
• Why the Incitec (ASX:IPL) share price is in the spotlight today
• Looming grocery price shock to impact on these ASX shares

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Incitec Pivot (ASX:IPL) share price sinks 5% on half year update appeared first on The Motley Fool Australia.

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