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The Bitcoin (CRYPTO: BTC) price is falling hard, down 8% since this time yesterday.

At time of writing, the world’s biggest token by market cap is trading for US$40,639 (AU$56,558).

That slide sends the Bitcoin price down 5% for the week and increases its losses to 15% so far in 2022.

As for crypto investors who bought at 10 November’s all-time highs? They’re in the red by some 41%, according to data from CoinMarketCap.

Why is the Bitcoin price tumbling today?

The Bitcoin price is following the broader selloff in risk assets.

Investor jitters saw the tech heavy Nasdaq plummet 2.9% in Thursday’s trading.

Here in Australia, the S&P/ASX All Technology Index (ASX: XTX) is on a similar path. The All Tech index is currently down 2.2%. That’s twice the losses posted by the broader All Ordinaries Index (ASX: XAO) at this same time.

Investors have predominantly been spooked by two events recently.

Firstly, the unexpectedly high inflation figures coming out of many developed nations, including the United States, the world’s biggest economy. This is seeing the US Federal Reserve, and likely other central banks including the Reserve Bank of Australia, usher in interest rate hikes sooner than expected.

Higher interest rates tend to see growth shares sell off. And Bitcoin has lately been closely tracking the fortunes of high growth stocks.

Secondly, and the more dominant driver to the current Bitcoin price slide, is investor fears over a potential Russian invasion of Ukraine. While Russia says it has no intentions to do so, the United States says an invasion could happen any time.

Commenting on the Bitcoin price plunge, Barbara Matthews, CEO of BCMStrategy said (quoted by Bloomberg), “The geopolitical situation in Europe and Ukraine is having material impact. But I think it’s underappreciated how much monetary policy continues to generate uncertainty and volatility in the markets.”

Not such a haven asset at the moment

Crypto enthusiasts will be disappointed to see that the Bitcoin price has not held up under increased global uncertainty.

As the token has gained greater institutional adoption, many have been touting Bitcoin as an alternate haven asset to the likes of gold.

However, the facts don’t support that.

ASX gold shares have been surging today amid rising uncertainty, while the Bitcoin price has decidedly gone the other way.

The post The Bitcoin price just fell 8%. What’s going on? appeared first on The Motley Fool Australia.

More reading

• Why Bitcoin, Ethereum, and Dogecoin plunged today
• How this tech giant could ‘put booster rockets’ under crypto: expert
• How this key metric bodes well for the Bitcoin price
• Why is the BetaShares Crypto Innovators ETF (ASX:CRYP) leaping 5% today?
• Ethereum and Bitcoin price in focus as world’s biggest asset manager eyes cryptos

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended Bitcoin. The Motley Fool Australia owns and has recommended Bitcoin.  The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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ASX growth shares have been hit hard in 2022 as interest rates prime up for a shift and inflation pressures dominate investor headlines.

Growth shares are companies that are expected to grow at a much faster rate than both competitors and the market, and typically are earlier in their maturity cycle. Most earnings are reinvested back into the company versus being paid in dividends.

Growth stocks have dominated in recent years

These stocks generally trade at lofty valuations, as measured by price to earnings (P/E). Growth stocks will trade at a P/E higher than the benchmark S&P/ASX 200 Index (ASX: XJO)’s P/E ratio (which currently rests at 18.8x according to Bloomberg).

Much of the reason is that people are prepared to pay a premium ‘today’ for access to this potential growth into the future. They will forgo returns today for a higher return way out into the future.

In fact, the theme of growth has dominated the investment landscape over the prior decade, primarily as yields on long-dated bonds wiggled lower and real interest rates sunk to nearly 0%.

This means the discount factor that is applied in the valuation of growth stocks has been equally as low. So investors have been happy to pay these premiums, seeing as the valuation seems ‘justified’. Some analysts will defend their assumptions with discounted cash flow projections and other methods as well.

But as interest rates and yields on long-maturity bonds start to rise, this hurts the valuations on already ‘overpriced’ stocks, with a flow-on effect to market prices.

On that front, many market pundits argue that one is ‘overpaying’ when purchasing these ‘overvalued’ stocks, and the risk is always going to be a correction down towards the ‘fair value’.

And not to mention the high volatility that can be associated with growth – we’ve seen as much in 2022. After all, there is a trade-off between risk and reward in finance as we know.

We can see this relationship between the yield/interest rate on the US 10yr Treasury note, a proxy used in asset valuations, and the Vanguard Growth ETF (NYSE: VUG). Investors should pay close attention to the inverse nature of how these two proxies trace each other. The relationship is especially tight in 2022.

One fund manager agrees with the market’s sentiment and remains adamant his fund’s discipline around valuation and seeking out undervalued companies has been integral to its success in recent periods. Let’s take a look.

‘Sensible cyclicality’ this fundie says

Growth shares continue to face headwinds on global equity markets as we roll through the new year. A number of macroeconomic crosscurrents are feeding into the narrative and it all boils down to how asset valuations dance to the tune of interest rates, inflation and the real economy.

Alphinity Investment Management fund manager, Andrew Martin is thinking along the same lines. The fundie notes his firm’s performance has benefitted well from its focus on stock valuation.

Speaking to yesterday’s Australian Financial Review, Martin noted that his fund had made some recent changes and was running a more balanced portfolio due to the current macro-climate.

“Our valuation and earnings leadership discipline has largely kept us out of the high PE, long duration growth stocks that have been coming off”, he noted.

“With upward pressure from inflation on interest rates and discount rates, that still feels the right approach for now, although we are alert to opportunities in great businesses that can get caught up in the general sell-off”.

Martin also noted that the recent turbulence in equity markets might have been somewhat warranted, particularly in view of what’s in store for investors from 2022 and beyond.

“For now, adding a bit of cyclicality back in (given current inflation and growth outcomes) seems sensible”, the portfolio manager said. “Especially shares are the more “value-y” end; so resources, energy, financials”.

That leaves Aplinity’s principal feeling constructive on a suite of potentially undervalued, defensible names that hold their mark on the ASX.

“However, looking for decently priced defensives such as Amcor, Orora and Medibank would also be prudent”, Martin remarked.

The post We steer clear of high-PE ASX growth shares: fund manager appeared first on The Motley Fool Australia.

More reading

• Brokers give their verdict on the Telstra (ASX:TLS) share price post-results
• ASX 200 (ASX:XJO) midday update: QBE sinks but Magellan rockets
• Own BHP (ASX:BHP) shares? CEO says inflation is here to stay and it’s positive for the miner
• Why is the Challenger (ASX:CGF) share price outperforming this week?
• Here’s why ASX 200 gold shares are leaping higher today

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Telstra Corporation Ltd (ASX: TLS) share price is defying the market weakness and is pushing higher.

In afternoon trade, the telco giant’s shares are up 1.5% to $3.96.

Why is the Telstra share price rebounding?

Investors have been bidding the Telstra share price higher today after brokers responded largely positively to its half year results.

For example, according to a note out of Morgan Stanley, its analysts have retained their overweight rating and lifted their price target on the company’s shares to $4.60.

Morgan Stanley was pleased to see Telstra finally deliver organic earnings growth after five years of declines. Overall, this has given the broker confidence in the sustainability of the telco’s dividends.

What else is being said?

Over at Goldman Sachs, its analysts have retained their neutral rating with a $4.30 price target. Its analysts were pleased with the performance of Telstra’s key mobile business but note that weakness in the fixed business persists.

Goldman said: “The key driver of the EBITDA beat was the +25% growth in Mobile EBITDA, +8% vs. GSe. Although impacted by accounting changes, service revenue trends were very strong. To drive continued growth, we believe TLS needs: (1) a recovery in int. roaming; or (2) mobile price rises.”

“Continued competitive pressures and NBN regional roll-out drove a disappointing Fixed Ent. performance- with the decline in ARPU likely to continue, impacted by intense competition and technological evolution,” it added.

Overall, Goldman is positive on Telstra and expects dividend increases to start from FY 2024. However, due to the current valuation of the Telstra share price, it is sticking with its neutral rating.

Morgans remains bullish

Elsewhere, the team at Morgans remain bullish on the Telstra share price. The broker has retained its add rating and $4.56 price target.

Morgans commented: “TLS’s 1H22 result showed the second consecutive half of underlying growth, with underlying EBITDA up 5%, underlying EPS up substantially and the DPS flat yoy. Reported numbers dipped yoy due to lower NBN revenue and other one-off gains (which boosted 1H21 reported numbers). Mobile was the star performer. Performance is tracking in the right direction and FY22 guidance was re-iterated. We make minor EPS upgrades on lower D&A; retain Add and $4.56 TP.”

The post Brokers give their verdict on the Telstra (ASX:TLS) share price post-results appeared first on The Motley Fool Australia.

More reading

• Why Block, Domain, Telstra, and Wesfarmers shares are dropping
• Telstra (ASX:TLS) share price slides 3% despite ‘strong mobile beat’
• ASX 200 (ASX:XJO) midday update: Telstra, Wesfarmers, and Woodside report
• Hold the phone! Telstra (ASX:TLS) delivers solid underlying growth and declares 8cps dividend
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns and has recommended Telstra Corporation Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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At lunch on Friday, the S&P/ASX 200 Index (ASX: XJO) is on course to end the week in the red. The benchmark index is currently down 1% to 7,221 points.

Here’s what is happening on the ASX 200 today:

QBE shares sink on full year results

The QBE Australia Group Ltd (ASX: QBE) share price is sinking today after its full year results fell short of expectations. For the 12 months ended 31 December, QBE delivered a 25.7% increase in gross written premium to US$18,453 million. This ultimately led to the insurance giant reporting an adjusted net cash profit after tax of US$805 million. This was well short of the market consensus estimate of US$870 million.

Magellan shares shoot higher

It has been a while, but today has been a good day for the Magellan Financial Group Ltd (ASX: MFG) share price. Its shares are shooting higher following the release of its half year results, which revealed first half profit growth of 16% to $248.1 million. In addition, the fund manager is planning a 1 for 8 bonus issue of options to shareholders and considering a share buyback.

Inghams tumbles on half year results

The Inghams Group Ltd (ASX: ING) share price is tumbling today following the release of its half year results. For the six months ended 31 December, the poultry producer reported a 5.9% increase in underlying net profit after tax to $39.7 million. This fell short of the consensus estimate of a net profit of $41.9 million. COVID-19 weighed heavily on its performance.

Best and worst ASX 200 performers

The best performer on the ASX 200 has been the Magellan share price with a 15% gain following the release of its results. Going the other way, the QBE share price is the worst performer with an 11% decline after its full year earnings fell short of expectations.

The post ASX 200 (ASX:XJO) midday update: QBE sinks but Magellan rockets appeared first on The Motley Fool Australia.

More reading

• ‘Robust financial position’: Magellan (ASX:MFG) share price surges 13% on half-year earnings
• Inghams (ASX:ING) share price slumps 5% amid continued COVID impacts
• QBE (ASX:QBE) share price sinks 9% on FY21 earnings miss
• This is how long the average investor holds onto their shares
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The BHP Group Ltd (ASX: BHP) share price has travelled higher in 2022 despite continuous volatility striking the ASX.

Geopolitical tensions between Russia and Ukraine have hijacked world headlines this month. In January, investors were worried about future interest rate hikes after inflation spiralled out of control.

Nonetheless, when looking at year to date, the mining giant’s shares have gained a tad over 15%.

At the time of writing, BHP shares are down 0.71% to $47.63.

BHP CEO embraces rising inflation

In the company’s half-year results released on Tuesday, management highlighted the strong performance despite operating in a challenging environment.

This came from favourable prices of the group’s main commodity, iron ore which surged above US$200 in July 2021. For every US$1 per tonne the price increased, BHP made $US119 million on H2 FY22 underlying EBITDA.

However, BHP CEO, Mike Henry noted that inflationary pressure has led to higher operating cost curves, and could impact project delivery.

As such, several commodity-linked uncontrollable costs have increased, and in some cases to record highs. An example of this is the severe staff shortage affecting the miner due to Western Australia’s border closure. This has caused materially higher labour costs.

BHP expects cost headwinds due to supply bottlenecks to remain in the 2022 calendar year. However, some easing of this may occur by the end of the period.

While the above may seem negative, Mr Henry stated that demand-led inflation in the broader economy is expected to continue for now. This reflects a healthy tension between rising demand and the ability for BHP to meet it.

He said, “that is fundamentally positive for the resources industry. After more than half a decade of industry wide capital discipline, positive developments in demand are broadly expected to manifest in tighter market balances.”

Mr Henry sees demand-led inflation as a positive for commodities, particularly BHP. This is because management believes it can better contain the impact of higher costs as opposed to other miners.

BHP share price summary

Despite travelling 15% higher in 2022, the BHP share price is relatively flat over the last 12 months, down 1.3%.

Investors heavily sold off the company’s shares in August after reaching an all-time high of $54.55. Since then, its shares hit a 52-week low of $35.56 in November, before surging back up to early June levels.

Based on valuation grounds, BHP presides a market capitalisation of roughly $242.84 billion and has approximately 5.06 billion shares outstanding.

The post Own BHP (ASX:BHP) shares? CEO says inflation is here to stay and it’s positive for the miner appeared first on The Motley Fool Australia.

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• Is BHP (ASX:BHP) the best ASX dividend share?
• Why BHP, Fortescue, Netwealth, and Santos shares are falling

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Challenger Ltd (ASX: CGF) share price is on a roll this week in what appears to be an upward trend.

Challenger shares are up 9% over the past five days while the S&P/ASX All Ordinaries Index (ASX: XAO) languishes, down 0.3%. Over the past month, the Challenger share price has risen 8.7% while the All Ords has dropped 3%.

Challenger’s half-year results appear to have given further strength to the fund manager’s stock. The share price gained 3% yesterday following the release of Challenger’s report. The shares are in the green again this morning, up 0.15% to $6.75 at the time of writing.

Challenger announced it would pay a higher dividend following boosted profits and record sales for the first half of 2022 (1H22). It also told the market it anticipated continuing financial strength looking forward.

So, what does this mean for investors? Let’s read on…

What did Challenger report?

The highlights of the company’s financials for 1H22 are:

• An interim dividend of 11.5 cents per share (up 21%)
• Normalised net profit after tax (NPAT) of $166 million (also up 21%)
• Assets under management totalling $115 billion (up 20%).

Looking closer at its main products, Challenger reported:

• Life sales at $4.9 billion (up 44%)
• Life book growth at $1.4 billion (up 8.4%)
• Funds under management totalling $109 billion (up 20%)
• Funds management EBIT of $45 million (up 28%).

Despite the COVID-19 challenges surrounding face-to-face meetings with clients, Challenger announced “record-breaking sales“.

Challenger said its sales were “benefiting from an expansion in the institutional product offering”. This includes the introduction of institutional term annuities and a growing institutional client base, along with low interest rates.

However, the company announced a slightly lowered cost-to-income ratio of 38.1% (against 39% as of 31 December 2020), and higher cash operating earnings for its life segment against the prior corresponding period.

Challenger said this was due to “additional costs associated with operating the Bank and increased costs to support business growth”.

The company said its interim dividend was fully franked and aligned with earnings growth.

What’s next for Challenger?

Overall, Challenger is confident that its financial strength will continue over the final half of 2022.

Running off the energy of its first half, Challenger aims to focus on retired customers, while maintaining product innovation and overall business momentum.

This follows the completion of Challenger’s acquisition of MyLife MyFinance Limited (MLMF) in 1H22, with term deposits now on offer.

Challenger deems term deposits to be a critically important ingredient to the portfolios of retirees and pre-retirees. It’s an important new offering for Challenger, given customers over 50 years of age accounted for 75% of sales in 1H22.

Smooth integration of the MLMF business into Challenger is on the agenda for the next half.

The company is also looking to develop its joint venture relationship with Apollo Global Management Inc Class A (NSYE: APO) in order to develop “a leading non-bank lending business in Australia and New Zealand”.

While more details are yet to be provided on the strategy, a primary aim will be “enhancing the parties’ retirement services offering in Australia”.

What did management say?

Managing director and chief executive officer Nick Hamilton said:

As a clear leader in retirement incomes, and one of the fastest growing active funds managers in the country, complemented by the strategic acquisition of our new digital bank, Challenger has a unique opportunity to meet the needs of more Australians entering and in retirement.

In the first half of 2022, we delivered a strong result, deriving growth right across our business, diversifying revenue and focusing on the disciplined execution of our strategy.

We are well positioned to benefit from the greatest thematic opportunity of our time, retirement; we have a strong earnings base for growth in 2022 and beyond; and a highly capable and talented team who are committed to fulfilling our purpose of providing customers with financial security for a better retirement.

Challenger share price performance

Over the last 12 months, the Challenger share price has increased by 4%.

The company has a market capitalisation of $4.57 billion and a price-to-earnings ratio (P/E) of 9.1.

The post Why is the Challenger (ASX:CGF) share price outperforming this week? appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• Why Challenger, CSL, NRW, and Woodside shares are pushing higher

Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Challenger Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The S&P/ASX 200 Index (ASX: XJO) is off to a rough start, down 0.9% in morning trade, having earlier posted losses of more than 1%.

This comes following hefty selloffs in US and European markets yesterday (overnight Aussie time).

As with overseas markets, the ASX 200 is under pressure as investors fret over the possible outbreak of a shooting war between Russia and Ukraine.

Russian officials firmly deny any plans to invade neighbouring Ukraine. However, United States authorities continue to sound the alarm, saying Russian forces might concoct a pretext to invade any day now.

Peter Essele is head of portfolio management at Commonwealth Financial Network. Commenting on the broader market selloff, Essele said (quoted by Bloomberg):

Investors, wary of any bad news, have been unable to maintain positive momentum in equity markets across the globe as geopolitical risks dominate headlines. A further escalation of tensions in the near term could roil markets due to the potential impact on a tenuous global supply chain, particularly as the Fed prepares for its first-rate hike in years. A perfect storm may be on the horizon if calmer heads don’t prevail.

While ASX 200 investors are clearly jittery today, some shares are shining brightly amid the turmoil.

Yep, we’re talking about gold shares.

ASX 200 gold shares shining brightly

With rising global uncertainty, investors are turning to gold as a classic haven asset.

Witness the 3.1% gain in the S&P/ASX All Ordinaries Gold Index (ASX: XGD) today.

Now that index includes a number of gold miners not included in the ASX 200.

So how are ASX 200 gold shares performing?

Well, the Newcrest Mining Ltd (ASX: NCM) share price is up 3.2%.

Evolution Mining Ltd (ASX: EVN) shares are up 3.7%.

And the Northern Star Resources Ltd (ASX: NST) share price is up 4.8%.

What’s driving the rally?

As risk assets selloff, investors are increasingly looking to gold as a store of value during a time of increasing geopolitical uncertainty.

Gold is currently trading for US$1,900 per troy ounce. That’s the highest price since June.

As recently as 28 January that same ounce was worth US$1,791, meaning a 6% lift in the price of bullion in just 6 weeks.

And when gold lifts off, the ASX 200 gold shares that dig the yellow metal from the earth tend to follow it higher.

The post Here’s why ASX 200 gold shares are leaping higher today appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Friday
• Newcrest (ASX:NCM) share price lifts despite 46% profit drop
• 5 things to watch on the ASX 200 on Thursday
• In the dirt: Evolution Mining (ASX:EVN) share price slips amid 60% profit plunge
• 5 things to watch on the ASX 200 on Wednesday

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Humm Group Ltd (ASX: HUM) share price is shooting higher today.

In morning trade, the financial services company’s shares are up 7.5% to 92.5 cents.

Why is the Humm share price shooting higher?

The catalyst for the rise in the Humm share price on Friday is news that a deal has finally been struck between it and Latitude Group Holdings Ltd (ASX: LFS) for its buy now pay later (BNPL), instalment, and credit card operations.

According to the release, the two parties have executed a binding agreement that will see Latitude take control of these consumer businesses for a total consideration of $335 million. This represents cash of $35 million and 150 million Latitude shares.

There were concerns that recent weakness in BNPL shares could scupper the deal or lead to the consideration being reduced, but that has proven not to be the case. These terms are the same as those announced on 4 January when Latitude first tabled its offer.

Why acquire these operations?

Latitude believes it will generate $55 million of annual synergies from duplicate costs, technology rationalisation, and funding benefits by the end of 2023 following full integration.

In addition, the release notes that Humm Consumer is expected to generate $35 million of pre-tax cash earnings for the full year 2023. As a result, the combination is expected to deliver incremental pre-tax cash earnings of $90 million on a run-rate basis by the end of FY 2023, excluding $10 million of revenue synergies.

Ultimately, the transaction is expected to deliver double digit cash earnings per share accretion assuming full run rate synergies. This is despite the issue of 150 million new shares to Humm shareholders.

Management commentary

Latitude’s Managing Director and CEO Ahmed Fahour said: “The acquisition of Humm’s consumer business is a great outcome for both Latitude and Humm shareholders. The Transaction will deliver significant synergies and shareholder value, cementing our position as the leading instalments and consumer lending business in Australia and New Zealand and accelerate our international expansion.”

“Humm’s consumer business is a great fit for Latitude given Humm’s capability in big and small ticket BNPL and its merchant base, providing additional scale to Latitude at minimal marginal cost.”

Mr Fahour also revealed that Latitude is inviting Humm’s CEO to lead the BNPL business.

He said: “Upon completion, it is proposed that Humm Group CEO Rebecca James will be invited by Latitude to lead the combined group’s BNPL business. Latitude also intends to invite two Humm independent directors to join the Latitude Board.”

The Humm share price is down 27% over the last 12 months.

The post Humm (ASX:HUM) share price shoots higher on $335m Latitude BNPL deal appeared first on The Motley Fool Australia.

More reading

• Yet another billionaire buys Rivian stock: Should you too?
• ‘Robust financial position’: Magellan share price surges 13% on half-year earnings
• Medibank (ASX:MPL) share price lifts despite rumours of failed hospital bid
• Inghams (ASX:ING) share price slumps 5% amid continued COVID impacts
• As markets fall, these 2 Nasdaq stocks are surging higher

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Humm Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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

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

Barely days ago, the stock of Rivian Automotive (NASDAQ: RIVN) caught the market’s attention when billionaire George Soros’ investment fund revealed a stake in the electric vehicle (EV) start-up. Turns out, Soros isn’t the only billionaire that eyed Rivian.

In its latest 13F filing with the Securities and Exchange Commission, activist investor and billionaire Dan Loeb’s hedge fund, Third Point, revealed  ownership of 4,046,572 shares of Rivian for the quarter ended Dec. 31, 2021. As of that date, Third Point’s Rivian stake was valued at roughly $408.3 million. 

Notably, Third Point didn’t own any shares in Rivian until the third quarter, which means something about the EV pickup truck manufacturer must have caught Loeb’s attention in the following months. Rivian stock surged Thursday morning on the news, encouraging some to bet on Rivian stock ahead of the company’s quarterly earnings release on March 10. Should you jump in, too? 

But while institutional buying in stocks is seen as a stamp of approval, you must also remember that such financial institutions do not disclose their stock moves in real time, and a lot may change by the time you find out what they bought and sold.

So for example, the latest filings from Loeb’s and Soros’ funds reveal their portfolios as of the end of 2021, and there’s no knowing yet whether they still own, have bought more, or sold off Rivian shares since. 

In fact, if Loeb and Soros saw an opportunity in the sharp dip in Rivian’s stock price in the end of 2021, they must be disappointed given how far the EV stock has fallen further since — it’s down a whopping 37% year to date, as of this writing. 

The point being, if you want your money’s worth, you might want to pay less attention to billionaire moves on a stock and stay laser-focused on the company’s underlying fundamentals and growth opportunities. 

Rivian was an early mover in the red-hot EV industry, and its R1T pickup truck even won the 2022 MotorTrend Truck of the Year award. However, Rivian failed to meet its production target last year even as its net loss mounted to $2.2 billion against revenue of only $1 million during the nine months ended Sept. 30, 2021. 

Yet the demand for the R1T pickup has been strong so far, and Rivian is reportedly ramping up production rapidly now to nearly 200 units per week, according to Bloomberg. Meanwhile, Rivian is working on its R1S SUV as well as its commercial vans, for which it has already secured an order for 100,000 units from e-commerce giant Amazon (NASDAQ: AMZN).   

Rivian, though, must show the numbers to gain investors’ faith, which is why its upcoming earnings report is so important. Has it really scaled up production and deliveries? Has it delivered its first electric delivery vehicle (EDV) to Amazon as planned? Is it on track to start key projects like the construction of its second factory in Georgia this year? 

These are just some of the important questions investors in Rivian should seek answers to on March 10, as only answers in the affirmative can help the stock rebound and sustain momentum given that it’s still commanding a steep market capitalization of $58 billion despite the recent plunge. 

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

The post Yet another billionaire buys Rivian stock: Should you too? appeared first on The Motley Fool Australia.

More reading

• Humm (ASX:HUM) share price shoots higher on $335m Latitude BNPL deal
• ‘Robust financial position’: Magellan share price surges 13% on half-year earnings
• Medibank (ASX:MPL) share price lifts despite rumours of failed hospital bid
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The Magellan Financial Group Ltd (ASX: MFG) share price is surging today after the wealth manager released its half-year results.

At the time of writing, Magellan shares are swapping hands at $20.75 apiece, a 13.26% gain. In comparison, the S&P/ASX 200 Index (ASX: XJO) is falling 0.97%.

Let’s take a look at what the funds manager reported today.

Magellan share price soaring

Highlights of the company’s half-year (H1 FY22) results include:

• Net profit after tax (NPAT) of $251.6 million, 24% more than the previous corresponding period (PCP) of H1 FY21
• Adjusted NPAT surged 16% to $248.1 million
• Adjusted revenue and other income up 15% to $384.1 million
• Adjusted diluted earnings per share up 15% to 134.4 cents per share
• Average funds under management up 12% to $112.7 billion.

What else happened in the half?

The company reported a 13% boost in its net tangible assets to $992.8 million. Its cash, financial, assets, and investments also increased 13% to $1,016.7 million. The company has no debt.

Magellan declared an interim dividend of 110.1 cents per share, a 13% increase on PCP. Magellan said its strong cash flows mean it can pay out 90-95% of its funds management profits. The dividend will be paid on 8 March.

Magellan believes it has “significant headroom” to continue to invest in the business. The company predicts its funds management expenses for FY22 will be between $125 to $130 million.

Management commentary

Speaking on the results boosting the Magellan share price today, interim CEO Kirsten Morton said:

Magellan has faced a number of challenges over recent months, however the group remains in a robust financial position and has delivered strong financial results for the period.

Magellan has a robust balance sheet with no debt and net tangible assets of $992.8 million, strong margins and operating cash flows which will enable us to continue to support and invest in the business.

We are focused on our core funds management business and delivering upon our investment objectives for our clients.

What’s next for Magellan?

Magellan will offer a 1 for 8 bonus issue of options to shareholders as part of a ‘significant’ capital management plan revealed today. These options will have an exercise price of $35 each with a five-year term. A prospectus will be lodged likely in March.

Further, Magellan intends to issue $10 million unlisted options to its staff. These options will also have a $35 exercise price and a five-year term.

Magellan is also considering implementing an on-market share buyback subject to market conditions. The company is suspending its dividend reinvestment plan and has no intention to invest further via Magellan Capital Partners.

Commenting on this initiative, Magellan chairman Hamish McLennan said:

We believe the capital management initiatives announced today will be attractive to shareholders and reflect our focus on our core funds management business.

These initiatives and proposals are in line with our aim to deliver capital efficiency, solid dividends and attractive returns for shareholders.

Magellan share price summary

The Magellan share price has dived 54% in the past year. In 2022, it has fallen 2.5%.

For perspective, the benchmark ASX 200 index has returned 4.8% in the past year.

Magellan has a market capitalisation of about $3.4 billion based on today’s share price.

The post ‘Robust financial position’: Magellan share price surges 13% on half-year earnings appeared first on The Motley Fool Australia.

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The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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