Later today the Reserve Bank will meet and could take the cash rate down to zero.

While this would be a blow for income investors, don’t worry, because the Australian share market is home to a number of companies paying shareholders dividends.

Two ASX dividend shares with attractive yields are listed below. Here’s what you need to know about them:

BWP Trust (ASX: BWP)

The first ASX dividend share to look at is BWP Trust. It is the owner of a total of 68 Bunnings Warehouse sites across the Australian markets.

Given the quality of the Bunnings business and its strong performance during the pandemic, the home improvement giant has been a fantastic tenant to have in the current environment.

So much so, BWP has been able to collect its rent largely as normal during the crisis, allowing it to continue paying its distributions.

In FY 2020, the BWP board lifted its distribution to 18.29 cents per unit and advised that a similar payout is expected this year. Based on the current BWP share price, this represents a 4.25% yield.

Rural Funds Group (ASX: RFF)

Another ASX dividend share to consider is Rural Funds. It is a real estate investment trust (REIT) that owns a diversified portfolio of high quality Australian agricultural assets

At the end of FY 2020, the company owned a total of 61 properties with a combined value of $1 billion and a weighted average lease expiry (WALE) of 10.9 years. These leases also include rental increases which are designed to allow the Rural Funds board to increase its distribution by 4% per annum.

This year the company intends to do exactly that and is forecasting a full year distribution of 11.28 cents per unit. Based on the current Rural Funds share price, this works out to be a 4.6% yield.

More reading

• 3 reasons why Rural Funds (ASX:RFF) is a strong ASX dividend share
• 3 ASX dividend shares with yields above 4%
• 2 high quality ASX shares for your retirement portfolio
• 2 reliable ASX dividend shares for income investors to buy
• 3 top ASX dividend shares to buy for income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post These ASX dividend shares offer attractive yields appeared first on The Motley Fool Australia.

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

There are some shares within the S&P/ASX 200 Index (ASX: XJO) that keep growing their dividends to investors.

Here are three examples:

Sonic Healthcare Ltd (ASX: SHL)

This ASX 200 dividend share has increased its income payment to shareholders every year for around a decade.

If you’re not sure what Sonic does, it’s a global pathology business which is currently involved in the fight against COVID-19. It’s one of the companies that is doing millions of tests.

Despite the terrible impacts that COVID-19 is having on the northern hemisphere, Sonic is actually seeing a return to growth for its core pathology business in many of the European countries that it operates. The US and UK were still struggling in the last update.

However, whilst core pathology is doing fairly well, the COVID-19 testing said that business is going gangbusters.

In the first quarter of FY21, revenue went up 29% and earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 71%. At its annual general meeting (AGM) update, Sonic said that October 2020 revenue was around 33% higher than October 2019. The base business was showing less impact than the first waves and COVID-19 testing was at record highs.

Sonic currently has a trailing partially franked dividend yield of 2.4%.

APA Group (ASX: APA)

This is an ASX 200 share with one of the longest growth records with its distribution, going back around a decade and a half.

APA owns a large network of 15,000km of natural gas pipelines around Australia with a presence in every mainland state and the Northern Territory. It also owns or has interests in gas storage facilities, gas-fired power stations and renewable energy generation (wind and solar farms). APA owns, or manages and operates, a portfolio of assets and delivers half the nation’s natural gas usage.

The business recently announced a 4.3% increase for its FY21 interim distribution to 23 cents per security. That brings the rolling 12-month distribution to 51 cents per security, which equates to a distribution yield of 5.25%.

The ASX 200 share funds its distribution from its operating cashflows each year.

It regularly announces new projects that could increase the profit and operating cashflow over time.

A couple of months ago, APA announced it was investing up to $460 million to building a new 580km pipeline in WA to connect emerging gas fields in the Perth Basin to the resource rich Goldfields region, forming an interconnected WA gas grid. It’s expected to be operational by the middle of the 2022 calendar year.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

This business has the longest-running dividend growth streak on the ASX, going all the way back to 2000.

Another dividend achievement by Soul Patts is that it has paid a dividend every year going back to 1903 when it first listed in Australia, including through wars, recessions and the Spanish Flu.

It operates as an investment conglomerate. This means it takes investment stakes in other businesses. The ASX 200 share has a listed portfolio of businesses like TPG Telecom Ltd (ASX: TPG), Brickworks Limited (ASX: BKW), New Hope Corporation Limited (ASX: NHC) and Australian Pharmaceutical Industries Ltd (ASX: API).

The business also has an unlisted portfolio of businesses in sectors like resources, swimming schools, financial services, agriculture and luxury retirement living communities. Some of the specific names of private businesses that it has stakes in include Ampcontrol, Dimeo, Verdant Minerals and Seven Miles.

At the current Soul Patts share price, it has a grossed-up dividend yield of 3.1%.

More reading

• 2 strong blue chip ASX shares rated as buys by brokers
• 2 fantastic blue chip ASX shares to buy
• 3 ASX dividend shares to buy in February 2021
• 2 ASX 200 shares to buy for dividends
• 3 top ASX blue chip shares to buy

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of APA Group. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 ASX 200 shares that keep growing their dividends appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3thV6kY

Small cap ASX shares that are growing quickly have the potential of delivering good investment returns over the long-term.

Here are two that could be worth looking at:

Bubs Australia Ltd (ASX: BUB)

Bubs was one of the businesses affected by COVID-19 impacts over the last year. The Bubs share price is down 34% on where it was seven months ago because sales are lower.

In the quarter ending 30 September 2020, Bubs saw a sales decline of 34% compared to the prior corresponding period. It blamed COVID-19 disruption to the domestic daigou channel in Australia for the drop, particularly with adult milk powder products. In the update, the Bubs infant formula sales were up 9%.

However, the recent update for three months to 31 December 2020 was much stronger. Whilst overall revenue was still down 12% year on year, the $12.8 million of quarterly gross sales was 36% better than the first quarter of FY21.

This growth for the small cap ASX share was driven by various segments doing well.

China cross border e-commerce (CBEC) sales went up 27% quarter on quarter, those sales were up 34% year on year.

Adult goat dairy gross revenue increased by 45% quarter and quarter, with growth of 34% against the prior corresponding period.

The Bubs infant nutrition portfolio, which represented 57% of second quarter revenue, saw sales rise by 27% compared to the first quarter of FY21.

Bubs boasted of being the fastest growing infant formula manufacturer across Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Chemist Warehouse. It saw combined retail scan sales at the checkout go up 41% quarter on quarter and up 67% year on year.

The corporate daigou trade was still softer than pre-COVID levels, but it was up 122% on the first quarter of FY21.

Total export sales revenue was up 45% on the previous quarter and up 55% on the prior year. Management said that this validated the global expansion strategy. Export to markets outside of China saw growth of 138% compared to the prior corresponding period.

Bubs revealed that it has signed with new e-commerce platforms in Asia with products now being sold on Redmart in Singapore and Lazada in Malaysia.

EML Payments Ltd (ASX: EML)

EML Payments has a number of different payment services for clients to use. EML Payments has general purpose reloadable offerings such as gaming payouts with white label gaming cards, salary packaging cards, commission payouts and rewards programs. EML Payments also offers physical gift cards, shopping centre gift cards and digital gift cards. Finally, the small cap ASX share offers virtual account numbers.

Broker Macquarie Group Ltd (ASX: MQG) thinks that the payments business will steadily move away from the physical gift card sector and focus more on digital cards and incentive programs. Whilst the broker is expecting strong double digit growth of gross debit value (GDV) over the next couple of years, there’s a concern that the lockdowns in Europe could hamper short-term growth.

But, for now, the small cap ASX share is reporting a return to growth after the worst of COVID-19 in the first half of the 2020 calendar year.

In the FY21 first quarter, EML’s total revenue went up by 20% compared to the fourth quarter of FY20, to $40.6 million. The amount of earnings before interest, tax, depreciation and amortisation (EBITDA) generated in the FY21 first quarter was $10 million, which was 69% higher than the fourth quarter of FY20.

According to Commsec, the EML Payment share price is valued at 37x FY23’s estimated earnings.

More reading

• Top brokers name 3 ASX shares to sell next week
• 2 beaten-up infant formula ASX shares to buy
• 3 ASX growth shares to buy in February 2021
• Why Bubs, Kogan, Lake Resources, & Western Areas shares are sinking lower
• 3 reasons why the Bubs (ASX:BUB) share price could be a buy

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends EML Payments. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO, EML Payments, and Macquarie Group Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 small cap ASX shares that are growing quickly appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3jaUo4m

There are some ASX dividend shares that a number of brokers like and have rated as ‘buys’

It can be quite hard to find good businesses that are trading at a good price. One investor might say that BHP Group Ltd (ASX: BHP) is a good buy, whilst another might say that Woolworths Group Ltd (ASX: WOW) is the share to buy.

Brokers are constantly looking at businesses and share prices, thinking about what would be a good investment. There are various brokers out there like Bell Potter, Macquarie Group Ltd (ASX: MQG) and UBS that provide different recommendations about shares.  

With that in mind, these ASX dividend shares are liked by more than one broker. Of course, this still isn’t a guarantee of success – they could all be herding together.

Bapcor Ltd (ASX: BAP)

Bapcor is an auto parts ASX share that is liked by at least six brokers at the moment.

At the current Bapcor share price, it has a trailing grossed-up dividend yield of 3.3%.

The company recently updated the market to say that performance is going better than previously expected. It said that its businesses, such as Burson and Autobarn, have continued to perform strongly since the previous update.

For the five months to the end of November revenue was up 26%. Net profit after tax (NPAT) is benefiting from lower expenses in areas such as travel and other areas of discretionary expenditure.

For the first half of FY21, Bapcor anticipates it will achieve revenue growth of at least 25% compared to the first half of FY20. Net profit is expected to increase by at least 50%. This growth may help the Bapcor dividend rise in FY21.  

The ASX dividend share said that initiatives that have helped the business include a recently-launched new Autobarn store format that is delivering a significant uplift in sales. It has also done things like improved its online capabilities, revitalised its catalogues, expanded product ranges and added to its product ranges, whilst growing its footprint expansion.

The company said that the construction of the new Victorian distribution centre is progressing well with the building expected to be handed over in February 2021, with the automated picking system operational in the following six months. Management expect this will lead to significant operational benefits.

Charter Hall Long WALE REIT (ASX: CLW)

Charter Hall Long WALE REIT is a way for investors to invest in commercial property across Australia. It’s liked by at least three brokers at the moment. 

It has a diversified property portfolio with various tenants including telecommunications, government, grocery and distribution, convenience retail (service stations), pubs and bottle shops, food manufacturing, waste and recycling, and ‘other’ such as Bunnings.

The REIT has plenty of listed businesses as tenants including Telstra Corporation Ltd (ASX: TLS), BP, Woolworths, Inghams Group Ltd (ASX: ING), Coles Group Ltd (ASX: COL), Metcash Limited (ASX: MTS), Westpac Banking Corp (ASX: WBC) and Wesfarmers Ltd (ASX: WES).

This ASX dividend share has one of the longest weighted average lease expiry (WALE) statistics in the REIT industry of 14.2 years.

Its occupancy rate is currently above 97% and the REIT is steadily making more high-quality acquisitions, such as the recent BP portfolio purchase.

Charter Hall Long WALE REIT recently reaffirmed guidance that FY21 operating earnings per share (EPS) will be at least 29.1 cents per share, which reflects a forward distribution yield of 6.3% assuming a distribution payout ratio of 100%.

More reading

• 3 ASX dividend shares with yields above 5%
• Brokers think these 3 top ASX shares are buys in February 2021
• 3 ASX dividend shares to buy in February 2021
• 3 ASX shares rated as strong buys by brokers
• 4 ASX shares picked for returns in 2021 by brokers and fundies

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Bapcor, Macquarie Group Limited, and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 2 ASX dividend shares rated as strong buys by brokers appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/3j5kQMJ

On Monday the S&P/ASX 200 Index (ASX: XJO) bounced back from a heavy early decline to record a strong gain. The benchmark index rose 0.85% to 6,663 points.

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

ASX 200 poised to rise.

The ASX 200 looks set to continue its recovery on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 34 points or 0.5% higher this morning. This follows a positive start to the week on Wall Street, which in late trade sees the Dow Jones up 0.85%, the S&P 500 1.7% higher, and the Nasdaq up a sizeable 2.6%.

Credit Corp kicks off earnings season

Earnings season kicks off this morning with the release of the Credit Corp Group Limited (ASX: CCP) half year result. According to a note out of Morgans, the debt collection company is expected to deliver a strong result. Its analysts expect cash collections to be up 10% on the prior corresponding period and half year net profit to be up 2.5%. Though, the broker sees upside risk to its profit estimates.

Oil prices storm higher

It looks set to be a good day for energy producers such as Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) on Tuesday after a strong night for oil prices. According to Bloomberg, the WTI crude oil price is up 2.3% to US$53.41 a barrel and the Brent crude oil price has risen 2.3% to US$56.29 a barrel. Oil prices pushed higher after inventories declined and demand picked up.

Gold price rises

Gold miners such as Evolution Mining Ltd (ASX: EVN) and Saracen Mineral Holdings Limited (ASX: SAR) could have a good day after the gold price pushed higher. According to CNBC, the spot gold price is up 0.65% to US$1,859.40 an ounce. Also of note, the silver price jumped 9% overnight as Reddit traders try to squeeze the precious metal.

Reserve Bank meeting

This afternoon the Reserve Bank of Australia will be holding its first meeting of 2021 and will discuss the cash rate. According to the latest cash rate futures, the market is pricing in a 75% probability of a cut to zero. This would be more bad news for income investors, who will potentially have to contend with even lower rate interest rates on savings accounts and term deposits.

More reading

• ASX 200 rises, Worley dumped, Mesoblast rises
• Why the Andromeda (ASX:ADN) share price is in the news today
• On fire! 2 reasons why the Afterpay (ASX:APT) share price rocketed 12% in January
• ASX 200 down 0.2%: Zip Chair steps down, Worley crashes, Blackmores & InvoCare jump
• Worley (ASX:WOR) share price crashed on profit warning

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

from The Motley Fool Australia https://ift.tt/2MJJ1Ea

“Here’s the story, of a man named Brady…”

“Come and listen to my story about a man named Jed…”

“It’s a love story, baby, just say, ‘Yes’”

For our younger readers, the first two, of course, are lines from well-known (if a little dated) TV sitcoms, The Brady Bunch and The Beverly Hillbillies.

The last one is from Taylor Swift’s song ‘Love Story’… but you knew that.

More than just leaving you with an earworm (or three) you’ll be stuck with all afternoon, I wanted to highlight the one thing these three lines have in common — the concept of a ‘story’.

I’ll let you judge my taste in music and television shows for yourself, but one thing each highlight (Tay Tay’s song takes its inspiration from perhaps the best known love story of them all, Romeo & Juliet), is our human attraction to stories.

We can’t get enough of them.

They’re behind the success of generations of books and television shows, most recently the spate of reality TV offerings.

Humans are unavoidably sucked into stories. We relate to the characters. We love them, hate them, and want to be them.

We cheer for our favourites, and we boo the villains.

We want to know what happens next.

We don’t choose to be sucked in by a story… we just are.

I’m not the only one who’s been sucked into the ‘What do they look like now’ ads on some websites. (right?)

The ‘cliffhanger’ season ending is as overused as it is devilishly effective.

We love the tension.

The intrigue.

The drama.

We watch the winners and losers, vicariously riding the waves with them.

I’ll leave the sociologists to further break down the whats and whys of our love of a story, but I want to highlight a recent one… and why it could cost you a small fortune.

See, you’ve almost certainly heard about GameStop.

I’ve written about it recently, and tweeted about it a few times in the past week.

I’ve been asked about it on AM and FM radio and on TV.

It is, right now, all anyone wants to talk about.

And fair enough.

As a story, it has everything.

Rags to riches.

Riches to rags.

David vs. Goliath.

Mystery and intrigue.

And, yes, an AFR story quoting a reddit user who goes by the handle buttmunch.

(Don’t blame me: I don’t make this stuff up… I just report it!)

And I can understand why it has captured the attention of the financial world (and much of the rest of the world, besides).

You know what? That’s okay, as far as it goes.

I mean, I’m no fan of The Kardashians, either, but I get that some people enjoy it.

The problems start, though, when stories like these crowd out the bigger picture.

Yes, to invoke yet another story, it’s important that we don’t let GameStop’s hare outshine Aesop’s metaphorical tortoise.

As I tweeted earlier today:

“Remember the company that was the GameStop of 2004?

“Me either.

“But the All Ords is up 320% since, then (including dividends).

“Careful what you focus on…”

Or take the Enron collapse of 2001.

Since then, the All Ords is up 360%. (The S&P 500 is up slightly more — but not much).

The point?

While ‘the story’ got the headlines, the tortoise just kept on doing her thing, putting one foot in front of the other.

Which, of course, is the more important story.

The more valuable story.

The more notable story.

But it’s rarely the one that gets told.

So, by all means, enjoy the GameStop drama, if that’s your thing.

But don’t confuse the excitement with actual investing (or actual progress).

Don’t confuse an exciting (often conspiratorial) storyline with what actually matters.

I don’t know where GameStop (or the reddit mob, or the short sellers) go from here.

Truthfully, I don’t much care, either.

My investing has zero to do with shorting. Or options of any kind.

I have no interest in where an individual stock, or the market at large, goes tomorrow, this month or this year.

My investment horizon is measured in decades. So should yours, even if you’re retired.

So sure, grab the popcorn.

Enjoy the show.

But when the lights come back on, and the ushers start cleaning the cinema, don’t forget to go back home and back to what actually works:

Methodical saving, regular investing. And patience.

More reading

• GameStop chaos: Love always wins over shorting
• Silver squeeze next on the list for WallStreetBets, or is it?
• The Vmoto share price tumbles 9% despite some positive sales figures
• The worst mistake GameStop investors can make right now
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX

Motley Fool contributor Scott Phillips 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 The moral of the GameStop story? appeared first on The Motley Fool Australia.

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

The Perenti Global Ltd (ASX: PRN) share price climbed today on news the company has secured a major underground mining contract extension.

From a negative start in early trading, the Perenti share price shot up to an intraday high of $1.35 after the company announced the deal this afternoon. However, at the closing bell, its shares had slightly dipped to $1.34, up 3%.

What did Perenti announce?

The engineering company advised that its subsidiary, hard-rock underground miner Barminco, has been awarded a contract extension worth more than $200 million.

The agreement will see Barminco continue operations at Gold Field’s Agnew Gold mine in Leinster, Western Australia. The company has performed underground mining operations at the site for more than 10 years.

Under the terms, and in light of increased development and production at Agnew, Barminco will provide full underground mining services. These include mine development, production, diamond drilling, vertical development, design planning and scheduling, and equipment supply and maintenance.

The contract is valued at more than $200 million depending on works completed.

Management commentary

Perenti managing director and CEO Mark Norwell hailed the extended partnership agreement, saying:

Part of our 2025 group strategy is to organically grow this part of our business. The recent achievements of Barminco in this regard are a result of the strong relationships we share with our clients and the value we create for them through our world class underground mining capabilities.

Perenti Mining CEO Paul Muller added:

We have been providing safe and efficient underground mining services at Agnew for more than 10 years and we are very pleased to be supporting Gold Fields with their increased development and production requirements. This extension will take our current term out to December 2023.

How has the Perenti share price performed?

The Perenti share price is down almost 7% over the past 12 months. The company’s shares took a dive in the COVID-led market freefall in March last year, falling to a 52-week low of 45 cents. From there, its shares reached a 52-week high of $1.60 in June.

Perenti commands a market capitalisation of $943 million at today’s share price.

More reading

• ASX 200 rises 0.7% on Friday

Motley Fool contributor Aaron Teboneras 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 Here’s why the Perenti (ASX:PRN) share price lifted today appeared first on The Motley Fool Australia.

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

The 4DS Memory Ltd (ASX: 4DS) share price has crashed lower for the second consecutive day, trading down 12.24% this afternoon to close at 21.5 cents. It’s a sharp come-down for the 4DS Memory share price, which touched its 52-week high of 28 cents just last week.

And it comes despite the semi-conductor manufacturer releasing positive results today on its progess in developing its memory technology.

Why is the 4DS Memory share price falling?

In today’s release, the company announced results from its second non-platform lot of testing. This was done as a follow up to ensure the validity of the initial test performed in June last year. At the time, the company said it had measured “the highest speed and endurance in the additional wafers lot” that it had ever recorded. A wafer is a thin slice of semi-conductor which is used for the fabrication of integrated circuits.

As such, 4DS Memory said today it has been able to repeat the results for each of the key memory characteristics (speed, endurance and retention) that were achieved with the first non-platform lot. Moreover, 19 of the 21 device wafers were functional, which is the highest number the company has achieved. 

Next stage for 4DS Memory

4DS Memory advised that it had incorporated the learnings from the second non-platform lot test into the process split conditions for the second platform lot of 300mm wafers. This second lot has been manufactured using a memory platform created by its digital tech partner, imec, and contains dense memory arrays which will give the conductors more computing power.

4DS Memory started producing the wafers last week and expects to analyse them in the second quarter of 2021.

The company hopes the analysis will help pave the way for it to pursue its strategic objective of fabricating wafers with chips that operate as fully functional megabit memories.

If successful, this may bring 4DS Memory closer to its 2021 objectives to achieve a potential corporate transaction.

Management comments

4DS Memory managing director Dr Guido Arnout welcomed the results, saying:

We are pleased that the success of the second non-platform lot has meant that we were able to immediately commence fabrication of the second platform lot. We are grateful to our partner, imec, for scheduling a slot in its state of the art fab in such a timely manner, particularly given the high demand for access to fab equipment in the current semiconductor market environment.

Until today’s market fall, the 4DS Memory share price had performed well since the start of the year, gaining 57% in January alone.

More reading

• 4DS Memory (ASX:4DS): Non-volatile memory, volatile share price

Motley Fool contributor Daniel Ewing 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 Why has the 4DS Memory (ASX:4DS) share price crashed 12% lower? appeared first on The Motley Fool Australia.

from The Motley Fool Australia https://ift.tt/2L7bG5L

Amid the chaos the GameStop Corp (NYSE: GME) saga has brought upon the investing world, some people have asked: Does shorting even work?

After all, don’t share markets head up in more years than they head down? In the medium to long term, doesn’t the market drift upwards?

Shorting might be a way to make a quick buck off a declining business – but it’s mostly a losing strategy against other companies, said Frazis Capital Partners portfolio manager Michael Frazis.

“We’ve noted before that when bearish investment professionals heavily short a widely loved company, the love tends to win out,” he wrote in a memo to investors Monday.

“This has happened time and again across our portfolio with Tesla Inc (NASDAQ: TSLA), Afterpay Ltd (ASX: APT) and Carvana Co (NYSE: CVNA) et al.”

The GameStop short squeeze has ruined the reputation of funds that short, according to Frazis.

“Long/short funds may never be the same. Certainly, institutions should think twice about allocating pension money to long/short funds that did not perform in the crisis of 2020; and can toast billions of dollars in days with a single misjudged trade,” he said.

“It’s a familiar irony that long/short strategies sound like sensible risk-managed approaches, but so often prove the opposite.”

And he should know. Frazis used to short.

Why Frazis gave up shorting

The Motley Fool asked Frazis why he and his fund stopped shorting a couple of years ago.

There was a moral reason.

“Shorting changes your mindset. It brings out your cynicism. You do well when others do not,” he told The Motley Fool.

“Every company has a team of people working hard to make it a success. It’s infinitely more rewarding to spend your days being positive and supportive of other people.”

But above all, according to the Sydney fund manager, it’s not a winning strategy.

“It costs a fortune to run a short book. Shorts can cost 2% to 4% to hold a year, and sometimes a lot more,” he said.

“We plan to be in business for 30 years, so that adds up to a staggering amount. The real money in life is made by owning successful businesses for extended periods of time.”

No winners in GameStop debacle

GameStop, believe it or not, became a now-famous target for activist investors because more than 100% of its shares were shorted.

That means there could’ve been some “naked” shorting going on, which is a short investor selling a share that they hadn’t actually borrowed. 

This is illegal in both the US and on the ASX.

While no one (except for the fund clients) is going to shed any tears for hedge funds that lost money, Frazis warned ultimately no one will win out of this episode.

“It’s important to remember that all short squeezes end in the same way: a collapse in price. Once the forced buyer folds at the top, there is no reason for anyone else to buy,” he said to investors.

“Having said that, this may not be over. The memes and use of language over the past week has been second to none.”

What it has done is to shed light on some new “heroes” in the investment world.

“There are 7 million people on [Reddit group] r/wallstreetbets. If they have US$5k each, that’s US$35 billion of dry powder. That’s more than enough to push around a heavily shorted stock.”

GameStop shares pushed up another 68% on Saturday morning Australian time, to hit US$325. It was US$17.25 a month ago.

More reading

• The ASX small cap with the best global expansion potential may not be tech
• Forget growth or value: Here’s a neutral way to pick shares
• On fire! 2 reasons why the Afterpay (ASX:APT) share price rocketed 12% in January
• Silver squeeze next on the list for WallStreetBets, or is it?
• Why Afterpay, ResMed, Temple & Webster, & Worley shares are dropping lower

Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post GameStop chaos: Love always wins over shorting appeared first on The Motley Fool Australia.

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

The S&P/ASX 200 Index (ASX: XJO) went up by 0.8% today to 6,663 points.

Here are some of the highlights from the ASX:

Worley Ltd (ASX: WOR)

The Worley share price was the worst performer in the ASX 200 today, dropping by more than 10%.

The company gave a business update today, providing guidance for its upcoming FY21 half-year result. It said that it has been impacted by COVID-19 related economic circumstances and foreign exchange translation impacts.

Aggregated revenue is expected to be in the range of $4.4 billion to $4.5 billion. The projected underlying earnings before interest, tax and amortisation (EBITA) is for a range of between $200 million to $210 million.

FY21 half-year statutory operating cashflow is expected to be in the range of $250 million to $255 million. The company is expecting to show a reduction in net debt to approximately $1.2 billion excluding lease liabilities, which it said would be the lowest level of net debt since the ECR acquisition.

Worley explained that the global acceleration of COVID-19 infections over the past few months has hurt demand in the markets that it operates. The company is seeing ongoing project deferrals but negligible project cancellations. Management expect those deferred projects to return as global economic conditions improve.

Chris Ashton, Worley CEO, said: “We’re still winning new work and we’re actively engaged in supporting our customers on their sustainability journey. Cash continues to flow from our customers on previously agreed terms and we’ve improved our liquidity position. We have a new and more efficient way of working, continue to manage headcount and have ongoing overhead cost savings in place. The actions we’ve taken to manage what’s in our control and our pivot to sustainability have provided us with a strong platform to grow the business as COVID-19 related economic circumstances improve and deferred projects restart.”

Crown Resort Ltd (ASX: CWN)

The Crown share price ended lower by 0.1% after explaining to the market what the Perth lockdowns meant for the casino operations.

Crown said that after a statement issued by the WA government about the 5-day lockdown of the Perth metro area, with effect from the evening of Sunday, 31 January 2021 until the evening of Friday, 5 February 2021, it has ceased operations of its gaming activities as well as food, beverage, banqueting and conference facilities other than for the provision of takeaway meals or meal delivery services. Hotel accommodation will continue to be provided in a reduced capacity.

Big market movers

Aside from Worley, there were some pretty sizeable movers in the market at either end of the ASX 200.

At the green end of the ASX 200, the Blackmores Limited (ASX: BKL) share price went up by 6%, the Mesoblast Limited (ASX: MSB) share price climbed 5.9%, the Elders Ltd (ASX: ELD) share price went up 4.9% and the Zip Co Ltd (ASX: Z1P) share price rose 4.8%.

At the red end of the ASX 200, aside from Worley, the Service Stream Limited (ASX: SSM) share price dropped another 4.7%, the Janus Henderson Group (ASX: JHG) share price fell 3.6% and the Megaport Ltd (ASX: MP1) share price fell 3.6%.

More reading

• Why Blackmores, Creso Pharma, Pilbara Minerals, & Zip shares are pushing higher
• On fire! 2 reasons why the Afterpay (ASX:APT) share price rocketed 12% in January
• ASX 200 down 0.2%: Zip Chair steps down, Worley crashes, Blackmores & InvoCare jump
• Worley (ASX:WOR) share price crashed on profit warning
• Why Afterpay, ResMed, Temple & Webster, & Worley shares are dropping lower

Tristan Harrison 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 MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of ZIPCOLTD FPO. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia has recommended Crown Resorts Limited, Elders Limited, MEGAPORT FPO, and Service Stream Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post ASX 200 rises, Worley dumped, Mesoblast rises appeared first on The Motley Fool Australia.

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