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Ask A Fund Manager

The Motley Fool chats with fund managers so that you can get an insight into how the professionals think. In this edition, Perennial Value Management portfolio management director Stephen Bruce explains how growth has overlapped with value in the past 2 years and his fund’s 2 biggest bets at the moment.

Investment style

The Motley Fool: How would you describe your fund to a potential client?

Stephen Bruce: We’re a broad-cap ESG-aware, value-oriented Australian equities fund. We’ve got a long track record. We’ve been around for over 20 years, with a moderate value-style process. 

The important thing is that we’ve got a real broad-cap focus. So we want to be able to find the opportunities wherever they are across the market cap spectrum. I think one of the reasons that we think we’ve got a good opportunity to do that is that we’re part of a very big equity business with 21 investment staff who cover everything from large caps, small caps, micro caps — and even down into the unlisted space, which is kind of helpful too in the sense that it gives you a good feel for what’s coming to [Initial Public Offering] IPO, et cetera.

MF: The last month or so has been poor for growth stocks with inflation and interest rate fears. Do you feel like next year will be a positive one for value stocks?

SB: I think in the same way the last 12 months has been pretty good for value and, in fact, since the day the market turned back in March 2020, it’s been good. 

That really, in our view, comes down to this change of emphasis in the way the economy’s being managed — from an exclusive focus on monetary policy towards the acceptance that fiscal policy is important as well. 

That’s led to this kind of a broadening of growth across the market. And if that continues, which on balance we expect it will — I’ll say why in a second — then we would think that you’re going to start to see this sort of kick up in interest rate, inflation being a bit more normal, lower than it is now but higher than it has been.

And in that environment where you could find growth across quite a number of parts of the market and money isn’t quite as free as it used to be, the more valuey parts of the market tend to do better. 

Some of the really expensive parts of the market might start to feel a bit of valuation pressure coming onto them. We’ve seen a bit of that just recently.

Biggest convictions

MF: What are your two biggest holdings?

SB: Healius Ltd (ASX: HLS), which was one of our biggest holdings last time we spoke, is actually our biggest holding at the moment. 

The investment case with that one hasn’t really changed in the sense that it’s got this really strong leverage to COVID testing. Being the second biggest pathology operator in Australia and doing about 20% of all pathology tests, it’s had an enormous first quarter. 

Just as we’re sort of expecting it to fade, with the latest variant of COVID entering the scene, those testing rates have started to go back up again. So that’s the headline near-term driver but, in the background, it’s a business which is being, we believe, significantly improved from an operating point of view — we should see that once COVID’s washed through over time, the business that’s left will be in much better shape and generating much better margins.

It’s also in a sector where there’s a lot of corporate activity. One of the really interesting things is infrastructure investors, which are a growing part of the market as more and more money is looking for assets with supposedly stable returns, it’s been expanding what is considered “infrastructure”. Many healthcare businesses are now starting to fall under the broader umbrella of infrastructure. 

And if you think about something like pathology, where it grows at about 5% per annum, it’s largely government-funded, it’s pretty economically insensitive, that’s potentially an attractive space and we’re starting to see offshore non-traditional investors starting to look at that space.

MF: What’s your other big one?

SB: Interestingly our other second-biggest overweight is actually BHP Group Ltd (ASX: BHP). We have been underweight off miners for probably the last 6 months or so, but just with the extent that the share prices have come back and how far the iron oil price has fallen — it’s done the round trip from $100 to $200 and back again — even if you assume that iron ore stays at $100, BHP’s probably trading on 10 times cash flow and it’ll pay you a 10% dividend yield, which to us looks like really good value.

But our expectation is that as we go into the new year, Chinese steel production will start to pick up again as the property market starts to accelerate. Because now, as we all know, the Chinese government has been clamping down on the property market which accounts for 40% of steel consumption in China.

But now they’ve sort of seemed to have achieved a fair bit of what they’ve been wanting to do — rein in the big private developers, cool the market a bit — we’re starting to see the early signs of them easing up there. 

It’s obviously such an important part [of the economy] and the comments that have come out of the most recent party meetings around their areas of focus all kind of indicate that housing, a recovery in housing and including construction of say, social housing, are going to be important. 

That augurs pretty well. So if the iron ore price, which already seems to [have] started to head back up — it’s $114 or so now — if that continues, then we see a lot of upside in all of the big miners. But BHP is quite good in the sense that at the moment it’s got pretty good operational performance. It’s got an ungeared balance sheet. It’s divested. Its fossil fuel exposure though is cleaning itself up and attracts some extra interest from that perspective as well.

The post 2 value ASX shares ready for a big 2022: fund manager appeared first on The Motley Fool Australia.

More reading

• Why is the BHP (ASX:BHP) share price having such a lousy start to the week?
• These are the 10 most shorted ASX shares
• 2 fantastic blue chip ASX 200 shares to buy next week
• ASX 200 (ASX:XJO) midday update: BNPL shares sold off, Corporate Travel returns
• Healius (ASX:HLS) share price falls despite $300m acquisition

Motley Fool contributor Tony Yoo 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 Nine Entertainment Co Holdings Ltd (ASX: NEC) share price will be on watch on Tuesday.

This follows the release of a positive update after the market close on Monday.

Why is the Nine share price on watch?

The Nine share price could be given a boost today from news that it has secured the broadcast rights to the NRL for the 2023 to 2027 seasons. This extends its partnership with the league beyond three decades.

According to the release, the agreement will see the live broadcast of NRL matches on Free-To-Air TV remain broadly in line with Nine’s current contract, except for an extra three matches per year. This is due to the expansion of the league to a 17-team competition in 2023.

Nine’s agreement includes the exclusive Free-to-Air broadcast of three premium live games a week, on each of Thursday and Friday evenings and Sunday afternoons, as well as the Finals series, and other special event matches. Nine will also show a Saturday night match live in each of the last five rounds of the weekly competition.

Furthermore, the NRL Grand Final and State of Origin will continue to be exclusively shown on Nine and 9Now. All State of Origin matches will be broadcast on Wednesday evenings from 2023.

Finally, the company has secured the radio and audio streaming rights for at least four matches each week, as well as the finals series and State of Origin series.

What is Nine paying?

The good news for Nine is that there hasn’t been an escalation in prices for these rights.

Nine is paying an average of ~$115 million per annum, which is in line with the price it paid for the 2018 to 2022 contract. The only difference this time is the additional ~$15 million per annum of contra and other non-cash services that will be provided. This is up from ~$10 million per annum previously.

Nine’s Chairman, Peter Costello, said: “This is a major deal for our business to bring this exciting sport to the Australian public across our platforms. The negotiation has been constructive and in the spirit of partnership across our businesses and we thank the NRL for the positive engagement in the process for an outcome that benefits all Australians and fans of the game.”

This sentiment was echoed by Nine’s CEO, Mike Sneesby.

He commented: “We are very pleased to extend our 30-year partnership with the NRL for a further five years. This certainty enables Nine to continue to bring the game live and free to all Australians, and partner with the NRL to further develop the game for the clubs and the broader community. This is an outstanding result as together we build a strong media partnership delivering quality, and free, NRL coverage for all Australians for the next six years.”

The post Nine (ASX:NEC) share price on watch following $650m NRL deal appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• These 3 ASX 200 shares are topping the volume charts on Friday
• ASX shares to buy for the Omicron COVID outbreak

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 Medibank Private Limited (ASX: MPL) share price could hit a new, all-time high in 2022 according to a leading broker.

Medibank is the largest private health provider in Australia with its Medibank and ahm brands.

What broker has high expectations for the Medibank share price?

Credit Suisse currently rates Medibank as a buy with a price target of $3.70. That implies the Medibank shares could rise by close to 10% over the next year, if the broker is right.

If the Medibank share price did indeed reach $3.70 in 2022, then that would be a new all-time high for the business.

Credit Suisse notes that Medibank continues to grow its total number of policyholders, which is helping it increase its market share.

The broker referenced Medibank’s latest update at its annual general meeting (AGM) when coming up with its recent thoughts for the business.

AGM update

Medibank is committed to returning any permanent net claims savings due to COVID back to customers and it expects to confirm the next segment of customer support before the end of the year.

Management said that its strong policyholder growth has continued with the addition of around 21,000 policyholders in the first four months of this financial year.

Due to that above growth, and the assumption that industry participation growth will be slower in FY22 relative to FY21, it’s now aiming to grow by at least 3% in FY22, including growth in the Medibank brand.

On an underlying basis, Medibank is expecting average net claims per policy to be in line with the second half of FY21, or 2.4% among resident policyholders.

Medibank also highlighted that it’s transforming into a health company, with preventative health and new models of care enabling the business to provide people with even more support to manage their health and wellbeing.

The digital offering is a key part of Medibank’s plan to support day to day engagement with customers, allowing for a more personalised and connected health experience.

Medibank share price valuation

Based on the broker Credit Suisse’s profit projections for FY22, the Medibank share price is valued at 21x FY22’s estimated earnings with a grossed-up dividend yield of 5.4%.

The post Why this top broker says the Medibank (ASX:MPL) share price will hit new, all-time highs in 2022 appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX shares today
• The Medibank (ASX: MPL) share price has gone backwards this past month. Is it a buy?
• 2 ASX shares that tick all the right boxes for the long term: expert
• Why has the Medibank (ASX:MPL) share price leapt 8% in November so far?

Motley Fool contributor Tristan Harrison 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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Are you looking for dividend shares to buy? If you are, then you might want to look at the shares listed below.

Here’s why these ASX dividend shares could be worth considering right now:

Accent Group Ltd (ASX: AX1)

The first ASX dividend share to look at is Accent. It is the retailer behind a growing network of footwear focused brands including The Athlete’s Foot, Platypus, Stylerunner, and HypeDC to name a few.

Accent could be a good option for income investors due to its track record of growing its earnings and dividends at a consistently solid rate for many years, as well as its very positive long term outlook. The latter is being underpinned by the popularity of its stores, its exclusive licensing agreements, and its expansion opportunities.

Bell Potter is a big fan of Accent. It currently has a buy rating and $3.05 price target on its shares.

As for dividends, the broker is forecasting fully franked dividends per share of 9.1 cents in FY 2022 and then 13.5 cents in FY 2023. Based on the latest Accent share price of $2.32, this represents yields of 3.9% and 5.8%, respectively.

Transurban Group (ASX: TCL)

Another ASX dividend share for income investors to look at is Transurban.

It is one of the world’s leading toll road operators which owns a portfolio of key roads in Australia and North America. In addition, the company has a pipeline of development projects that should support its growth over the next decade.

Morgans is positive on Transurban. This is due to its shares providing investors with exposure to trends such as regional population growth, employment growth, and urbanisation. The broker currently has an add rating and $14.79 price target on the company’s shares.

In respect to dividends, Morgans expects dividends per share of 39 cents in FY 2022 and then 57 cents in FY 2023. Based on the current Transurban share price of $13.63, this will mean yields of 2.9% and 4.2%, respectively.

The post Analysts say buy these ASX dividend shares appeared first on The Motley Fool Australia.

More reading

• Bell Potter names the best ASX retail shares to buy in 2022
• Brokers name 3 ASX shares to buy today
• Transurban (ASX:TCL) share price edges higher despite $1.7 billion West Gate Tunnel blowout
• Two inflation resilient ASX 200 shares revealed: fund manager
• Analysts name 2 ASX dividend shares to buy now

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 Accent Group. 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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On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week on a subdued note. The benchmark index fell 0.15% to 7,292.2 points.

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

ASX 200 expected to edge lower

The Australian share market looks set for another subdued day on Tuesday. According to the latest SPI futures, the ASX 200 is expected to open the day 10 points or 0.15% lower this morning. This is a decent result considering the poor start to the week on Wall Street. In late trade the Dow Jones is down 1.5%, the S&P 500 is down 1.45%, and the Nasdaq is 1.6% lower.

Nine secures NRL rights

The Nine Entertainment Co Holdings Ltd (ASX: NEC) share price will be one to watch on Tuesday after it confirmed an agreement for NRL broadcast rights for the 2023 to 2027 seasons. Under this agreement, the live broadcast of NRL matches on Free-To-Air TV will be broadly in line with the current contract, albeit with an extra three matches, due to the expansion of the league. Nine is paying an average of $115 million per annum, which is in line with the prior agreement.

Oil prices fall

Energy producers such as Beach Energy Ltd (ASX: BPT) and Woodside Petroleum Limited (ASX: WPL) could have a difficult day after oil prices tumbled again. According to Bloomberg, the WTI crude oil price is down 3.6% to US$68.26 a barrel and the Brent crude oil price has fallen 3% to US$71.31 a barrel. Oil prices fell amid concerns over demand because of the spread of Omicron.

Gold price falls

Gold miners Evolution Mining Ltd (ASX: EVN) and Northern Star Resources Ltd (ASX: NST) could have a difficult day after the gold price dropped. According to CNBC, the spot gold price is down 0.7% to US$1,792.40 an ounce. The precious metal fell despite Wall Street tumbling overnight.

Westpac dividends

Today is payday for the shareholders of Westpac Banking Corp (ASX: WBC). Eligible shareholders can look forward to receiving the banking giant’s final dividend of FY 2021. Last month Australia’s oldest bank declared a fully franked final dividend of 60 cents per share. This equates to a 2.9% yield based on the current Westpac share price.

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

More reading

• Here are the top 10 ASX shares today
• Sydney Airport (ASX:SYD) share price flat amid ‘subdued’ traffic outlook
• What’s going on with the strange Newcrest (ASX:NCM) share price today?
• These 3 ASX 200 shares are topping the volume charts on Monday
• What experts are saying about the Woolworths (ASX:WOW) share price in 2022

Motley Fool contributor James Mickleboro owns Westpac Banking Corporation. 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 Westpac Banking Corporation. 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 DevEx Resources Ltd (ASX: DEV) share price had a tough day today despite no news from the company.

In fact, the company hasn’t released any price-sensitive announcements to the market for more than a month.

Yet the DevEx share price finished well in the red today, down 10.19% to 48.5 cents.

Let’s take a look at what might have weighed on the company’s shares today.

DevEx share price drops on Monday

DevEx is a mining exploration company digging for gold, copper, uranium, and other metals. The company’s major focus is its copper and gold discoveries in the Lachlan Fold Belt region of New South Wales. It also has interests in nickel-copper-PGE exploration in Julimar, Western Australia.

One clue as to the performance of the company’s share price today may lie in the broader performance of gold.

The S&P/ASX All Ordinaries Gold (ASX: XGD) index dropped 8.7% by market close today. For perspective, the S&P/ASX 200 Materials (ASX: XMJ) index finished 0.13% higher.

DevEx’s last price-sensitive announcement to the market was back on 10 November. It was an update on the completion of two diamond drill holes at the Sovereign Nickel-Copper-PGE Project in Western Australia.

As the Motley Fool reported at the time, the discovery was well received by investors and led to them snapping up DevEx shares.

Since that time, the directors of the company have been involved in several share transactions.

According to company notices, most of the transactions carried out since 10 November were as a result of the exercise of options. However, two buy transactions by company chair Tim Goyder, worth a total of around $335,000, were on-market trades.

In total between 10 and 18 November, the company’s directors purchased more than $1.1 million worth of DevEx shares. Potentially, outside investors saw this as a vote of confidence in the company.

The only other news since then was the chairman’s address and AGM presentation on November 24.

Overall, the company reported a positive year including an increase in market capitalisation and positive developments on several exploration projects.

DevEx share price recap

Despite today’s plunge, the DevEx share price has rocketed 136% in the past 12 months and 111% year to date.

However, during the past month, the company’s shares have dropped by nearly 13% and 10% in the past week.

DevEx has a market capitalisation of nearly $152 million based on its current share price.

The post Why did the DevEx Resources share price plunge 10% today appeared first on The Motley Fool Australia.

More reading

• How is the DevEx (ASX:DEV) share price climbing 42% so far this week?

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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If you’re interested in bolstering your portfolio with some blue chip ASX 200 shares, then you may want to consider the ones listed below.

Here’s what analysts are saying about these top blue chip shares:

ResMed Inc. (ASX: RMD)

ResMed could be an ASX 200 blue chip share to buy. It is a medical device company which has a focus on sleep treatment solutions.

Over the last decade the company’s revenue and earnings have grown at a very strong rate thanks to the quality of its products and its large and growing market opportunity. Pleasingly, due to its massive market opportunity in sleep apnoea, chronic obstructive pulmonary disease (COPD), and home healthcare, ResMed looks well-placed to continue its growth long into the future.

Morgans is a fan of the company. It recently commented: “While we believe the next few quarters will likely be volatile, as COVID-related demand for ventilators continues to slow and core sleep apnoea volumes gradually lift, nothing changes our medium/longer term view that the company remains well-placed as it builds a unique, patient-centric, connected-care digital platform that addresses the main pinch points across the healthcare value chain.”

The broker has an add rating and $40.80 price target on ResMed’s shares.

Suncorp Group Ltd (ASX: SUN)

Another ASX 200 blue chip share to look at is Suncorp. It is one of Australia’s leading banking and insurance companies with a collection of popular brands. These include AAMI, Apia, Bingle, GIO, Shannons, Vero, and the eponymous Suncorp brand.

The team at Citi is positive on Suncorp despite concerns that its near term performance could be subdued.

Citi commented: “While we still see SUN as more of a medium term than shorter term story, our analysis suggests the current share price is a reasonable entry point even so. Largely to reflect lower impairment charges, we nudge up our FY22E EPS by 1% and retain our Buy call and A$12.80 TP.”

Citi has a buy rating and $12.80 price target on the company’s shares.

The post Why analysts love these ASX 200 blue chip shares appeared first on The Motley Fool Australia.

More reading

• 3 ASX 200 shares with major upside potential in 2022
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• 3 strong blue chip ASX 200 shares to buy
• Leading brokers name 3 ASX shares to buy today

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 ResMed Inc. 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 Lynas Rare Earths Ltd (ASX: LYC) share price has been a top 10 performer of the S&P/ASX 200 Index (ASX: XJO) over the past 12 months. However, with the new year drawing closer investors are eyeing off what performance might look like for the year ahead.

Despite the rare earths mining company anticipating significant demand growth for the magnetic commodity, analysts are divided over the upside potential for the Lynas share price in the coming year.

Where could the Lynas share price be heading?

Let’s first take a look at the buy-side for the Lynas share price. At the beginning of the month Barrenjoey mining equity analyst, Daniel Morgan initiated coverage on the rare earth mining company.

According to the note, the Sydney-based broker has given the company an ‘overweight’ rating. Simultaneously, the broker labelled the Lynas share price with a target of $10.50.

However, not all analysts share in Morgan’s positive sentiment for the commodity-driven business. Instead, David Franklyn of Argonaut and Tim Serjeant of Eley Griffiths have stuck with a ‘hold’ rating. In an interview with Livewire in November, the fund managers were more reserved towards the Lynas share price due to its valuation.

Both agreed that the company’s Mount Weld mine is a strategic asset considering its position outside of China. However, neither Franklyn nor Serjeant could get past the fundamentals. At present, the company trades on a price-to-earnings (P/E) ratio of approximately 50 times.

In addition, Serjeant believes pricing is now towards the upper end for neodymium-praseodymium (NdPr), at around $100 per kilogram. From here, the fund manager sees little volume growth in the near term as ASX-listed Lynas goes through a capital heavy period.

This capital intensity being referred to is likely with regards to the development of the rare earths processing facility in Kalgoorlie. The project has been pencilled out to involve $500 million of investment before becoming operational in July 2023.

For those reasons, Franklyn and Serjeant are sticking with a hold rating.

The post What is the outlook for the Lynas (ASX:LYC) share price in 2022? appeared first on The Motley Fool Australia.

More reading

• Up 27% in a month, the Lynas (ASX:LYC) share price just hit another 9-year high. Here’s why
• Here’s how EV mania is supercharging growth for Lynas (ASX:LYC)
• These were the best performing ASX 200 shares last week
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• Lynas (ASX:LYC) share price tipped for 18% upside

Motley Fool contributor Mitchell Lawler owns Lynas Corporation Limited. 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 is off to a disappointing start this week. This comes despite the company not making any new announcements to the ASX.

At market close, the mining giant’s shares have slipped 0.72% on Monday to $41.10. But, regardless of the drop, the company’s shares have rebounded almost 13% in the past month.

What’s dragging BHP shares lower?

There are a couple of possible reasons as to why the BHP share price languished in negative territory today.

First and foremost, the S&P/ASX 200 Materials Index (ASX: XMJ) spent most of the day in the red before rallying late in the day to close 0.13% up at 16,372.8 points. The sector represents 39 of the largest companies that specialise in mining, forestry products, and construction materials.

It appears generally negative sentiment on the company’s home sector is weighing down the BHP share price.

Fellow miner Rio Tinto Ltd (ASX: RIO) also spent Monday well in the red before edging 0.24% in the green about twenty minutes before the close, finishing at $98.23 apiece.

In addition, another catalyst that may be affecting the BHP share price is that investors are holding around 8% of the company’s shares in short positions.

There’s belief that iron ore prices could give back their recent gains, which will put pressure on the company’s margins. This could potentially mean the world’s second-largest miner would miss its earnings targets set for FY22.

Currently, the spot price for iron ore is US$111.64 per tonne. And while it’s recovered from the 52-week lows of US$91.98 last month, there’s still a long way to go.

On a positive note, the company’s proposed acquisition of its petroleum business by Woodside Petroleum Limited (ASX: WPL) is on track. The Australian Competition and Consumer Commission (ACCC) did not oppose the takeover.

The competition regulator commented:

We examined the proposed acquisition closely as it would combine two of the four largest domestic natural gas suppliers in Western Australia.

We found that post acquisition, Woodside would continue to face competition from a range of suppliers of domestic gas, including major producers Chevron and Santos, and from several other smaller suppliers including Shell and ExxonMobil. Woodside’s share of domestic gas after the acquisition will be approximately 20 per cent.

What do the brokers think?

A number of brokers updated their view on the BHP share price over the last week.

Analysts at Macquarie raised their price target by 2% to $52.00 for BHP shares. Swiss investment firm UBS had a more bearish tone, reducing its outlook by 3% to $37.00. It’s worth noting that this is almost in line with the current share price.

BHP share price summary

Since the beginning of the year, it has been a substandard result for BHP shares, falling by almost 5%. This is a stark contrast from when its shares were tracking more than 25% higher for the year-to-date period during August.

Based on today’s price, BHP presides a market capitalisation of roughly $121.2 billion and has approximately 2.95 billion shares outstanding.

The post Why is the BHP (ASX:BHP) share price having such a lousy start to the week? appeared first on The Motley Fool Australia.

More reading

• These are the 10 most shorted ASX shares
• 2 high yield ASX 200 dividend shares to buy
• Woodside (ASX:WPL) share price dips amid corporate watchdog’s mega-merger verdict
• ASX 200 (ASX:XJO) midday update: CSL sinks, Qantas’ $1.1bn+ first half loss
• BHP (ASX:BHP) share price slips as ACCC gives all-clear for Woodside deal

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 recommended Macquarie 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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The big four bank Australia and New Zealand Banking Group Ltd (ASX: ANZ) is in focus as management admitted that it got things wrong.

ANZ is one of the biggest banks on the ASX. It is facing intense competition in the mortgage space from the likes of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB), Bank of Queensland Limited (ASX: BOQ), Bendigo and Adelaide Bank Ltd (ASX: BEN), Macquarie Group Ltd (ASX: MQG), Pepper Money Ltd (ASX: PPM) and so on.

There are three key parts for how much lending profit ANZ, or any bank, can make – the size of its loan book, the net interest margin (NIM) and the amount of bad debts (and provisions).

But ANZ said to shareholders that it had dropped the ball in terms of lending recently.

Problems with lending processing

At the company’s annual general meeting (AGM), the ANZ CEO acknowledged in the big four bank’s FY21, it saw home loan revenue growth of more than 10% but the number of home loans on its books fell during the second half.

It attributed this decline to two factors.

First, customers were paying down loans faster.

Second, the speed at which it was able to process an increasing number of applications “just wasn’t sufficient”.

According to reporting by the Sydney Morning Herald ANZ chair Paul O’Sullivan said about its processing of mortgage applications:

Let me be frank, we got it wrong. Although we expanded capacity, we didn’t expand capacity enough. And as a result, we lost market share to those who could process it.

We have spent a lot of time at board and management understanding this issue. There has been significant work done to bring in new processes, new ways of handling things and to look externally at best practice, so we can learn from that and improve.

Yes it’s been a disappointing performance, but there has been a lot of work done to get us back on track.

ANZ said that it took urgent action to fix those processing issues by materially increasing its assessment capacity as well as simplifying and automating processes.

Whilst it’s still early days and there is much to do, ANZ said it is seeing improvements in its processing times and a modest return to balance sheet growth.

However, ANZ admitted that processing applications in a timely manner has resulted in a loss of market share. The board said it was confident that the systemic actions taken by management will address those issues.

ANZ is expecting Australian home loan portfolio to return to growth in this half and for ANZ growth to be in line with the overall system growth in the second half of the current financial year.

ANZ share price snapshot

Whilst ANZ shares have risen 17% over the last year, it is actually down 3% over the past six months.

The post Own ANZ (ASX:ANZ) shares? Here’s why the bank admits ‘we got it wrong’ appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison 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 Macquarie 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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