Australians are going crazy for a new stock in the United States that has the backing of Warren Buffett’s investment company.

Technology company Snowflake Inc (NYSE: SNOW) debuted on Wall Street late Wednesday night Australian time. 

The shares immediately doubled in price after retail investors realised Buffett’s Berkshire Hathaway Inc (NYSE: BRK.A) (NYSE: BRK.B) bought US$250 million worth during the initial public offering (IPO).

This was reportedly the first time Buffett or his company purchased in an IPO since Ford Motor Company (NYSE: F) in 1956.

And Snowflake became the largest company to ever double its share price in its first day on the US market.

But it wasn’t just in America investors went mad for Snowflake. The fever transmitted across the Pacific Ocean too.

Share trading platform Stake reported Friday that Australians buying shares of the data warehousing provider doubled in just 24 hours.

The value of transactions for Snowflake on Friday morning was a stunning 5700% more than another popular tech stock, Uber Technologies Inc (NYSE: UBER).

It was also 776% more than Slack Technologies Inc (NYSE: WORK).

“As a business-to-business enterprise providing database solutions, the company is not widely known outside of tech circles, although it does compete with the likes of Amazon and Microsoft,” said Stake chief executive Matt Leibowitz.

“Aussie investors are clearly clued into what is happening in overseas markets, even more than their local market.”

All up more than $1 million worth of transactions went through Stake on Thursday morning for Snowflake, then another $1.38 million on Friday morning.

Snowflake shares did lose their momentum on Friday morning and lost more than 10% to hit US$227.54. But that’s still 90% higher than the IPO price of US$120.

More reading

• The Snowflake (NYSE:SNOW) share price is up 90% in two days
• Overwhelming demand made Warren Buffett-backed Snowflake the biggest software IPO ever
• Warren Buffett is investing in this hot tech IPO. Should you?
• Warren Buffett just invested billions in Japan – here’s why it matters
• Why Alphabet should split its stock

Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Berkshire Hathaway (B shares) and Slack Technologies. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Snowflake Inc. and Uber Technologies and recommends the following options: short January 2021 $200 puts on Berkshire Hathaway (B shares) and long January 2021 $200 calls on Berkshire Hathaway (B shares). The Motley Fool Australia has recommended Berkshire Hathaway (B shares) and Slack Technologies. 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 5G Networks Ltd (ASX: 5GN) share price has fallen today as the company updated the market with its bidder statement. The bidder statement relates to its takeover attempt of Webcentral Group Ltd (ASX: WCG) which is discussed in more detail below. The 5G Networks share price closed 2.25% lower today at $1.74.

Webcentral is an Australian, full-service digital services partner for small and medium businesses. 5G Networks already owns a 10.2% stake in the company.

What has changed?

5G Networks first stated its intentions to acquire Webcentral in early September along with a $30 million capital raise to provide the funds for the takeover. 

However, prior to the announcement, Web.com was the leading candidate for the takeover. The American domain registration and web development company had proposed to acquire all of the shares in Webcentral for 15.5 cents each.

Nonetheless, despite an improved offer of 18 cents per share from the American company, the Webcentral board has decided to go with 5G Networks’ proposal. As such, the company has entered into a bid implementation deed with 5G Networks.

Why did 5G Networks’ offer get selected?

Notwithstanding a higher offer by Web.com, the Webcentral board believes the 5G Networks proposal provides shareholders with a better outcome.

This is as a result of ongoing exposure to potential improvement in the performance of Webcentral after a period of underperformance and a declining share price. Furthermore, there is potential value from benefits of scale and potential synergies of the combined group.  

Ultimately, the deal with 5G Networks provided less completion risk and higher execution certainty as compared to the Web.com scheme. 5G Networks has agreed that it will offer to acquire all the Webcentral shares which it does not presently hold.

What will Webcentral bring to 5G Networks?

I believe the deal represents a transformational transaction for 5G Networks, materially changing the scale and earning profile of the business. Furthermore, the deal would see increased diversification and resilience of 5G Networks’ earnings profile through the introduction of complimentary product offerings. As such, the combined businesses would create a diverse enterprise with a significant combined customer base and deep management expertise.

Finally, the opportunity to gain exposure to new markets and access a large base of new customers represents obvious upside. Management believes the combination of the two businesses can generate synergies of over $7 million per annum on a run rate basis.

Foolish takeaway

In my opinion, the acquisition is a shrewd piece of business for 5G Networks. Webcentral is a strong strategic fit, aligning with 5G Networks’ growth strategy to acquire businesses with operational and product synergies to augment its current capabilities. The 5G Networks share price is currently trading nearly 126% higher so far this year.

More reading

• Why 5G Networks, AMP, Clover, & Reliance shares are dropping lower today
• Why the 5G Networks share price is sinking lower today
• 5G Networks launches capital raising for Webcentral acquisition
• 3 small cap ASX shares I’d buy with $1,000
• Top ASX Stock Picks for September 2020

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. 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 5G Networks Ltd (ASX: 5GN) share price has fallen today as the company updated the market with its bidder statement. The bidder statement relates to its takeover attempt of Webcentral Group Ltd (ASX: WCG) which is discussed in more detail below. The 5G Networks share price closed 2.25% lower today at $1.74.

Webcentral is an Australian, full-service digital services partner for small and medium businesses. 5G Networks already owns a 10.2% stake in the company.

What has changed?

5G Networks first stated its intentions to acquire Webcentral in early September along with a $30 million capital raise to provide the funds for the takeover. 

However, prior to the announcement, Web.com was the leading candidate for the takeover. The American domain registration and web development company had proposed to acquire all of the shares in Webcentral for 15.5 cents each.

Nonetheless, despite an improved offer of 18 cents per share from the American company, the Webcentral board has decided to go with 5G Networks’ proposal. As such, the company has entered into a bid implementation deed with 5G Networks.

Why did 5G Networks’ offer get selected?

Notwithstanding a higher offer by Web.com, the Webcentral board believes the 5G Networks proposal provides shareholders with a better outcome.

This is as a result of ongoing exposure to potential improvement in the performance of Webcentral after a period of underperformance and a declining share price. Furthermore, there is potential value from benefits of scale and potential synergies of the combined group.  

Ultimately, the deal with 5G Networks provided less completion risk and higher execution certainty as compared to the Web.com scheme. 5G Networks has agreed that it will offer to acquire all the Webcentral shares which it does not presently hold.

What will Webcentral bring to 5G Networks?

I believe the deal represents a transformational transaction for 5G Networks, materially changing the scale and earning profile of the business. Furthermore, the deal would see increased diversification and resilience of 5G Networks’ earnings profile through the introduction of complimentary product offerings. As such, the combined businesses would create a diverse enterprise with a significant combined customer base and deep management expertise.

Finally, the opportunity to gain exposure to new markets and access a large base of new customers represents obvious upside. Management believes the combination of the two businesses can generate synergies of over $7 million per annum on a run rate basis.

Foolish takeaway

In my opinion, the acquisition is a shrewd piece of business for 5G Networks. Webcentral is a strong strategic fit, aligning with 5G Networks’ growth strategy to acquire businesses with operational and product synergies to augment its current capabilities. The 5G Networks share price is currently trading nearly 126% higher so far this year.

More reading

• Why 5G Networks, AMP, Clover, & Reliance shares are dropping lower today
• Why the 5G Networks share price is sinking lower today
• 5G Networks launches capital raising for Webcentral acquisition
• 3 small cap ASX shares I’d buy with $1,000
• Top ASX Stock Picks for September 2020

Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends 5G NETWORK FPO. 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 Beach Energy Ltd (ASX: BPT) share price outperformed other energy stocks today after a top broker upgraded the stock.

The BPT share price added 0.4% to $1.39 on Friday when the S&P/ASX 200 Index (Index:^AXJO) lost 0.3% of its value.

The gain by Beach Energy also stands in contrast to other energy stocks. The Woodside Petroleum Limited (ASX: WPL) share price, Santos Ltd (ASX: STO) share price and Oil Search Limited (ASX: OSH) share price fell by around 0.3% each.

Beach Energy share price upgrade

The outperformance of the Beach Energy share price coincides with Citigroup upgrading the stock to “buy/high risk” from “neutral/high risk”.

The broker noted that the stock is more correlated with the Brent oil price than its peers despite Beach Energy selling more CPI-indexed gas. This means its income should be less affected by the oil price.

What’s more, Beach Energy is net cash and patient investors the opportunity to buy the stock that is well below intrinsic value when oil sells off.

Why now may be time to buy

With the oil price on the backfoot recently, this is a chance to buy the stock with a compelling margin of safety.

“We think the stock may be underperforming some peers due to a perceived lack of catalysts,” said Citi.

“This might be true, but unlike peers, BPT is not beholden to M&A markets functioning in order to sell assets to fund capex.

“This is a positive because there is no balance sheet overhang for BPT that we think is keeping investors on the sidelines for other energy stocks.”

BPT share price looking oversold

What’s more, too much bad news is priced into the stock. Even in Citi’s bear case scenario, investors buying the stock is getting a free carry on Cooper basin growth and Waitsia phase 2.

“If we include growth consistent with our model, the current share price implies a US$37 [per barrel] oil price into perpetuity, equal lowest among our covered names,” said Citi.

The current Brent price stands at around US$43 a barrel.

How much is the BPT share price worth?

The Beach Energy share price lost around half of its value over the past year. That’s behind the 33% drop in the STO share price and the 44% decline in the WPL share price. Only the OSH share price is faring worse as it plunged by 64%.

Citi’s 12-month price target on Beach Energy is $1.94 a share.

More reading

• Why the Purifloh (ASX:PO3) share price crashed to a 2-year low today
• Why the St Barbara (ASX:SBM) share price is climbing higher today
• Brokers name 3 ASX shares to buy right now
• ASX 200 down 0.1%: Tech shares push higher, AMP (ASX:AMP) sinks lower
• The 3 best ETFs for passive investing

Motley Fool contributor Brendon Lau 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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Mark Delaney manages one of the biggest lumps of money in Australia.

Since 2006 he has been chief investment officer for AustralianSuper, which now has more than $180 billion under management.

One out of every ten Australians rely on him to maximise their retirement nest eggs.

So Delaney knows a thing or two about investing, and has heard all the barbecue talk about how to grow your money.

So what’s the cliché that frightens him the most for retail investors?

“There’s no more dangerous words in investing than ‘this time it’s different’,” he said at the Yahoo Finance All Markets Summit.

“Every time people say ‘this time it’s different’, you should probably do the opposite.”

Is it different this time in 2020?

COVID-19 has made for an unprecedented 2020, which could well cause permanent changes to the way we live and work.

And that’s had some thinking whether the fundamentals of investment have also shifted.

Plenty of newbies have dived into the sharemarket this year, pouring in what fund manager Geoff Wilson called “non-sophisticated money”.

Financial authorities and veteran investors are worried that many are in to make a quick buck and could plunge themselves into horrible trouble.

This is why Delaney advised investors to resist this short-sightedness and go long.

“The biggest risk in investing is not that you lose money in the short term,” he said.

“But it’s that your investments don’t deliver what you want them to in the long term.”

Good times follow tough times

It’s a well-known investment axiom to stay the course during tough times.

But it’s easier said than done when emotions take over during a global recession.

Many superannuation account holders this year would have changed their investment mix to increase their proportion of cash.

For Delaney, this doesn’t make sense, because investing is for the future, not the present.

“It’s like driving your car on high beam. You’re not looking at the next bend — you’re looking at the bend after and the one after that,” he said.

“That’s what investing is, looking at what’s beyond what you can see in front of you.”

The Reserve Bank of Australia and central banks around the world have declared low interest rates will be around for many years to aid recovery.

So for Delaney, it makes sense to put your money into the inevitable recovery out of the pandemic.

“It doesn’t make any sense to invest in lower rates,” he said.

“Why don’t we invest in things that will benefit from the recovery in the economy, growth in earnings and businesses that are taking advantage of the structural changes that are taking place.”

More reading

• Why the Beach Energy (ASX:BPT) share price is outperforming its peers today
• Why the Pilbara Minerals (ASX:PLS) share price is up 12% from Wednesday
• Why the Purifloh (ASX:PO3) share price crashed to a 2-year low today
• Coppermoly (ASX:COY) share price up 355% before trading halt
• Where to invest $10,000 into ASX shares immediately

Motley Fool contributor Tony Yoo 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 Pilbara Minerals Ltd (ASX: PLS) share price has rocketed higher over the last three trading days of this week, up 12% since the closing bell on Tuesday.

Despite falling 60% from 5 February through to 23 March, largely driven by the wider COVID-19 market rout, the Pilbara Minerals share price is up an impressive 25% year to date. And it’s up a really impressive 175% from its 23 March low.

For comparison, the S&P/ASX 300 Index (ASX: XKO) is down 12% in 2020 and up 30% from 23 March.

At the current Pilbara Minerals share price of 38 cents, the company has a market capitalisation of $812 million.

What does Pilbara Minerals do?

Pilbara Minerals is an Australian lithium-tantalum producer. The company owns 100% of the Pilgangoora Lithium-Tantalum Project. Located in the Pilbara region of Western Australia, the Pilgangoora project is considered one of the largest hard-rock lithium-tantalum deposits globally. The project’s significant scale and high quality has seen the company progress it from first drill hole to production in less than 4 years.

The company is embarking on a massive expansion of the Pilgangoora project, while developing strategic links into Chinese and South Korean markets. Pilbara Minerals shares began trading on the ASX in 2010.

Why is the Pilbara Minerals share price soaring this week?

On the bigger front, Pilbara Minerals is well situated in the rapidly growing global lithium industry, with demand for lithium raw materials forecast to grow by 28% annually through to 2028. That’s helped drive the Pilbara Minerals share price throughout the year.

But this week, shareholders received a nice boost when the company announced on Tuesday that it had replaced its existing Nordic Bond with a new, low cost US$110 million (AU$150 million) debt facility. Formal agreements for the new debt facility were executed with BNP Paribas and Australia’s specialist clean energy investor, the Clean Energy Finance Corporation.

Pilbara Minerals stated it expects to use the new funds to repay the Nordic Bonds by 30 September. The company forecasts “substantial cost savings” from the lower interest rates it secured. Furthermore, it announced the agreements include the renewal of the US$15 million Working Capital Facility with BNP Paribas.

Commenting on the new finance facilities, Pilbara Minerals’ Managing Director, Ken Brinsden, said:

The fantastic long-term financing outcome achieved by the Pilbara Minerals team shows just how far the company has come since 2017. As one of the major new key lithium raw materials suppliers globally, we have been able to attract very competitive financing terms from leading financial institutions in a challenging market.

This speaks volumes to the Tier-1 status of our deposit, the quality of our products, the strong recent performance of our plant, our cost competitive supply base and the quality of the key strategic partners and off-takers participating in our business.

With the Pilbara Minerals share price up 5.5% in trading today alone, investors appear to agree with Brinsden’s enthusiastic outlook.

More reading

• Top brokers name 3 ASX shares to sell next week
• Pilbara Minerals share price on watch as losses increase 243%

Motley Fool contributor Bernd Struben 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 Purifloh Ltd (ASX: PO3) share price tumbled to a near two-year low today after it announced the sudden resignation of its chairman.

Shares in the water and air purification technology developer crashed 15.3% to $1.61 in the last hour of trade.

In contrast, the All Ordinaries (Index:^AORD) (ASX:XAO) and the S&P/ASX 200 Index (Index:^AXJO) are trading around breakeven.

Purifloh share price rocked by sudden exit

Companies that are involved in decontamination should be well regarded during the COVID-19 pandemic. But investors got spooked when PuriflOH’s chairman Bill Parfet resigned with immediate effect.

“It has been an honour to lead Purifloh over the past 12 months though I now wish to spend more time in retirement with my family,” said Mr Parfet.

“I depart with nothing but good wishes and best regards for the Company, my fellow Board Members and the management team. 

“I plan to continue to support them as best I can through continuing with my shareholding and offering guidance where requested.”

Can’t de-sanitise bad news

Investors haven’t taken the news well despite Mr Parfet’s explanation. The sudden and immediate resignation of any key executive tends to trigger a share sell-off. Shareholders are selling first and asking questions later.

Management tried to cushion the fall in the PuriflOH share price by stating that Mr Parfet doesn’t intend to sell his shares in the company.

Mr Parfet will be replaced by Carl Le Souef, who controls Dilato Holdings Pty Ltd. Dilato is a major shareholder in PuriflOH.

PuriflOH’s new chairman

“All shareholders owe a debt of gratitude towards Bill for his investment in PuriflOH, together with his efforts on behalf of the Company,” said Mr Le Souef.

“We thank Bill for his support and leadership and wish him the very best in his retirement.

“We plan to release a detailed update of activities in the near future.”

Already in strife

One can’t rule out a cap raise. The company holds around $2.4 million in the bank, which management stated in its 4C is enough to last it for a little over two quarters.

Our share market operator ASX Ltd (ASX: ASX) suspended PuriflOH at the start of August after it submitted an incomplete 4C, or quarterly cash flow report.

Talk about a bad look!

Little wonder investors are jittery to any bad news.

More reading

• Why the Beach Energy (ASX:BPT) share price is outperforming its peers today
• Why the St Barbara (ASX:SBM) share price is climbing higher today
• ASX 200 down 0.1%: Tech shares push higher, AMP (ASX:AMP) sinks lower
• The 3 best ETFs for passive investing
• How to make $1 million from ASX shares

Motley Fool contributor Brendon Lau 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 Coppermoly Limited (ASX: COY) share price was up 355.56% today to 4.1 cents. This came prior to the company entering a trading halt this morning.

Why did Coppermoly request a trading halt?

Coppermoly requested a trading halt in order to respond to an ASX price query. The company stated that it was not aware of any reason why a trading halt should not be granted in accordance with listing rule 17.1.

Coppermoly requested that the trading halt remain in place until the commencement of trading on Tuesday 22 September 2020 or when the company has made an announcement to the market in response to the ASX price query.

Trading in shares of Coppermoly was paused at 10.48 am this morning.

About Coppermoly

Coppermoly is a mineral exploration and development company focused on copper, gold, and molybdenum deposits. It operates in Papua New Guinea and has been listed on the ASX since 2007. 

In its quarterly report released in July, Coppermoly announced that it had cash reserves of $4.6 million at 30 June 2020, down from $5,026,000 at the end of the previous quarter.

In April, Coppermoly announced that it had intersected high grade copper and zinc mineralisations at its Mt Nakru project through electromagnetic ground surveys. At the Nakru 2 Northwest prospect, the company identified a strong electromagnetic conductor which returned 11 metres at 4.13% copper, 9.04% zinc and 0.29 grams per tonne of gold.

At the Nakru 3 prospect, the company identified a conductive zone which returned 2 metres at 0.41% copper, 1.45% zinc and 1.11 grams per tonne of gold along with 364 grams per tonne of silver. Another trench at the Nakru 3 prospect returned 2 metres at 0.41% copper, 1.45% zinc and 0.14 grams per tonne of gold. The electromagnetic survey at Mt Nakru revealed drilling targets which the company stated were “highly encouraging”.

The Coppermoly share price is up 925% since its 52-week low of 0.4 cents, and is up 310% since the beginning of the year. 

More reading

• Where to invest $10,000 into ASX shares immediately
• Fonterra Shareholders’ Fund (ASX:FSF) share price higher after annual result
• The Sezzle (ASX:SZL) share price is up 15% this week
• Why the BBX share price has rocketed 93% this month
• Negative rates may be coming to a big four ASX bank near you

Motley Fool contributor Chris Chitty 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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Given the increasingly bleak outlook for interest rates in Australia and globally over the coming few years, if I had $10,000 sitting in a savings account, I would be looking to put it to work in the share market.

But where should you invest $10,000? Three top ASX shares that I would buy with these funds are listed below. Here’s why I like them:

Kogan.com Ltd (ASX: KGN)

The first option to consider investing $10,000 into is this ecommerce company. Although its shares have been on fire this year, I don’t believe it is too late to invest. At 38x estimated FY 2021 earnings, I feel Kogan shares are still good value given its exceptionally positive long term outlook. This is thanks to the popularity of its offering and the ongoing shift to online shopping. In respect to the latter, the pandemic appears to have accelerated this structural shift and Kogan stands to benefit greatly from it.

Pushpay Holdings Group Ltd (ASX: PPH)

Another option to consider investing $10,000 into is Pushpay. It provides a donor management and community engagement platform to the church market. Pushpay has worked hard over the last few years to carve out a leadership position in the market and is reaping the rewards today. In FY 2020 the company grew its operating earnings at a rapid rate and more of the same is expected in FY 2021. Pleasingly, despite this, the company is still only scratching at the surface of its sizeable market opportunity. In light of this, I believe there is a lot more to come from Pushpay over the next decade.

SEEK Limited (ASX: SEK)

A final share to consider investing $10,000 into is SEEK. Although trading conditions are tough for the job listings giant right now because of the pandemic, I think it is worth sticking with it. This is because of its dominant position in the ANZ market and its growing Chinese operations. I believe the latter has the potential to underpin strong earnings growth and help SEEK achieve its aspirational revenue target of $5 billion later this decade. This will be a big increase on FY 2020’s revenue of $1,577.4 million.

More reading

• 3 ASX shares poised for huge growth in FY21
• 3 ASX shares to buy before this window of opportunity closes
• Why you should invest $5,000 into these ASX shares right now
• 2 of the best ASX tech shares to buy and hold until 2025
• ASX 200 rises 1%, SEEK (ASX:SEK) jumps 9%

James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Kogan.com ltd and PUSHPAY FPO NZX. The Motley Fool Australia has recommended Kogan.com ltd, PUSHPAY FPO NZX, and SEEK 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 Fonterra Shareholders’ Fund (ASX: FSF) share price was up 0.27% at the time of writing to $3.73. This came after the company released its annual result for the year ended 30 June 2020.

What was in the announcement?

The Fonterra Shareholders’ Fund had revenue of NZ$6 million in the year to 30 June 2020 (FY20). Its FY20 net profit was nil. 

According to the fund’s FY20 report, Fonterra Cooperative Group’s reported net profit after tax was NZ$659 million, up NZ$1.3 billion compared to the prior year. The report stated that the underlying business performance improved, with Fonterra’s food service business having a significantly better first half, especially in Greater China. However, this improved performance was partially offset by the disruption caused by COVID-19.

Fonterra’s consumer business performance was down compared to the prior year. This was attributed to business disruptions in Hong Kong and Chile, and impairments to the company’s Chesdale brand and goodwill in the New Zealand consumer business. 

Free cash flow for the Fonterra business increased by NZ$733 million during FY20 to NZ$1.8 billion. This was achieved through a combination of improved earnings, lower capital expenditure and the sale proceeds received from the divestment of DFE Pharma and Foodspring, along with a reduction in the company’s Beingmate shareholding.

The Fonterra Shareholders’ Fund announced a final dividend of 5 NZ cents per unit, which is unfranked. The ex-dividend date is 24 September 2020.

Outlook for FY 2021

According to the report, there is a high level of uncertainty for Fonterra entering the 2021 financial year due to the global recession and the potential for new waves of COVID-19 to affect the dairy industry. However, Fonterra’s CEO, Miles Hurell, has stated that he intends to keep to the group’s current strategy, which includes spreading its reach in global markets.

About the Fonterra Shareholders’ Fund share price

The Fonterra Shareholders’ Fund is a managed investment scheme that allows shareholders to invest in the performance of the Fonterra Co-operative Group, which is listed in New Zealand.

The Fonterra Shareholders’ Fund share price is up 26.87% since its 52-week low of $2.94, however, it is down 7% since the beginning of the year. 

More reading

• Coppermoly (ASX:COY) share price up 355% before trading halt
• Where to invest $10,000 into ASX shares immediately
• The Sezzle (ASX:SZL) share price is up 15% this week
• Why the BBX share price has rocketed 93% this month
• Negative rates may be coming to a big four ASX bank near you

Motley Fool contributor Chris Chitty 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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