The S&P/ASX 200 Index (ASX: XJO) has been on a rollercoaster ride to start the year and we’ve already seen one ASX share market crash.

We’re less than halfway into 2020 and we’ve already seen a bear market, pandemic, oil price war and record government stimulus.

But despite some obvious headwinds, the ASX 200 has bounced back strongly in April and May. Investors are starting to get spooked as ASX shares climb back to where they were in mid-February.

So, if we were to see another ASX share market crash, what’s the best way to deal with it?

Don’t panic in an ASX share market crash

If a crash has already occurred, it’s too late to cash out. Selling out during a downturn can chrystallise your losses and reduce any potential upside.

That means it’s best to keep calm and carry on if the market has a downturn. This way you can keep your eye on the long-term prize and stay cool under pressure.

Trust in diversification

There’s a reason why diversification is key. While it can be tempting to load up on a growth share like Altium Limited (ASX: ALU) and hope for the best, portfolio construction is critical.

If we see another ASX share market crash in 2020, it’s best to have a portfolio ready to spread the risk. That means having enough investments across individual companies and sectors to weather the storm.

Don’t overinvest in ASX shares

An ASX share market crash creates buying opportunities for savvy investors. While it’s tempting to buy, buy, buy, it is a short-sighted mindset.

Make sure you only invest what you can afford to lose. No matter how good an ASX share price is, you don’t want to overinvest and commit too much capital.

The worst thing you can do as a long-term investor is be forced to sell early to cover short-term expenses.

More reading

• Where will the Telstra share price be next year?
• 3 ASX shares Warren Buffett couldn’t ignore today
• What would $50,000 invested in the ASX 200 a decade ago be worth today?
• Is the Transurban share price a buy today?
• Should you ever buy ASX shares at an all-time high?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium. 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 Experience Co Ltd (ASX: EXP) share price is flying higher in morning trade, up 17.24% at the time of writing to 17 cents.

Experience Co is a provider of adventure tourism and leisure experiences in Australia and New Zealand. These experiences include skydiving, island day trips, and reef tours. The company’s operations are located predominantly on the eastern seaboard of Australia from the Great Ocean Road in Victoria to Queensland’s Port Douglas. It also has skydiving operations in Queenstown, New Zealand.

Despite getting off to an impressive start after listing in 2017, Experience Co shares haven’t had the best run on the ASX to date – falling from around 88 cents in December 2017 on the back of weak tourism conditions, poor weather events, and the resignation of its CEO.

Why has the Experience Co share price bounced today?

This morning, Experience Co released a market update in regard to the impact of COVID-19 on its operations. The company had previously announced the indefinite suspension of all operations on 23 March.

According to today’s release, operations have resumed at Experience Co’s Queenstown skydiving drop zone. The company is also aiming to resume operations at a number of Australian-based drop zones during June.

On the whole, experiences will be activated on a breakeven basis, staged over the coming months in line with the relevant jurisdictional lifting of restrictions.

In terms of financial stability, the company believes it is well-positioned to sustain an extended period of hibernation with $10 million cash on its books as at 30 April 2020. It also has an additional $15 million undrawn capacity on its debt facility with National Bank of Australia Ltd (ASX: NAB) and facility agreement waivers in place in relation to covenant testing for the 30 June 2020 testing period.

Assuming operations are suspended and there are no material changes in market conditions, Experience Co is anticipating its minimum monthly net cash outflow to average approximately $1 million per month to 30 September 2020.

As for wages, the company has triggered job subsidy programs in both Australia and New Zealand. The respective programs have been implemented for 360 eligible employees in Australia and 78 employees in New Zealand. Meanwhile, senior executives and board members have taken a 30% reduction in remuneration until 30 June 2020.

Experience Co has also been supported by lease cost relief with the co-operation of its landlords. As a result, monthly lease expenses through a combination of waivers and deferrals have been reduced. This includes 100% rent relief for Ports North and fees and charges in its Great Barrier Reef business until 31 December 2020.

Looking forward, Experience Co noted the continuation of its strategy for business simplification. It described the divestment of its Hunter Valley and Byron Bay Ballooning businesses as “well progressed” and cited other surplus asset sales processes are ongoing.

Additionally, Experience Co highlighted that good headway has been made on business process projects. This includes implementing a new reservations system for the skydiving business and process improvements across corporate functions.

Management commentary

Commenting on today’s update, CEO John O’Sullivan said:

“The EXP team has been working extremely hard to design and implement COVID-19 operational processes and procedures since the Australian and New Zealand Government regulations came into effect. We are cautiously excited about recommencing our operations all the while recognising that the emergence is likely to be protracted and will require a sustained level of resilience across the business. Our goal remains to maintain a viable business and balance sheet, positioning EXP for when conditions improve.”

“At the time of suspending operations we noted that we were not in a position to forecast with any level of certainty the duration nor recovery profile from this pandemic. This remains the case and our continued strategy is to minimise short-term cash outflows,” he added.

More reading

• Where to invest $10,000 into ASX shares immediately
• Why Beach, Jumbo, ResMed, & WiseTech Global shares are dropping lower
• Why you shouldn’t fear an ASX share market crash
• Where will the Telstra share price be next year?
• Why the Blackmores share price is charging higher today

Motley Fool contributor Cathryn Goh has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of EXPERNCECO FPO. 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 Telstra Corporation Ltd (ASX: TLS) share price has slumped lower in 2020 but where is it headed in the next year?

What’s been happening with Telstra in 2020?

It’s been a bit of a rollercoaster for Telstra shareholders in recent years.

In fact, the Aussie telco’s share price has shed over 48% in the last 5 years including nearly 10% this year. However, the S&P/ASX 200 Index (ASX: XJO) is down 11.58%, at the time of writing. This means Telstra is actually outperforming right now.

Notwithstanding, the recent share price falls are largely as a result of increased competition from NBN Co which has hit Telstra’s earnings hard.

Telstra has also changed its dividend policy in recent periods. This comes after having famously paid out close to 100% of profits throughout the 2000s.

This change, along with the coronavirus pandemic, has spooked investors and sent the Telstra share price tumbling. That means the Aussie telco could be in the buy zone at $3.22 per share.

I think the current climate could accelerate Telstra’s transformation plans. The Telstra 2022 strategy was designed to slash costs and make Telstra into a more focused, efficient telco.

While COVID-19 has thrown a spanner in the works for those plans, Telstra services are still in high demand. More workers at home is increasing the need for mobile infrastructure and stronger networks. 

That’s good news for Telstra and could help maintain earnings when August rolls around.

Will the Telstra share price climb higher?

The Telstra share price is sitting at $3.22 per share which is a far cry from its 52-week high of $4.01. Things are clearly different compared to the start of the year but Telstra is still a strong ASX dividend share with a current yield of 3.15%.

No one knows exactly where the telco’s share price will be in the next 12 months. I think the 5G network is the key to the telco’s success over the medium to long-term.

If Telstra can corner the market with this, its share price could be on the rise by May 2021. However, there’s still strong competition and a challenging market which means there’s plenty of uncertainty ahead this year.

Foolish takeaway

I think the Telstra share price could outperform the S&P/ASX 200 Index in 2020 and continue to be a strong dividend share next year.

More reading

• Why you shouldn’t fear an ASX share market crash
• 3 ASX shares Warren Buffett couldn’t ignore today
• What would $50,000 invested in the ASX 200 a decade ago be worth today?
• Is the Transurban share price a buy today?
• Should you ever buy ASX shares at an all-time high?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra 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 Blackmores Limited (ASX: BKL) share price has returned from its trading halt and is pushing higher.

At the time of writing the health supplements company’s shares are up 2% to $80.50.

Why was Blackmores in a trading halt?

Blackmores requested a trading halt on Wednesday while it undertook a capital raising which aimed to raise up to $117 million.

These funds were being raised to strengthen its balance sheet and liquidity position, support its activities in the Asia market, and invest in its efficiency program.

This morning the company revealed that it has successfully completed the $92 million fully underwritten institutional placement component of the capital raising.

Blackmores has issued approximately 1.3 million new shares to institutional investors at a price of $72.50 per share. This represented an 8% discount to its last close price.

The company revealed that the placement generated significant interest from existing institutional shareholders and other institutional investors.

Blackmores Chief Executive Officer, Alastair Symington, commented: “We are pleased with the demonstration of support shown by our institutional shareholders and other institutional investors for the Placement. We believe our capital management initiatives put us in a position of strength to focus on our strategic priorities and help us achieve our objective of returning Blackmores to sustainable, profitable growth.”

The company will now push on with its share purchase plan. This aims to raise a further $25 million. Eligible shareholders can apply for up to $30,000 of new shares.

Trading update.

In case you missed it, on Wednesday the company also provided the market with an update on its performance during the pandemic.

While Blackmores has experienced a material increase in demand for its immunity products, this has been offset by weakness in other areas of the business.

Nevertheless, the company remains on track to achieve its guidance for FY 2020. It expects underlying net profit after tax to be $17 million to $21 million this year.

Although this will be a massive year on year decline, management appears optimistic that better days are coming thanks to this capital raising.

More reading

• 5 things to watch on the ASX 200 on Thursday
• ASX 200 edges down, bank share prices fly
• Why the Blackmores share price is in a trading halt
• 2 quality ASX shares to buy for long-term growth
• ASX shares and investing trends that could boom post COVID-19

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores 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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I recently bought an ASX share for my portfolio.

It’s something that I’ve regularly written about and offers exposure to something quite different to many other ASX investments.

I’m talking about WAM Microcap Limited (ASX: WMI).

Almost every investor knows what’s going on with shares like National Australia Bank Ltd (ASX: NAB), Afterpay Ltd (ASX: APT) and Telstra Corporation Ltd (ASX: TLS).

It’s when you start going down the market capitalisation list that you start finding those unknown opportunities. Not many people are looking at shares with market caps under $300 million. That’s exactly the shares that listed investment company (LIC) WAM Microcap looks at.

Regular investors can’t be expected to know about every small cap ASX share. I believe it can be a smart idea to delegate some of that share picking to one of the best small cap investment teams in Australia, Wilson Asset Management.

How has WAM Microcap performed?

At the end of April 2020, WAM Microcap’s gross investment portfolio performance was 11.1% per annum since inception in June 2017. But of course, that includes the 21.4% drop over the previous three months from the coronavirus sell-off. But WAM Microcap outperformed its benchmark by 7.7% per annum in that time.

At the end of January 2020 its gross investment performance was 22.8% per annum since inception.

So why did I buy this ASX share?

The ASX share holds dozens of positions, so it doesn’t have too much risk from any one position. Indeed, it actually offers a lot of diversification.

The main thing to worry about, apart from potentially poor returns, is that small cap values can get smashed during times like this when market liquidity disappears. Which is exactly what happened.

But it’s this market selloff that presents the best times to buy. We’ve already seen huge share price recoveries from shares like EML Payments Ltd (ASX: EML) and City Chic Collective Ltd (ASX: CCX).

It’s not exactly a cyclical share, but there are going to be moments where it makes a lot more sense to buy this ASX share small cap LIC compared other times. Despite the huge recovery of the WAM Microcap share price from 23 March 2020, it’s still materially under the pre-crash high of $1.58 (though it has paid a dividend since then).

The dividend

The dividend of WAM Microcap is one of the best features. It has been increasing its ordinary dividend over the past few years, whilst also paying special dividends. Using an annualised dividend of 6 cents per share, it has a grossed-up dividend yield of 6.6%. A very good yield in today’s low interest era.

Foolish takeaway

I think WAM Microcap is at a fair price right now. It’s probably trading close to its net tangible asset (NTA) price, but its actual share holdings have rallied hard and aren’t as good value. There could be another market dip. I’d be very willing to buy a parcel of the ASX share and buy more the next time the market falls – whenever that is.

More reading

• ASX shares can help millennials retire before their parents
• ASX shares I’d invest $10,000 into today
• Why high yield dividend shares can be detrimental to your wealth
• Is it time to buy ASX small caps for your portfolio?

Tristan Harrison owns shares of WAM MICRO FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Emerchants Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Emerchants 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 WiseTech Global Ltd (ASX: WTC) share price is dropping lower on Thursday after the release of an update.

At the time of writing the logistics solutions company’s shares are down 3.5% to $21.60.

What was in WiseTech’s update?

This morning WiseTech provided the market with an update on the earnout arrangements it has for many of the bolt-on acquisitions it has made in recent years.

Earnouts are used during acquisitions to reward the sellers of a business if the acquired business goes on to achieve certain financial goals.

According to the release, it has worked collaboratively with 17 of its acquired businesses to simultaneously reduce and close-out future earnouts and replace significant cash payments with equity.

WiseTech Global Founder and CEO, Richard White, explained: “The current environment provided us with the opportunity to restructure previously agreed acquisition earnouts, ensuring we can better drive those resources, accelerate their contribution to CargoWise development, and further improve our commercial efficiency.”

“Our shared vision and alignment with our Founder MDs enabled us to close out these arrangements efficiently, remove significant contingent cash obligations and reduce future contingent liabilities. The leaders across our acquired organisations remain in the Group and are focused on delivering value for shareholders.,” he added.

What are the changes?

The company revealed that the negotiations have resulted in:

• Reduction in contingent liabilities overall from $215.5 million to $68.5 million.
• Removal of $151.5 million of future contingent cash liabilities.
• Equity issuance of $81.4 million of which $45.7 million remains escrowed for 12 months.
• The complete close-out of all future earnouts for ABM Data, CargoIT, Cargoguide, CargoSphere, CustomsMatters, DataFreight (LSI), Microlistics, Pierbridge, SmartFreight, Softcargo, SaaS Trans, Trinium, and Xware.
• The replacement of cash earnouts with equity for Cypress, Depot Systems, Forward, and SISA: part immediate equity close-out, and part future equity earnouts of $10.9 million based on product development.

The company will now review earnouts for the remaining acquisitions it has made.

In other news, WiseTech revealed that it remains on target to achieve its guidance for FY 2020.

Mr White advised: “In the current environment, our business continues to demonstrate resilience and tracks in line with our expectations.”

More reading

• Why Beach, Jumbo, ResMed, & WiseTech Global shares are dropping lower
• 1 key trait to look for with most top ASX growth shares
• The WiseTech share price has doubled since March. Too late to invest?
• Fund managers have been buying these ASX shares
• 2 top ASX tech shares with strong long-term growth potential

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of WiseTech Global. 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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There are some great ASX shares to buy for Warren Buffett-like value investors right now. The S&P/ASX 200 Index (ASX: XJO) is down 13.60% this year and is going from bear to bull on an almost daily basis.

That volatility and market noise is good for experienced investors. Here are a few ASX shares I think even the ‘Oracle from Omaha’ couldn’t ignore at today’s prices.

3 ASX shares even Warren Buffett couldn’t ignore

There’s no doubt Buffett is one of the world’s greatest ever investors. He keeps things simple, looks for strong earnings potential and creates value through ownership.

Now, if you’re a Fool with $5,000, you won’t be able to effect great strategic change today. But what you can do is invest in undervalued ASX shares with strong earnings potential.

I like the look of CSL Limited (ASX: CSL) right now. CSL is a leading biotech group with a $130.77 billion market capitalisation. With a strong research and development pipeline, and after falling 6.38% lower in yesterday’s trade, CSL shares could be in the buy zone.

Another ASX share worth a look today is Wesfarmers Ltd (ASX: WES). Wesfarmers is a diversified conglomerate that is sitting on a big pile of cash after selling a $1.1 billion stake in Coles Group Ltd (ASX: COL).

Wesfarmers is in a strong financial position and is looking to restructure its underperforming Kmart Group segment. That could be good news for investors like Warren Buffett who like to see efficiency and strong cash flow.

Finally, I like National Australia Bank Ltd. (ASX: NAB) shares right now. NAB shares are down 23.3% this year, at the time of writing, but could bounce back as we begin to recover from the coronavirus-led economic fallout.  

Despite some regulatory headwinds and intensifying competition, I think NAB will continue to churn out dividends for shareholders in years to come.

Foolish takeaway

These are just a few of the ASX shares that could be undervalued right now. Warren Buffett has proven to be a patient investor who isn’t afraid to sit and wait for the right opportunity.

More reading

• 1 key trait to look for with most top ASX growth shares
• What would $50,000 invested in the ASX 200 a decade ago be worth today?
• Is the Transurban share price a buy today?
• Should you ever buy ASX shares at an all-time high?
• 3 quality ASX dividend shares for income investors to buy today

Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers 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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