The Novonix Ltd (ASX: NVX) share price has been a positive performer on Wednesday.

In afternoon trade the shares of the integrated developer and supplier of high-performance materials, equipment, and services for the global lithium-ion battery industry are up 3% to $1.75.

Why is the Novonix share price pushing higher today?

Investors have been buying the company’s shares amid growing interest in the lithium sector following Tesla’s Battery Day event overnight.

This afternoon Novonix released an announcement in response to some of key the topics discussed at the event.

According to the release, the electric vehicle company touched on all aspects of cell manufacturing through to vehicle integration to outline a roadmap for a potential 56% cost reduction in the final battery pack in a vehicle.

The event also focused significantly on Tesla’s internal project to develop cell manufacturing technology of its own. This is something which has been rumoured about since the acquisitions of companies such as Maxwell Technologies and Hibar Systems.

Novonix’s CEO Dr. Chris Burns, notes that this event was of great significance to the company and the entire battery market.

He said: “It was very exciting to listen to Elon [Musk] and Drew [Baglino} discuss the advancements in TESLA’s battery program. Their approach to rethinking battery cell manufacturing exactly aligns with NOVONIX’s approach to rethinking battery materials manufacturing.”

Dr Burns notes that cost reductions are a focus for Tesla and he feel Novonix can assist with these goals.

The CEO explained: “Today’s battery chemistry has proven itself for vehicles and energy storage systems, it just needs to be more affordable. The cost of production of cells and materials has been stuck on existing technology and there is opportunity to disrupt these sectors through re-engineered solutions.”

“NOVONIX’s anode material processing technology is one example of delivering lower cost, high performance graphite to support long cycle life applications, and Dry Particle Microgranulation (DPMG) is another as a process to eliminate waste water and use simpler metal inputs to reduce cathode manufacturing cost or improve yield in anode manufacturing,” he added.

What now for Novonix?

Management appears very optimistic on the future and intends to focus on delivering lower cost materials to the electric vehicles sector.

It concluded: “The NOVONIX team and proprietary technologies complements the amazing work by TESLA and we look forward to continuing to participate in the advancement of the state of lithium-ion battery technology. NOVONIX continues to work on delivering lower cost materials to support million-mile (or more) vehicle battery and 20+ year grid storage technologies to decrease the total cost of ownership of batteries over their lifecycle.”

More reading

• ASX All Technology Index swells with new additions

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Tesla Inc (NASDAQ: TSLA) share price was down 5.60% overnight in US trading to US$424.23. This, however, was prior to Tesla’s ‘Battery Day’ event at which CEO, Elon Musk, announced positive news to shareholders. Despite the upbeat announcements, the Tesla share price continued to fall in after hours trading sessions, dropping nearly 7% in only a couple of hours. It will be interesting to see what effect the announcements continue to have on Tesla shares when US markets open late tonight (Australian time).

What was announced?

Tesla will work to start producing a car that costs $US25,000 as it aims to bring down the cost of its production. The company has a goal to bring the cost of Tesla vehicles closer to the cost of cars running on conventional fuels. 

The electric car maker is taking a range of initiatives aimed at bringing down the cost of batteries including introducing ‘tabless’ batteries. The new batteries will be produced in house and increase the power of Tesla’s vehicles while bringing down costs. The range of Tesla’s vehicles will be increased by 16% using the new batteries.

Tesla will also start to produce cathodes, a key component of electric vehicle batteries, in house in the future. Additionally, it is making improvements to its processes which will make cathodes 76% cheaper whilst producing zero waste water. Tesla’s cathode production will also eliminate cobalt, which is often unethically sourced, and reduce the volume of nickel required, which is in short supply.

According to Tesla, it will soon release another car model named the Model S ‘Plaid’. This will become Tesla’s highest powered car and will be able to go from 0-60 miles per hour in 2 seconds with a maximum speed of 200 miles per hour. The vehicle will be able to travel 520 miles between charges. It will also cost more than Tesla’s current offerings at US$139,990. 

About the Tesla share price

Tesla is a manufacturer of electric cars, batteries and renewable energy technology. It has been listed on the Nasdaq since 2010.

In August, Tesla stock was split 5-for-1, meaning shareholders now hold 5 Tesla shares for every 1 share they originally held.

In the second quarter of 2020, Tesla had US$104 million in net income according to generally accepted accounting principles (GAAP) and US$451 million non-GAAP income. It had cash and cash equivalents of US$8.6 billion at the end of the second quarter.

The Tesla share price is up 871.44% since its 52-week low of $43.67, it has increased 393% since the beginning of the year. The Tesla share price is up 779.23% since this time last year.

More reading

• Novonix (ASX:NVX) share price pushes higher after Tesla’s Battery Day event
• Plenti (ASX:PLT) share price crashes lower after its IPO
• 3 ASX dividend shares rated as buys by brokers
• Why have ASX tech founders been unloading shares?
• Why the Service Stream (ASX:SSM) share price is surging 14% higher today

Chris Chitty does not own shares in Tesla.

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It hasn’t been a very positive first day of trade on the Australian share market for the Plenti Group Limited (ASX: PLT) share price.

Earlier today the technology-led consumer lending and investment company’s shares were trading 25% lower than their initial public offering (IPO) price at $1.25.

At the time of writing the Plenti share price has recovered slightly and is up to $1.34.

What is Plenti?

Plenti is a growing technology-led consumer lending and investment business which provides borrowers with efficient, simple, and competitive loans. These are delivered via simple digital experiences.

In addition to this, Plenti seeks to provide investors with attractive and stable returns via investing in consumer loans.

The company has funded approximately $870 million in loans to over 55,000 borrowers since its launch in 2014, providing loan products to creditworthy borrowers in the automotive, renewable energy, and personal lending verticals.

Why did Plenti list on the ASX?

Plenti has listed on the ASX following the successful completion of its IPO, raising $55 million at $1.66 per share. This gave the company an implied market capitalisation of $280 million at the time.

The proceeds from the IPO will be used to drive future lending growth across the automotive, renewable energy, and personal lending verticals. Management notes that this represents a $45 billion+ annual lending opportunity.

In addition to this, the proceeds will support the expansion of its warehouse and other wholesale funding activities.

Plenti CEO and co-founder Daniel Foggo said: “This is an extremely exciting day for Plenti and its shareholders and I am incredibly proud of the effort of the whole team in getting the business to this important milestone.”

“However, this is also just the beginning of the next stage in the evolution of our business and I am very optimistic about the opportunities ahead of us given the capabilities of our technology platform and team, which the funds from the IPO will help us capture,” he concluded.

More reading

• Why have ASX tech founders been unloading shares?
• The biggest mistakes investors are making in today’s share markets
• Why the Nufarm (ASX:NUF) share price has rocketed today
• ASX 200 up 1.9%: Afterpay storms higher, Nufarm jumps, big four banks rise
• Why the Xero (ASX:XRO) share price can hit $100 again in 2020

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It can be an interesting insight to know what brokers think of an ASX dividend share. The problem is that a single broker can be wrong or biased.

If you can get a consensus among brokers about which shares are best, then that may give a clue about what to buy and what to avoid.

Every so often MarketIndex collates the broker recommendations of 150 ASX shares and totals the buys, holds and sells for those shares. The higher or lower the average score the more of a strong buy, buy, hold, sell or strong sell that share is.

The below ideas have dividend yields above 5% and a market capitalisation above $1 billion. However, a high dividend yield can indicate a falling share price or limited growth prospects.

Here are three of the ASX dividend shares that fit the bill:

Pendal Group Ltd (ASX: PDL)

Pendal is a global fund manager with a variety of different investment strategies and it has offices in Australia and places like London, Singapore and New York.

The Pendal share price is down 38% since the start of the COVID-19 crash. The ASX share has recovered to $5.48 at the time of writing, it was as low as $3.44 during March 2020.

Market movements can be a doubled edged sword for fund managers. When things are going well the funds under management (FUM) organically rises from capital growth and it may also see pleasing levels of fund inflows. However, market crashes can cause the FUM to plummet and people may also take their money out of the fund manager.

The Pendal FUM update for the quarter ending 30 June 2020 showed an attractive 4% increase in FUM to $89.4 billion, however that was largely due to market movements because the ASX share actually suffered a $2.5 billion net outflow of funds.

Pendal may seem cheap on a trailing basis with a trailing grossed-up dividend yield of 10.4%. However, I don’t think the next 12 months of dividends will be that good. But the Pendal share price could recover nicely if FUM can rise in the shorter-term.

Aurizon Holdings Ltd (ASX: AZJ)

Railroad business Aurizon is an interesting dividend idea. It obviously benefits from the large amount of resources that are transported around Australia.

The Aurizon share price has fallen 29% over the past year and it’s down 21% since the start of the COVID-19 crash.

Thankfully, the FY20 result from the ASX share was actually fairly good. Revenue rose by 5% to $3 billion, underlying net profit grew 12% to $531 million and statutory net profit rose 28% to $605 million.

For income investors, Aurizon grew its total FY20 dividend by 15% to 27.4 cents per share. That equates to a current partially franked dividend yield of 6.35%.

Expectations of lower earnings in FY21 has probably dampened investor demand for Aurizon shares.

Origin Energy Ltd (ASX: ORG)

Energy businesses have gone through a tough time in recent months because of COVID-19.

The Origin share price is down 42% since the COVID-19 crash and it has actually fallen 19% since the end of August 2020.

The fall in the share price has helped boost the trailing dividend yield to 5.5%.

Excluding impairments, the FY20 profit of the ASX share was actually flat whilst free cashflow improved by about $100 million.

Origin seemed to indicate lower profit in FY21 when it provided its guidance for this financial year.

I’m not sure if Origin’s board will decide to maintain the annual dividend payment at $0.25 per share, or reduce it to $0.20 after the $0.10 final FY20 dividend.

Foolish takeaway

I don’t think the dividends of Origin or Pendal are safe, whilst Aurizon’s link to commodities makes me a little uneasy because I don’t like investing in resources. Of the three, I’d probably go for Aurizon.

For a commodity-type income play I think something like Vitalharvest Freehold Trust (ASX: VTH) could be a better option as its distribution floor seems to be a current yield of 6% with growth potential.

More reading

• 3 reasons I like the AGL Energy (ASX:AGL) share price today
• 4 dividend kings to buy now and hold forever
• 5 ASX shares to avoid in October
• These were the worst performing ASX 200 shares last week
• 3 ASX shares that are trading at bargain prices

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Aurizon Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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ASX tech shares like Afterpay Ltd (ASX: APT), Xero Limited (ASX: XRO) and Kogan.com Ltd (ASX: KGN) have been the undisputed champions of the S&P/ASX 200 Index (ASX: XJO) over the past 6 or so months.

In a market battered and bruised by the share market crash we saw in March, it was ASX tech shares leading the recovery. Since 23 March, the Afterpay share price has appreciated almost 800% on today’s prices. Xero shares are up 66% and Kogan shares by more than 400%.

This mirrors a trend we have seen over in the United States as well. US tech shares have also been the stars of the American market recovery. Shares like Apple Inc (NASDAQ: AAPL) and Amazon.com Inc. (NASDAQ: AMZN) are up around 100% and 65% respectively since 23 March. And electric car maker Tesla Inc (NASDAQ: TSLA) raised some eyebrows when it shot up nearly 600% between 18 March and 31 August.

ASX tech share sell-off

But according to reporting from Business Insider, many founder/owners of these ASX tech companies have been using this extraordinary rally to offload their own shares.

Business Insider claims that $750 million worth of insider selling has occurred within just 5 ASX tech shares in 2020 so far.

This insider selling was lead by the co-founders of Afterpay – Nick Molnar and Anthony Eisen. Between the two of them, $250 million worth of Afterpay shares were reportedly unloaded in July this year.

This was echoed over at Xero, with founder Rod Drury offloading $198 million worth of Xero shares earlier this month.

Kogan founders Ruslan Kogan and David Shafer have also cashed in, reportedly selling a combined $157.6 million worth of Kogan shares in August.

Also cashing in has been WiseTech Global Ltd (ASX: WTC) founder Richard White, who has sold more than $65 million worth of his company’s stock since June.

Finally, Business Insider reports that management at the cloud company Whispir Ltd (ASX: WSP) have been selling out of their shares as well, with $77 million worth of sales from “major investors” executed since the company’s shares were released from a 1-year post-IPO escrow.

What does the heavy insider selling tell us?

Well, I’m never too worried about the odd dash of insider selling, particularly if the share price in question has been exploding higher. Remember, the company’s founders and managers are investors too, that’s why they are running companies. And any good investor understands the dangers of having too many eggs in one basket. If I was an ASX tech billionaire sitting on an asset base that consisted of 90% Afterpay shares, dang right I would want to diversify. And if my company’s share price had risen by 800% in just a few months, I think I would be looking to cash in as well.

However, I would be concerned if say a founder was obviously selling off the vast bulk of their shareholdings. That would imply the founder is protecting his or her wealth by selling out of their own company – not a good sign. That being said, I don’t think any of these moves described above fit these criteria. So keep things in some perspective when you see insider selling. Most of the time, those sellers are just being prudent investors.

More reading

• The biggest mistakes investors are making in today’s share markets
• Why the Nufarm (ASX:NUF) share price has rocketed today
• Why Afterpay, Nufarm, PolyNovo, & Sezzle shares are racing higher today
• ASX 200 up 1.9%: Afterpay storms higher, Nufarm jumps, big four banks rise
• Where next for the Zip (ASX:Z1P) share price?

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Amazon, Apple, Tesla, and Whispir Ltd. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and Xero and recommends the following options: short January 2022 $1940 calls on Amazon and long January 2022 $1920 calls on Amazon. The Motley Fool Australia owns shares of AFTERPAY T FPO and WiseTech Global. The Motley Fool Australia has recommended Amazon, Apple, Kogan.com ltd, and Whispir Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The best performer on the S&P/ASX 200 Index (ASX: XJO) on Wednesday has been the Service Stream Limited (ASX: SSM) share price by some distance.

In afternoon trade the essential network services provider’s shares are up 14% to $2.03.

Why is the Service Stream share price zooming higher?

Investors have been buying Service Stream’s shares on Wednesday after the Federal Government revealed plans to spend upwards of $4.5 billion to upgrade the NBN over the next three years.

According to the media release, this upgrade will mean around eight million Australian homes will have access to ultra-fast broadband speeds of up to 1 gigabit per second. This compares to the current mandatory minimum speed of 25 megabits per second.

Minister for Communications, Cyber Safety, and the Arts, the Hon Paul Fletcher MP, commented: “The 2013 decision by the Coalition to roll out the NBN quickly, then phase upgrades around emerging demand, has served Australia well. It meant the NBN was available to almost all Australians when COVID-19 hit, giving us high speed home connectivity when we needed it most.”

“And it means NBN Co is now well placed to invest in Australia’s broadband infrastructure to meet Australians’ growing appetite for faster speeds,” Minister Fletcher said.

Why is this good news for Service Stream?

This could be a major positive for Service Stream as it has been generating significant revenues by supporting the rollout of the NBN in recent years.

In addition to this, just last month it announced a long‐term agreement with NBN Co for the provision of network operations, maintenance, and optimisation services to the network.

This is likely to put Service Stream in a strong position to support the upgrade of the network over the coming years and generate further meaningful revenues.

More reading

• ASX 200 up 1.9%: Afterpay storms higher, Nufarm jumps, big four banks rise
• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 next week
• 3 ASX 200 shares to buy for strong returns

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Service Stream Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The world is changing faster today than at any time since World War II unleashed massive political, cultural and technological transformations. And it’s leading many share investors to make some hasty, costly decisions.

Sure, there have been some other revolutionary developments since the 1940s.

Jetliners ushered in the era of international travel for work and play. The internet changed so many aspects of how we live our lives I won’t begin to list them here. And the smartphone came around to enable everyone to carry the internet around with them in their pockets or purses.

These – and a number of other developments over the past 80 years – have seen the share prices of companies that weren’t able to adapt plummet. On the flip side, companies with nimble management that got ahead of the curve saw their share prices soar.

We’re seeing the same thing play out today, only much faster.

It took decades for the advent of affordable air travel to wholly disrupt the previous travel and leisure business models. It also took many years for the internet – which went live as the World Wide Web in 1991 – and smartphones to upend businesses that were slow to embrace the changes they unleashed.

The more gradual pace of those changes gave investors more time to position their shareholdings into businesses likely to prosper from the changing operating environment.

But society’s transformational responses to the coronavirus pandemic – from governments to businesses to individuals – are happening in the virtual blink of an eye, prompting many investors to make hurried decisions.

Transformational changes in the blink of an eye

Who would have thought back on New Year’s Day that 2020 would see international borders slammed shut and Australia’s own state borders sealed and patrolled by the military?

Who would have imagined that Australia – and many developed nations around the world – would post record quarterly GDP declines. Or that millions of people would be working, shopping and socialising from home?

But perhaps the biggest change we’ve seen in the past 6 months is governments and central banks pulling out all the stops to keep their economies and share markets ticking along.

Official interest rates across developed nations are at or near record lows, while government stimulus packages are at record highs. That change transpired in a matter of months. But it’s unlikely to wind back anytime soon.

Yesterday the Reserve Bank of Australia (RBA) deputy governor, Guy Debelle addressed the Australian Industry Group. He said it was “highly unlikely” the RBA would raise the official cash rate from the current record low 0.25% any time in the next 3 years.

With rates this low, Debelle echoed central bankers around the world in encouraging state and federal governments to take on even more debt to support the economy. He said:

The increase in debt is definitely manageable. Moreover, there is not, in my judgment, a trade-off between debt and supporting the Australian economy in the current circumstance…

This is particularly so with interest rates at their historically low levels, where the growth benefit from the fiscal stimulus will improve the debt dynamics and help service the debt in the future.

Fast moving share prices and ill-planned decisions

So many changes in so little time makes for an uncertain environment. And if you needed any proof that share markets hate little more than uncertainty, pull up a chart of the S&P/ASX 200 Index (ASX: XJO).

Everything looked to be going along nicely until 20 February, with the ASX 200 up 7% for the year. Then panic set in, and the index plunged 37% by 23 March. At which point government and central bank stimulus came pouring in, and the ASX 200 rocketed 35% higher by 10 June.

These are the sharpest corrections and recoveries ever for the top 200 Australian shares.

And the rapid pace of change has led many investors to make costly mistakes.

Like ignoring companies with long-term share price growth potential for the latest hot tips on social media. Those hot tips might keep heading higher after you buy shares. But you could well find yourself buying near the highs and then opting to cut your losses and sell near the lows.

Which leads us to another often costly mistake investors make when share prices move so quickly. Trying to time the market becomes much more tempting when even ‘boring’ blue chips see their share prices tumble 37% only to rocket 35% or more higher in just a few months.

But calling the highs or lows in the markets is like trying to forecast the black or red on the next roulette spin. There are too many variables at work to do this with any consistency.

Two shares embracing the rapid COVID changes

We’ll round this off with 2 quality shares with long-term share price growth potential.

First is US-listed, Walmart Inc (NYSE: WMT).

Walmart has been quick to increase its online presence as many shoppers chose or were forced to stay home. And yesterday (overnight Aussie time) Walmart upped its game with a novel drone delivery program.

As Boston 25 News reports:

Walmart Inc. is taking to the skies to expand COVID-19 testing. The retail behemoth launched drone delivery of self-collection kits on Tuesday to single-family homes within a 1-mile radius of the North Las Vegas Walmart location… The pilot program will be expanded to Cheektowaga, New York, in early October.

It’s just a pilot program, mind you. But this is a good indicator of a blue chip share getting ahead of the rapid pace of pandemic driven change.

Walmart’s share price is up 16% year-to-date and down 6% from its 2 September all-time highs.

On the ASX 200, few shares have been as well-positioned or quick to respond as online retailer Kogan.com Ltd (ASX: KGN).

Year-to-date Kogan’s share price is up 176%, giving it a market cap of $2.2 billion. Kogan’s share price is down 10% from its August 18 record highs.

More reading

• Why have ASX tech founders been unloading shares?
• Why the Nufarm (ASX:NUF) share price has rocketed today
• ASX 200 up 1.9%: Afterpay storms higher, Nufarm jumps, big four banks rise
• Why the Xero (ASX:XRO) share price can hit $100 again in 2020
• Correction or crash for ASX 200 shares?

Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd. The Motley Fool Australia has recommended Kogan.com ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Many of Australia’s top brokers have been busy adjusting their financial models again, leading to the release of a large number of broker notes this week.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Fortescue Metals Group Limited (ASX: FMG)

According to a note out of Citi, its analysts have upgraded this iron ore producer’s shares to a buy rating with a $18.50 price target. Although the broker acknowledges that iron ore prices have softened this month due to concerns over Chinese steel production, it expects improving steel production outside China to be supportive of prices. Citi is forecasting a $2.05 per share fully franked dividend in FY 2021, which equates to a massive yield of almost 13%. I think Citi is spot on and Fortescue would be a top option for investors.

Magellan Financial Group Ltd (ASX: MFG)

Analysts at Morgans have upgraded this fund manager’s shares to an add rating but trimmed the price target on them slightly to $61.05. According to the note, despite others classing its shares as expensive, the broker believes Magellan is trading on undemanding multiples. Especially given its positive growth outlook. This should be supported by solid flows from partnerships and new product launches. I think Morgans makes some good points, but I would rather invest at a lower price.

Pushpay Holdings Ltd (ASX: PPH)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating and lifted their price target on this donation platform provider’s shares to NZ$9.30 (A$8.63). Credit Suisse believes Pushpay is in a strong position to benefit from an acceleration in digital donations because of the pandemic. In addition to this, it feels that its platform is becoming indispensable to churches. This should be supportive of high retention rates. All in all, the broker expects Pushpay to outperform its guidance once again in FY 2021. I agree with Credit Suisse and believe Pushpay is a fantastic long term option for investors.

More reading

• Forget BrainChip (ASX:BRN) and buy and hold these outstanding ASX shares
• Leading brokers name 3 ASX shares to sell today
• 2 ASX shares I’m never selling
• 4 unstoppable ASX shares to buy with $4,000
• ASX 200 drops another 0.8%, Magellan (ASX:MFG) reveals a large investment

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 PUSHPAY FPO NZX. The Motley Fool Australia has recommended PUSHPAY FPO NZX. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Last year, the legendary investor Warren Buffett supprised the markets by betting big on an oil company. According to reporting in The New York Times,  Buffett, through his company Berkshire Hathaway Inc (NYSE: BRK.A)(BYSE: BRK.B), invested roughly US$10 billion into Occidental Petroleum Corporation (NYSE: OXY), receiving preferred shares for his efforts. This purchase helped Occidental finance a bid for fellow oil producer Anadarko Petroleum, which was successful. 

Buffett has reportedly sold all of Berkshire’s holdings in Occidental, probably due to the impact that the coronavirus pandemic has had on crude oil prices in 2020 so far (crude prices briefly, but infamously went into negative territory back in April). But these were preferred shares in Occidental, which probably influenced his decision when it came to this particular company. And given Berkshire still holds some shares in a Canadian oil company Suncor Energy, I think we can disregard this event in light of a good question today: are oil shares a good long-term buy?

Buffett, a famously long-term orientated investor, seemed to think so last year. This was confirmed with reporting by CNBC, which ran a story at the time quoting Buffett as stating:

It’s also a bet on the fact that the Permian Basin [a large oil field in Texas] is what it is cracked up to be… [but] oil prices will determine whether almost any oil stock is a good investment over time. If oil goes way up, you make a lot of money.

So it’s clear from this quote that Buffett is bullish on a long-term investment case for oil, or at least oil prices. And a high oil price indicates either long-term high demand or low supply.

So, with this in mind, should ASX investors be rushing out to buy Woodside Petroleum Limited (ASX: WPL), Santos Ltd (ASX: STO), Oil Search Limited (ASX: OSH) or BHP Group Ltd (ASX: BHP) perhaps?

Are ASX oil shares black gold?

Now I have the utmost respect for Warren Buffett. He’s a legendary investor as well as a fantastic teacher. But he is also 90 years’ old. It’s possible that, as a man who has watched crude oil become a massive enabler of road travel and industrialisation throughout the 20th century, Buffett still harbours some 20th-century views on oil. I’m sure the more environmentally-minded of us out there would agree with this statement and wouldn’t endorse his views on black gold.

But again, maybe he’s onto something. Yes, most investors expect electric vehicles like those made by Tesla Inc (NASDAQ: TSLA) to eventually replace internal combustion vehicles powered by oil-derivatives. But the most optimistic Tesla investors think that it might take 5 to 10 years for half of all new vehicle sales to consist of electric vehicles. That’s a decade of strong oil demand from the transportation sector. And then we have plastics, road tar, aviation fuel, kerosene and all of the other uses we now have for crude. Suddenly, Buffett isn’t looking like the 20th-century man he was.

Foolish takeaway

I don’t personally invest in oil shares myself for a variety of reasons (including concerns over climate change). But I do see the bullish case for a higher crude price over the coming decade. I hope that we, as a world, can wean ourselves off black gold, and sooner rather than later. But I also understand there’s something to be said for the ultra-cheap prices oil companies are trading at right now. I won’t be panning myself, but I’m sure there is some dark gold in the oil sector right now. If you’re so inclined, that is.

More reading

• Understand this quote, and you’ll understand the ASX share market
• 5 things to watch on the ASX 200 on Wednesday
• Tesla Weighs on Nasdaq — Will Investors Believe Musk This Time?
• Where to invest your BHP (ASX:BHP) dividends
• 5 things to watch on the ASX 200 on Tuesday

Sebastian Bowen owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and Tesla and recommends the following options: long January 2021 $200 calls on Berkshire Hathaway (B shares) and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares). We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Should ASX investors follow Buffett and bet on oil shares? appeared first on Motley Fool Australia.

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The Recce Pharmaceuticals Ltd (ASX: RCE) share price has come under pressure on Wednesday after returning from its trading halt.

The pharmaceutical company’s shares crashed as much as 15% lower to $1.38 this morning.

They have since recovered the majority of this decline but are still down over 3% to $1.58 at the time of writing.

Why is the Recce share price sinking lower today?

Investors have been selling Recce’s shares after it completed a placement of shares to institutional, professional and sophisticated investors.

The company raised a total of approximately $28 million before costs at an issue price of $1.30 per share. This represents a sizeable 20% discount to its last close price.

Why is Recce raising funds?

Recce launched the capital raising in order to fund the advancement of its synthetic anti-infective pipeline.

This comprises the RECCE 327, RECCE 435 and RECCE 529 compounds which are addressing the urgent global health problems of antibiotic resistant superbugs and emerging viral pathogens.

The company notes that there will be additional financial support from the Australian Government’s 43.5% R&D rebate on R&D applicable activities.

This ensures it is fully funded to complete its Phase I human clinical trial, SARSCoV-2 (COVID-19) pre-clinical program, Helicobacter pylori preclinical program, and the anticipated Phase I/II topical study at a leading Australian teaching hospital.

Recce’s Chief Executive Officer, James Graham, commented: “We greatly appreciate the support shown by both our existing investors and new institutional investors. Their financial support comes at a transformative time for Recce as we prepare to advance human clinical trials. We welcome all new investors and look forward to updating the market as our pivotal trials progress in the coming months.”

There certainly is a lot of optimism around these compounds. Despite its share price weakness today, the Recce share price is up over 360% since the start of the year.

The coming months will soon reveal whether investors were right to back this one.

More reading

• Why Kathmandu, New Hope, Recce, & Ramelius shares are dropping lower today
• These 4 ASX shares have grown more than 100% this year
• Turn $6k into $60k, a guide to growth investing
• Why the DroneShield (ASX:DRO), BrainChip (ASX:BRN) and Recce (ASX:RCE) share prices are rising today
• Why BrainChip (ASX:BRN) and Recce (ASX:RCE) shares just hit record highs

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. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Why the Recce Pharmaceuticals (ASX:RCE) share price crashed 15% lower today appeared first on Motley Fool Australia.

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