The S&P/ASX 200 Index (ASX: XJO) is on course to record a very strong gain. In afternoon trade, the benchmark index is up 1.2% to 7,181.9 points.

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

Betmakers Technology Group Ltd (ASX: BET)

The BetMakers share price is down 15% to $1.36. Investors have been selling the betting technology company’s shares after it announced a $4 billion offer to acquire the Tabcorp Holdings Limited (ASX: TAH) Wagering and Media business. This comprises $1 billion in cash and $3 billion in BetMakers shares. The latter could significantly dilute existing shareholders.

CSR Limited (ASX: CSR)

The CSR share price has fallen 5% to $5.59. This decline is almost entirely due to the building materials company’s shares trading ex-dividend this morning. Eligible shareholders can look forward to receiving its fully franked 24 cents per share final dividend in their bank accounts on 2 July.

Electro Optic Systems Hldg Ltd (ASX: EOS)

The Electro Optic Systems share price has tumbled 8.5% to $3.83. This follows the release of the communications, defence, and space company’s annual general meeting update this morning. At the meeting, the company advised that it expects full year EBIT of between $20 million and $25 million. However, this is before its SpaceLink acquisition costs of $17 million. Management also warned that COVID-19 could have an impact on its financial and operational performance.

Fisher & Paykel Healthcare Corp Ltd (ASX: FPH)

The Fisher & Paykel Healthcare share price is down 2% to $27.37. This decline appears to have been driven by a broker note out of Credit Suisse. According to the note, the broker has downgraded the medical device company’s shares to a neutral rating and cut the price target on them to $30.00. It appears disappointed by management’s uncertain outlook for FY 2022.

More reading

• Electro Optic (ASX:EOS) share price sinks 8% following AGM
• Why Inghams, Latitude, Rio Tinto, & Tabcorp shares are charging higher
• ASX 200 up 1.1%: Tabcorp receives $4bn offer, KKR wants Link’s PEXA business
• BetMakers (ASX:BET) share price sinks on Tabcorp takeover proposal
• ASX 200 rises, Costa smashed, Fisher & Paykel drops

The post Why BetMakers, CSR, EOS, & Fisher & Paykel Healthcare are tumbling appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3utXe8y

There are some exchange-traded funds (ETFs) that might be able to provide investors with strong diversification to international shares.

The ASX only accounts for a small part of the global share market. There are many more businesses out there that Aussies can’t invest in on the ASX.

ETFs can be a way to get that exposure whilst sticking to investments on the ASX.

These two investments could be ideas:

iShares S&P 500 ETF (ASX: IVV)

The S&P 500 is an index of US-listed businesses. They are among the biggest in the world. At the top end of the list are global leaders of their industries.

It has a long-term track record of delivering returns for investors because the US is where many of the world’s strongest businesses are invested.

This particular ETF has a very cheap annual management fee of just 0.04% per annum. That means that hardly any of the investor returns are lost to fees. Active fund managers can charge both management fees and performance fees, which can reduce total returns over time.

You may recognise some of the largest holdings in the ETF’s portfolio: Apple, Microsoft, Amazon, Facebook, Alphabet, Berkshire Hathaway, JPMorgan Chase, Tesla, Johnson & Johnson, UnitedHealth, Nvidia, Visa, Home Depot, Procter & Gamble, Walt Disney, Bank of America, Mastercard and PayPal.

The performance of the S&P 500 has been superior to the S&P/ASX 200 Index (ASX: XJO) in recent years. Over the last three years the iShares S&P 500 ETF has produced an average of 17.4% and over the last decade it has been an average of just over 18%.

According to Blackrock, iShares S&P 500 ETF has a price/earnings ratio of just over 32x.

Betashares Nasdaq 100 ETF (ASX: NDQ)

This is another ETF that is focused on the US share market. However, this one is only invested in businesses that are listed on a particular stock exchange in the US – the NASDAQ. The New York Stock Exchange is utilised more by old-school businesses whilst many tech shares are listed on the NASDAQ.

Not only is this ETF more focused on tech, but it also only has 100 holdings. So investors can gain more exposure to the largest tech names.

These are some of the largest positions in the portfolio right now: Apple (10.8%), Microsoft (9.6%), Amazon (8.3%), Alphabet (7.6%), Facebook (4.1%), Tesla (3.8%), Nvidia (3%) and Paypal (2.4%).

The tech giants have performed strongly over the last several years, which has helped the returns of the Betashares Nasdaq 100 ETF. Since inception in May 2015 it has produced an average return per annum of 21.6%. Over the last three years the average return per annum has been 27.5%.

The biggest businesses are the ones that are shaping the way we are living in certain areas in our lives, particularly since the onset of COVID-19. For example, Microsoft offers huge amounts of functionality for businesses and individuals in the shift to digital working and learning.

More reading

• This tech ETF has returned 30% for ASX investors in the past year
• A2 Milk and EML were among the most traded ASX shares last week
• 2 outstanding tech ETFs for ASX investors
• A2 Milk and Zip were among the most traded ASX shares last week
• These 3 ASX ETFs are some of the cheapest on the market

The post 2 ETFs that could be buys for strong diversification appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3hTTcng

The Peninsula Energy Ltd (ASX: PEN) share price is sinking today following the company’s capital raising efforts.

At the time of writing, the uranium mining company’s shares are down 8.11% to 17 cents.

What’s happening with the Peninsula Energy share price?

A major catalyst for the fall in today’s Peninsula Energy share price is an impending share dilution. According to today’s announcement, Peninsula Energy has completed a share placement to enable it to fund the purchase of natural uranium concentrates.

The company received commitments from new and existing international and domestic institutions, raising $13.4 million before costs.

According to the placement, about 89.3 million shares will be issued at a price of 15 cents apiece. This represents a 19% discount to Peninsula Energy shares’ last closing price of 18.5 cents on 25 May before they entered a trading halt.

Peninsula Energy will use its existing placement capacity to create the new shares. Under listing rule 7.1, this allows up to 15% of its total shares to be issued without shareholder approval.

The proceeds of the placement will be used to settle the purchase of 300,000 pounds of natural uranium concentrates. The company has entered into a binding agreement to purchase the concentrates at a price of US$31.35 per pound.

The settlement is due next month, with the product to be stored at the Cameco facility in Ontario, Canada.

Management said buying the uranium will support the company’s plans for its flagship Lance Project in Wyoming, United States.

Lastly, Peninsula Energy says it will launch a $2 million share purchase plan to eligible investors. Up to 13.3 million new shares will be created, with the monies being put towards corporate purposes and working capital.

Commentary from management

Peninsula managing director and CEO Wayne Heili said:

The acquisition of physical uranium underpins our focus on the transition of the Lance Project to a low pH ISR operation. Adding physical uranium to our balance sheet provides significant flexibilities and potential upside as we move towards the restart of operations.

Importantly, holding uncommitted uranium inventories at a time when there is a strong and continued push by the United States Government to support nuclear power generation and the domestic production of critical minerals like uranium, enhances our ability to successfully participate in expanding market opportunities.

The Peninsula Energy share price is up by around 50% since this time last year.

More reading

• What’s happening with the Peninsula Energy (ASX:PEN) share price?

The post Why the Peninsula Energy (ASX:PEN) share price is plummeting 8% today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2TfRthG

Shares in Downer EDI Limited (ASX: DOW) are on the rise today after news the company’s joint venture has been awarded the contract to run Sydney’s Northern Beaches bus services.

At the time of writing, the Downer share price is up by 2.86%, with shares in the company swapping hands for $5.75.

The $900 million contract will see Keolis Downer run the Northern Beaches and Lower North Shore bus services for 8 years, beginning in October 2021.

Keolis Downer is a joint venture between multinational transport company Keolis and Australian industrial company Downer.

Let’s take a closer look at the news boosting the Downer share price today.

$900 million bus services contract

According to Keolis Downer, it hopes to use its time running Sydney’s Northern Beaches buses to introduce more frequent services and improved sustainability.

The $900 million contract was awarded by Transport for New South Wales (TfNSW).

During the 8-year contract, Keolis Downer will oversee a range of TfNSW initiatives, including the introduction of 125 electric buses. The electric buses will run from newly electrified depots in Brookvale and Mona Vale.

Keolis Downer’s on-demand transport service Keoride will also become a permanent part of the network. Keoride allows public transport users to prebook a bus to arrive at a particular place and time. It then aligns other users’ requests to make a custom public transport network based on users’ needs.

Keolis Downer will also introduce innovative headway technology. The technology will help bus drivers keep track of whether they’re running according to schedule. The company expects the technology to increase the reliability of the Northern Beaches bus service.

Commentary from management

Keolis Downer’s CEO David Franks said:

We are very proud to partner with TfNSW to support the future growth and transformation of the Northern Beaches. Drawing on our experience locally and globally, we will launch a range of new initiatives to enhance the customer experience building from the already excellent bus services in the area…

We look forward to further engaging with the community to deliver a safe, efficient and reliable transport system that supports the liveability and future prosperity of this vibrant, growing region.

Downer share price snapshot

Downer shares have been delivering a solid performance on the ASX lately. Currently, the Downer share price is up by around 8% year to date. It’s also gained around 25% since this time last year.

The company has a market capitalisation of around $3.9 billion, with approximately 701 million shares outstanding.

More reading

• ASX winners and losers from the Victorian budget
• The ASX healthcare giant ready to explode: fundie
• Wilson Asset Management (WAM) thinks these 2 ASX shares are a buy

The post Here’s why the Downer (ASX:DOW) share price is gaining today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2SxXndJ

The S&P/ASX 200 Index (ASX: XJO) has done it again folks. The flagship ASX index has once again hit a new record all-time high today during mid-day trading. Just before midday, the ASX 200 clocked in at 7,183 points, a slight beat on the previous all-time high of 7,172 points (which was, unfortunately, a slightly more aesthetically pleasing number). At the time of writing, the ASX 200 has pulled back from that high, but it still sitting at 7,174.6 points, up 1.12% for the day.

When it rains, it pours, and the same can be said of record highs. It took the ASX 200 more than a year to recover from the coronavirus-induced share market crash that happened in March last year. It was on 21 February 2020 that the ASX had its last all-time high before this month – 7,162 points. That high watermark stood until 11 May 2021 because, shortly after it was hit, the ASX 200 collapsed more than 32% over the following month. Since 23 March, the index is now up close to 50%. In saying that, the ASX 200 has actually lagged other markets around the world. The US S&P 500 Index (INDEXSP: .INX) crossed its pre-COVID all-time high back in August last year. it has since printed record highs like confetti. It’s now a whopping near-25% above where it was in February 2020.

ASX 200 record high: how did we get here?

Well, the performance of any market capitalisation-weighted index depends mostly on the performance of its most heavily weighted shares. In the ASX 200’s case, that would be the big four banks, the big iron ore miners and CSL Limited (ASX: CSL). Well, most of those shares have had a top month, as you might expect. Commonwealth Bank of Australia (ASX: CBA) recently broke $100 a share for the first time ever. In fact, CBA has been the ASX share we can probably put this new high down to the most. It’s currently sitting at the top of the ASX 200 with a hefty market capitalisation of $177.1 billion, having climbed close to 20% in 2021 so far. The other ASX banks are also at, or over, their pre-COVID highs.

BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue Metals Group Limited (ASX: FMG) aren’t too high from their own all-time highs that have all occurred in recent months. CSL shares have actually been one of the laggards in the ASX 200. But even CSL is up more than 17% over the past 2½ months or so.

So it’s been the collective efforts of these companies that we can largely thank for pushing up the ASX 200 to yet another all-time high. What’s next? Well, no one knows. But that’s what makes investing fun.

More reading

• 2 top ASX 200 shares that might be buys today
• What’s with the Fortescue (ASX:FMG) share price today?
• Why Inghams, Latitude, Rio Tinto, & Tabcorp shares are charging higher
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises, Costa smashed, Fisher & Paykel drops

The post Breaking! ASX 200 hits another record share market high appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3c1P5ln

The S&P/ASX 200 Index (ASX: XJO) has some shares that could get counted as top ideas today to think about.

These businesses are ones that are among the leaders in Australia and may still have plenty of growth potential.

Sonic Healthcare Ltd (ASX: SHL)

Sonic Healthcare is a pathology business with a market capitalisation of over $16 billion according to the ASX.

It has seen a high level of profit growth during FY21 because of all of the COVID-19 testing. FY21 saw net profit rise 166% to $678 million.

With this high level of profit, Sonic is increasingly focused on further growth opportunities, including acquisitions, contracts and joint ventures, supported by its “very strong” balance sheet. At the time of the half-year result, it was bidding on “significant” opportunities in Australia, the UK, the USA and Alberta in Canada.

Its pre-COVID, global base business is becoming increasingly less affected by social restrictions and fear of infection, through better community understanding of the dangers in delaying or avoiding essential healthcare services. The ex-COVID business only saw a 1% drop in revenue in the first six months of FY21.

Sonic is currently benefiting from the operating leverage of using its existing infrastructure. That’s how profit was able to grow 166%, but revenue ‘only’ grew 33%.

The healthcare ASX 200 share expects demand for COVID-19 PCR testing to continue into the foreseeable future. There’s also the potential growing demand for COVID-19 serology testing, in other words their immunity status.

According to Commsec, the Sonic share price is valued at 23x FY22’s estimated earnings.

Magellan Financial Group Ltd (ASX: MFG)  

Magellan is an Australian-based fund manager that has around $110 billion of funds under management (FUM).

The business continues to see an increase in its total FUM at a high profit margin. Magellan’s funds management’s business has a cost to income ratio (excluding performance fees) of 16.8%.

Magellan has been looking into other initiatives to grow long-term profit. It has taken investment stakes in external ‘principal investments’ that meet certain criteria. The board has set a pre-tax hurdle of 10% per annum over the business cycle for the principal investment portfolio.

Some of the early investments have been Barrenjoey, Finclear and Guzman y Gomez.

In the FY21 half-year result, average FUM grew 9% to $100.9 million, net profit rose 3% and the interim dividend increased 5%.

Magellan has recently told investors to expect the launch of Magellan ‘Futurepay’. That’s its upcoming retirement income focussed solution. It will be launched on 1 June 2021.

The CEO of Magellan Brett Cairns said:

We are pleased to announce the launch of Magellan FuturePay. We believe it will help address the challenges faced by many investors and their advisors.

Ord Minnett rates Magellan as a buy with a price target of $52. The broker has estimated that Magellan is priced at 18x FY22’s estimated earnings.

More reading

• Breaking! ASX 200 hits another record share market high
• 5 things to watch on the ASX 200 on Friday
• ASX 200 rises, Costa smashed, Fisher & Paykel drops
• The RBNZ could hike rates in 2022. Will the RBA follow suit?
• Magellan (ASX:MFG) is launching a new retirement fund. Here’s what we know

The post 2 top ASX 200 shares that might be buys today appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3wGHII2

You may have seen the name Catherine ‘Cathie’ Wood pop up on your investing radar over the past year or so. Or perhaps the name of the investment company she runs – ARK Invest. Ms Wood and ARK have attracted some of the most intense investor interest, particularly amongst retail investors, of almost any US fund manager in recent times. ARK’s funds even pop up on the most popular US shares that ASX investors trade from time to time, which the Fool covers most weeks.  So who is Cathie Wood and ARK? And why are they now so famous?

ARK is a funds management business over in the United States. Ms Wood is its founder, CEO and chief investment officer. ARK has gained its fame through its suite of exchange-traded funds (ETFs), which specialise in high-growth, future-facing and disruptive companies, usually in the tech space. Ms Wood first rose to fame with her uber-bullish views on some prominent tech shares.

Wood drew a lot of eyeballs a couple of years ago with her unabashedly optimistic views on the electric car and vehicle manufacturer Tesla Inc (NASDAQ: TSLA). Back in May 2019, Cathie Wood surprised even the more bullish investors of Tesla when she spruiked a US$5,905 share price target for the company. At the time, Tesla was a US$40 share (adjusted for last year’s stock split). It was also just before Tesla went on its millionaire-minting run. Over the following year or two, Tesla was to shoot up more than 1,100% in value. The fact that Ms Wood was one of the first investors to come out of the gates with such a bullish price target for Tesla earned her and Ark a lot of respect in hindsight.

Growth at scale

But since the days of calling Tesla’s success, Cathie Wood and ARK also put some pretty convincing runs on the board. Its flagship fund – the ARK Innovation ETF (NYSE: ARKK) – returned an impressive near-40% in 2019, and almost 150% in 2020. ARK Innovation is a fund that incorporates the ‘best ARK picks’ from its other, more sector-specific ETFs. Between 1 January 2021 and 12 February, it added another ~25% or so. That’s enough performance to catch any investors’ eye. Other ARK ETFs performed similarly well, if not better, over these time frames. 

But since February 2021, things haven’t been entirely ‘coming up Milhouse’ for ARK funds. The ARKK ETF has corrected sharply since February when it reached its peak of US$159.70 a unit. On today’s pricing, ARKK units are back to US$112.28, giving up more than 28% off of that high.

So is ARK a spent force? Let’s take a deeper dive.

What’s in an ARK ETF?

Here are the top holdings, and their weightings, in the flagship ARKK ETF, as of 27 May:

ARKK Holding	ETF Weighting (%)
Tesla Inc (NASDAQ: TSLA)	10.24%
TelaDoc Health Inc (NYSE: TDOC)	6.05%
Roku Inc (NASDAQ: ROKU)	5.8%
Square Inc (NYSE: SQ)	4.69%
Shopify Inc (NYSE: SHOP)	4.17%
Zoom Video Communications Inc (NASDAQ: ZM)	4.07%
Twilio Inc (NYSE: TWLO)	3.64%
Coinbase Global Inc (NASDAQ: COIN)	3.63%
Spotify Technology SA (NYSE: SPOT)	3.5%
Unity Software Inc (NYSE: U)	3.46%

As you can see, the fund is heavily weighted to high-growth tech shares. We have Tesla (naturally taking out a large chunk at the top there. But we also have companies like Roku, Square, Shopify, Spotify, Zoom and Coinbase.

These companies are all very similar in nature. They are disruptive, tech-based companies that have long growth runways, and a lot of future potential. But they are also not too profitable today, and still very much in ‘growth phase’. These companies are at the stage of their lives where they are prioritising revenue growth over profitability. That’s why most of them don’t even have price-to-earnings (P/E) ratios yet. Or if they do, they are normally in the triple-digits. Take Tesla. Its P/E ratio is currently sitting at 635.7.

What about some other ETFs?

We see similar patterns in some of ARK’s other popular ETFs.

Here are the top ten holdings for the ARK Fintech Innovation ETF (NYSE: ARKF) fund:

ARKF Holding	ETF Weighting (%)
Square Inc(NYSE: SQ)	10%
Shopify Inc (NYSE: SHOP)	5.25%
Sea Ltd (NYSE: SE)	4.81%
Zillow Group Inc (NASDAQ: Z)	4.68%
PayPal Holdings Inc (NASDAQ: PYPL)	4.58%
Adyen NV (AMS: ADYEN)	3.42%
Pinterest Inc (NYSE: PINS)	3.38%
Twilio Inc (NYSE: TWLO)	3.35%
JD.com Inc (NASDAQ: JD)	3.35%
Tencent Holdings ADR (OTCMKTS: TCEHY)	3.27%

And here is what the ARK Next Generation Internet ETF (NYSE: ARKW) fund holds:

ARKW Holding	ETF Weighting (%)
Tesla Inc (NASDAQ: TSLA)	10.22%
Shopify Inc (NYSE: SHOP)	4.87%
Twitter Inc (NYSE: TWTR)	4.72%
Square Inc (NYSE: SQ)	4.63%
TelaDoc Health Inc (NYSE: TDOC)	4.47%
Grayscale Bitcoin Trust (OTCMKTS: GBTC)	4.39%
Roku Inc (NASDAQ: ROKU)	3.95%
Spotify Technology SA (NYSE: SPOT)	3.86%
Twilio Inc (NYSE: TWLO)	3.7%
Coinbase Global Inc (NASDAQ: COIN)	3.46%

Again, very similar businesses – high growth, disruptive, priced for future profitability rather than the money they make today.

So why have ARK funds had a bad few months?

And now we can look at the main problem that these funds face. They tend to do well, really well, when the market is running hot, and growth companies are ‘in vogue’. By definition, growth companies tend to outperform the broader markets during a bull run and underperform during a bear market. 2019, and post-COVID 2020 were decidedly the former.

But why the underperformance since February 2020? After all, the US S&P 500 Index (INDEXSP: .INX) has gone and pushed to more record highs since 12 February. Most recently on 7 May.

Well, another factor at play has been fears of inflation and rising bond yields, which have spiked in the months since 12 February. According to CNBC, the US 10-year Treasury yield was well under 1% at the start of 2021 and was around 1.18% on 12 February. This yield reached a high of roughly 1.75% in late March and still stands at 1.61% today.

Rising bond yields typically turn sentiment against companies who are being priced on future earnings, rather than what they offer today. In other words, most of the stocks that ARK funds hold. We saw similar gyrations in our own ASX tech sector between February and May.

What does the future hold for ARK?

The big corrections in the value of Ark funds over the past few months might have dented some of the optimism that many of its investors would have been feeling in the months and years prior. But if the market was once again to fall back in love with the kinds of future-facing tech companies that ARK invest in, it is conceivable that we will see ARK funds back at all-time highs. Time will only tell. But Cathie Wood and ARK are probably not going away anytime soon regardless – as barometers of high-octane growth stock investing if nothing else.

More reading

• Tesla Model 3 losing top safety designations
• Apple (NASDAQ:AAPL) job ad sparks Bitcoin rumours among enthusiasts
• Stock markets stay strong; can Ford and Tesla both win?
• Tesla dumps radar in lower-cost models
• 1 in 4 Aussies surveyed want their salary paid in Bitcoin

The post An ASX guide to Cathie Wood and ARK Invest ETFs appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3wFhCow

The Appen Ltd (ASX: APX) share price is pushing higher on the day of its annual general meeting (AGM).

In afternoon trade, the artificial intelligence (AI) data annotation products and solutions provider’s shares are up 2% to $13.54.

What happened at the AGM?

There were a couple of talking points from Appen’s AGM earlier today. The first was management reaffirming its guidance for FY 2021.

According to the company’s AGM update, Appen has maintained its guidance for underlying earnings before interest, tax, depreciation and amortisation (EBITDA) guidance. It continues to expect underlying EBITDA of US$83 million to US$90 million this year. This represents constant currency growth of 18% to 28% year on year.

Once again, management advised that its underlying EBITDA is expected to be heavily weighted to the second half. This is due largely to key projects that were delayed in late 2020 returning with a skew to delivery in the second half.

In addition, the first half cost base reflects the full year cost of 2020 hiring and its resource optimisation benefits aren’t expected to flow through until the second half.

What else?

Perhaps the biggest talking point from the Appen AGM was its shareholder vote, and particularly the voting on its remuneration report.

A total of 47.6% of votes were cast against the remuneration report, giving Appen its first strike. If shareholders were to give it a second strike next year, it would result in a board spill.

They also came very close to blocking the granting of performance rights to the company’s CEO, Mark Brayan. Approximately 43.9% of shareholder votes were against the granting of 55,908 performance rights.

With the Appen share price down 70% from its 52-week high, shareholders appear unhappy with the way the company has been run recently and are making this known today.

More reading

• ASX 200 Weekly Wrap: ASX whipsaws in volatile week
• These were the best performers on the ASX 200 last week
• 3 top-performing ASX shares this week
• Why Appen, Kogan, Nufarm, & Red 5 shares are sinking
• Here’s why the Appen (ASX:APX) share price is sinking 6% today

The post What happened at the Appen (ASX:APX) AGM today? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2SBhDLG

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.

ARK Invest CEO Cathie Wood has been one of the best investors of the modern era.

Her flagship exchange-traded fund ARK Innovation ETF (NYSEMKT: ARKK), which focuses on disruptive tech stocks like Tesla, Roku, and Square, has returned more than 400% since its founding in 2014, outperforming the S&P 500 by nearly a factor of four, and Wood garnered much acclaim when five of her funds returned more than 100% last year.

Though ARK ETFs have mostly slipped this year with the broader sell-off in growth stocks, given her track record, it’s worth paying attention to what Wood has to say.

The ARK chief has been a big backer of Bitcoin (CRYPTO: BTC) and said at a Barron’s virtual conference last November that she saw the cryptocurrency hitting $500,000. Amid the recent crypto crash, Wood reaffirmed her price target on Bitcoin, though she acknowledged the environmental concerns that led Tesla CEO Elon Musk to say his company would no longer accept the digital currency as payment.

Let’s take a look at Wood’s argument before we examine whether it can hit $500,000.

Wood’s take

Back in Nov. 2020, Wood argued that a number of catalysts were supporting Bitcoin’s growth. She called it the reserve currency of the digital ecosystem and essentially said it was the crypto equivalent of the dollar.

Wood also noted that the central bank distributed currencies (CBDCs) that countries like China and the U.S. are beginning to create are bullish for Bitcoin and other crypto coins. They will help legitimize cryptocurrencies by giving the idea behind them a government stamp of approval and by highlighting the advantages of cryptocurrencies in general. Those include the fact digital coins like Bitcoin are pseudonymous and can’t be tracked to the user, unlike the digital yuan that China is launching.

The ARK chief also pointed to the increasing institutional embrace for Bitcoin, and said that if institutions were to allocate around 5% of their funds to Bitcoin the way they have with asset classes like real estate or emerging markets, that would lift the price to $400,000 or $500,000.

At those levels, Bitcoin would be worth roughly the same as all of the gold in the world. That fits with another argument for Bitcoin’s value, as many backers claim it’s digital gold due to it being capped at 21 million coins, which creates artificial scarcity.

Can Bitcoin really get to $500,000?

Back in 2018, Wood slapped a split-adjusted $800 price target on Tesla, which seemed outlandish at the time as it called for the stock to increase by more than 1,000%. However, Tesla eclipsed that price last year, making Wood look prophetic.

The $500,000 price target for Bitcoin implies a similar gain as the currency would have to increase about 12 times to reach that mark. 

The price target itself makes a good headline, but it’s less relevant than Wood’s overall bullishness. Price targets give investors a perception of precision that isn’t possible even in the stock market, and is even less realistic in an asset class without any fundamentals like cryptocurrency.

Wood’s math to get to a $500,000 Bitcoin price assumes that institutional investors would build up to a mid-single-digit allocation in the cryptocurrency, something she also said was “not going to happen.” The example was more of an academic one than a realistic one, and an example, along with Bitcoin’s supposed equivalence to gold, of how Bitcoin could reach a price of $500,000.

In other words, investors shouldn’t expect Bitcoin to hit such a level anytime soon, especially as that would imply adding roughly $10 trillion to the cryptocurrency’s market value, or the equivalent of about a third of the S&P 500.

Still, Wood’s bullish stance shouldn’t be ignored as she has been right so far about several other disruptive innovations, and her funds have been aggressively gaining exposure to Bitcoin through purchases of the Grayscale Bitcoin Trust and Coinbase.

Bitcoin’s recent volatility shows the asset still remains highly speculative and confidence in its long-term growth is fickle, but if it does become the digital reserve currency as Wood argued, it could hit her price target given a long enough time frame.

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

More reading

• Apple (NASDAQ:AAPL) job ad sparks Bitcoin rumours among enthusiasts
• 1 in 4 Aussies surveyed want their salary paid in Bitcoin
• Why 1 analyst thinks the recent crypto collapse is not so different from 2017
• A cracking year so far for Super, and where to for Bitcoin? Motley Fool CIO Scott Phillips on Sunrise
• Crypto is crashing: Is now the time to invest?

The post Cathie Wood thinks Bitcoin could reach $500,000. Is she right? appeared first on The Motley Fool Australia.

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

from The Motley Fool Australia https://ift.tt/34rbap2

Fortescue Metals Group Ltd (ASX: FMG) announced an update for its Iron Bridge Magnetite Project today. The Fortescue share price opened strongly this morning, pushing 2.55% higher to an intraday high of $22.84. However, its shares have given back their gains, currently trading at $22.32, 0.22% higher.

Fortescue share price flat on Iron Bridge update

Fortescue’s Iron Bridge project has raised questions in the past due to potentially higher than expected capex expenditure. As well as the company’s leadership change in February which saw the resignation of its project director, Manie McDonald.

Today, investors will receive greater visibility into the project after the completion of both technical and commercial assessments.

Fortescue reports that the Iron Bridge project is expected to deliver 22 million tonnes per annum (mtpa) of high grade 67% Fe magnetite concentrate. To add some perspective, the company mined some 204.3 million wet metric tonnes (wmt) of ore in FY20. First production is expected to take place by December 2022 and ramp up to full production rate over the next 12 to 18 months.

The company has made a number of strategic investments to enhance the product range, increase production and shipping capacity to meet today’s strong demand for iron ore.

Fortescue estimates that it will need to front up its share of US$2.5 billion to US$2.7 billion of the total US$3.3 billion to US$3.5 billion of capital expenditure. The update also flags that the joint venture has incurred capital expenditure of US$1.5 billion as at 30 April 2021, with Fortescue’s share of US$1.3 billion.

The project is expected to diversify Fortescue’s product mix, bringing on board 67% Fe content low impurity concentrate. This compares to the lower grade iron ore that Fortescue is usually known for.

From a cost perspective, the mine possesses a competitive cost structure with life of mine C1 cost estimates of US$33 to US$38 wmt.

Management commentary

Fortescue CEO Elizabeth Gains said Iron Bridge was well positioned to meet market demand and deliver strong returns for the joint venture and stakeholders.

The iron ore market fundamentals support the investment in the Iron Bridge project, and we anticipate strong demand for this high value-in-use product, which will attract a premium to the Platts 65% Fe CFR Index.

Led by our highly experienced project team, completion of the technical and commercial assessment of the Iron Bridge project has confirmed the optimal transportation solution, while also addressing contractor and logistical constraints, managing capital costs and confirming first production by December 2022.

More reading

• The richest Aussies have been revealed … so who makes the top 10?
• 4 ASX 200 resource shares poised to deliver: AMP Capital
• The Champion Iron (ASX:CIA) share price lifts on 419% profit news
• The ASX dividend party’s here: how to get yours
• Up then down, what’s with the Fortescue (ASX:FMG) share price?

The post What’s with the Fortescue (ASX:FMG) share price today? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2RUD1LH