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The Tyro Payments Ltd (ASX: TYR) share price is on course to start the week with a solid gain.

In afternoon trade, the payments company’s shares are up over 3% to $1.46.

This compares favourably to the performance of the S&P/ASX 300 index, which is up 0.2% at the time of writing.

Why is the Tyro share price pushing higher?

Investors have been scrambling to buy Tyro’s shares today amid speculation that a new takeover offer could be coming.

According to the AFR, its sources claim that Potentia is close to tabling a $1.70 per share offer for the payments company. This comes after the company granted the private equity group non-exclusive due diligence on 10 February.

Though, whether that offer would be enough to get a unanimous recommendation from Tyro’s board, is hard to say.

What’s the latest?

This morning, Tyro responded to the media speculation and revealed that it has not received a proposal from Potentia. However, it has confirmed that talks are continuing between the two parties.

Though, it also warns that there’s no guarantee that these talks will result in a binding offer being made. The company explained:

Tyro confirms that it has not received any further proposal from Potentia since 11 December 2022, and that should it receive a revised proposal from Potentia, Tyro will inform the market in accordance with its continuous disclosure obligations.

Although Tyro continues to be in discussions with Potentia in relation to a possible change of control transaction, Tyro shareholders do not need to take any action. There is no certainty that these discussions will result in a non-binding indicative offer, a binding offer or a transaction of any kind.

The post Why is the Tyro share price smashing the ASX 300 on Monday? appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Tyro Payments share price lifts as EBITDA soars 600%
• Earnings preview: Here are the ASX shares reporting on Tuesday

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 positions in and has recommended Tyro Payments. The Motley Fool Australia has recommended Tyro Payments. 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 share price of S&P/ASX 200 Index (ASX: XJO) mineral explorer Chalice Mining Ltd (ASX: CHN) isn’t going anywhere today. It’s been frozen as the company prepares to inform the market of an update on its mineral resource estimate.

The Chalice Mining share price last traded at $6.28.

And there it will stay until the company reveals its news or the market opens on Wednesday, whichever comes sooner.

So, what might we expect from the anticipated announcement? Let’s take a look.

ASX 200 mining share frozen ahead of mineral resource news

The Chalice Mining share price has been placed into a trading halt on Monday.

The market might be expecting to hear news of the company’s flagship Julimar Project – previously found to house nickel, copper, platinum group elements (PGE), cobalt, and gold.

Chalice Mining previously said it expects to post an update on the project’s Gonneville deposit’s resources in the current quarter.

Drilling completed in the December quarter saw potential for the deepening of the deposit’s resource pit shell at its northern end. It intersected several broad zones of sulphide mineralisation beyond the known resource.

The expected resource update will incorporate 157 infill and wide-spaced step-out drill holes and 109 close spaced reverse circulation drill holes in the expected starter pit area.

Further, initial drilling at the greenfield Hooley Prospect also intersected PGE-dominant sulphide mineralisation last quarter.

Of course, there’s no guarantee the awaited announcement is related to the Gonneville deposit, or the broader Julimar Project.

No doubt ASX 200 mining fans will be watching the stock closely over the coming days in anticipation of the expected mineral resource update.

Chalice Mining share price snapshot

The Chalice Mining share price has underperformed the broader market slightly in recent times.

The stock is trading flat so far this year. Though, it’s fallen 11% over the last 12 months.

For comparison, the ASX 200 is also trading flat year to date and has posted a 6% fall since this time last year.

The post Guess which ASX 200 mining share is on ice pending a mineral resource estimate appeared first on The Motley Fool Australia.

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More reading

• Forget BHP and buy these ASX mining shares instead: broker
• Here are the top 10 ASX 200 shares today
• Here are the top 10 ASX 200 shares today
• Here are the top ten ASX 200 shares today

Motley Fool contributor Brooke Cooper 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 Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to start the week with a modest gain. At the time of writing, the benchmark index is up 0.15% to 6,965.6 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping:

Lake Resources N.L. (ASX: LKE)

The Lake Resources share price is down 11.5% to 42.5 cents. This follows news that the lithium developer’s chairman, Stu Crow, has been selling shares. According to the release, Crow sold approximately $3.9 million worth of shares through on-market trades.

Latitude Group Holdings Ltd (ASX: LFS)

The Latitude share price is down 3% to $1.17. This morning, this non-bank lender released an update on its recent cybersecurity incident. Its latest update reveals that a forensic review has identified that approximately 7.9 million Australian and New Zealand driver licence numbers and approximately 53,000 passport numbers were stolen.

Synlait Milk Ltd (ASX: SM1)

The Synlait Milk share price is down almost 6% to $2.11. This follows the release of the dairy processor’s half-year results this morning. Synlait had a tough half and reported an 83% decline in net profit after tax to NZ$4.8 million. This reflects operational stability and cost challenges, which have impacted its performance.

Woodside Energy Group Ltd (ASX: WDS)

The Woodside share price is down almost 3% to $31.63. This appears to have been driven by a pullback in oil prices on Friday night. Traders seem concerned that the banking crisis could spread and hurt economic growth and demand for oil. The S&P/ASX 200 Energy index is down almost 2% this afternoon.

The post Why Lake Resources, Latitude, Synlait, and Woodside shares are falling today appeared first on The Motley Fool Australia.

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More reading

• Lake Resources share price plummets 12% following $3.9m insider sell-off
• Guess which ASX All Ords stock is plummeting following an 80% profit dive
• Here are the top 10 ASX 200 shares today
• 5 things to watch on the ASX 200 on Friday
• Why are ASX lithium shares sinking 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 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 Scott Phillips.

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The ASX share market has had a rough few weeks, no way around it. As it stands today, the S&P/ASX 300 Index (ASX: XKO) has lost around 3.6% over the past month alone, as well as a nasty 5.4% since 7 March.

In 2023 so far, ASX shares are barely breaking even after what was a stellar start to the trading year over January and February.

This means that the Vanguard Australian Shares Index ETF (ASX: VAS) has also been a bit shaky of late. This exchange-traded fund (ETF) is an index fund that tracks the ASX 300 Index. This means that wherever the ASX 300 goes, this index fund follows.

Indeed, Vanguard Australian Shares ETF units are now down more than 6.5% since early February and down around 9.2% over the past 12 months:

But this might not be such a bad thing for long-term investors. After all, as Warren Buffett tells us, cheaper shares usually mean better returns over the long run.

So do the weaker markets over the past month or so make the Vanguard Australian Shares Index ETF a no-brainer buy today?

Why is the Vanguard Australian Shares ETF a no-brainer buy?

I think it does. Whenever you are buying an index fund, you are essentially buying a small portion of every company that the index contains. In the Vanguard Australian Shares Index ETF’s case, this means a small piece of the 300 largest companies listed on the ASX.

That’s everything from Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP) and Telstra Group Ltd (ASX: TLS) to Coles Group Ltd (ASX: COL), JB Hi-Fi Ltd (ASX: JBH) and Ampol Ltd (ASX: ALD).

The way an index fund is structured means that the better companies grow in influence within the Index over time while the weaker ones are weeded out. This means that buying an ASX-wide index fund is essentially a bet on the long-term growth of the Australian economy. That is a bet that has historically been a lucrative one for investors.

The Vanguard Australian Shares Index ETF’s managed fund equivalent has been around since October 1998. Since that time, this managed fund has returned an average of 8.11% per annum. That’s despite the Asian financial crisis, the dot-com bust, the global financial crisis and COVID.

This fund’s ETF variation has only been around since 2009. But over its shorter lifetime, it has averaged a return of 8.95% per annum.

So I think that buying this Vanguard index fund is always a good long-term investment. But buying it after a pullback? It’s about as close to a no-brainer buy as you can get on the ASX, in my view.

The post Does the fall in the Vanguard Australian Shares Index ETF share price make it a no-brainer buy? appeared first on The Motley Fool Australia.

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More reading

• Help safeguard your retirement with this key Warren Buffett investment strategy
• Here are 3 ways to get passive income from ASX shares
• Is a dividend ETF really better than an ASX index fund for income?
• Want high income right now? These are the ASX dividend shares I would buy
• I bought these two ASX shares last week, here’s why

Motley Fool contributor Sebastian Bowen has positions in Telstra Group and Vanguard Australian Shares Index ETF. 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 positions in and has recommended Coles Group and Telstra Group. The Motley Fool Australia has recommended Jb Hi-Fi. 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 Lake Resources N.L. (ASX: LKE) share price is having a very poor start to the week.

At the time of writing, the lithium developer’s shares are down 12% to a 52-week low of 42 cents.

This means the Lake Resources share price is now down approximately 75% over the last 12 months, as you can see on the chart below.

Why is the Lake Resources share price crashing?

The latest weakness in the Lake Resources share price has been driven by news that an insider has been selling shares.

Insider selling rarely goes down well with the market. After all, the theory goes that if an insider was confident that a company’s shares were heading higher, they wouldn’t be selling them.

On this occasion, the seller has been Lake Resources’ non-executive chairman, Stu Crow.

According to the release, the company’s chairman has sold a total of 7,919,367 Lakes shares through on-market trades between 17 March and 23 March. Crow received a total consideration of $3,893,187.77, which represents an average of 49.16 cents per share.

Why was its chairman selling?

The company provided an explanation for the insider selling. It advised:

These sales were made under advice to meet personal financial obligations.

In addition, the company revealed that Crow has no plans to sell any more Lake Resources shares and remains one of its largest private shareholders. It adds:

Mr. Crow currently has no plans to sell any additional shares in the foreseeable future. Mr Crow remains committed to Lake Resources as it transitions from explorer toward development. As a founding shareholder, Mr. Crow has been actively involved in driving the growth of Lake Resources since its inception. Mr Crow remains one of the company’s largest private shareholders with a relevant interest in 10,000,000 shares following the recent sales.

The post Lake Resources share price plummets 12% following $3.9m insider sell-off appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today
• Why are ASX lithium shares sinking today?
• What was with ASX lithium shares today?
• Top broker says buy Lake Resources shares for potential 300% upside
• Here are the 10 most shorted ASX shares this week

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 Scott Phillips.

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A2 Milk Co Ltd (ASX: A2M) shares are up 1.18% during the lunch hour on Monday.

The S&P/ASX 200 Index (ASX: XJO) dairy stock closed Friday trading for $5.91 per share. Shares are currently trading for $5.98 apiece.

With A2 Milk shares down 7% over the past month, is now a good time to buy?

What does the broker forecast?

At just under $6 per share, Bell Potter analyst Jonathan Snape sees a significant upside for the company.

Bell Potter has a buy rating on A2 Milk shares with a $7.65 price target.

That represents a 27% upside from the current price.

Snape estimates earnings per share (EPS) growth of 19.5% for 2023 and 15.3% for 2024.

Strong company results

A2 Milk reported some strong half-year results on 20 February, though the company’s share price fell on the day.

Highlights included an 18.6% year-on-year increase in revenue, driven by strong growth in the company’s Chinese infant formula sales. Revenue reached NZ$783 million for the six months.

The big revenue boost helped deliver a 22.1% increase in net profit after tax (NPAT), which came in at NZ$69 million.

And the company ended the half year with a strong balance sheet, reporting a cash balance of NZ$707 million.

Guidance was also positive, with management forecasting low double-digit revenue growth along with steady margins.

Commenting on the company’s growth in the Chinese markets, A2 Milk CEO David Bortolussi said:

As the China market continues to evolve, we are focused on refining our English label distribution model which resulted in a modest increase in sales with market share increases in the CBEC and Daigou channels.

All told, with A2 Milk shares trading at $5.98 apiece, today might represent a profitable entry point.

How have A2 Milk shares been tracking?

As you can see in the chart below, A2 Milk has strongly outperformed the benchmark over the past 12 months. The ASX 200 dairy stock has gained 12% while the ASX 200 fell 6% over that time.

The post Should I buy A2 Milk shares at $6? appeared first on The Motley Fool Australia.

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More reading

• Why A2 Milk, Accent, Northern Star, and Select Harvests shares are dropping
• A2 Milk share price slides amid $139 million buyback completion
• At almost $7, can the A2 Milk share price go any higher?
• What caused the A2 Milk share price to spill almost 6% in February?
• ‘Result was incredible’: 3 ASX 200 shares Jun Bei Liu would buy now

Motley Fool contributor Bernd Struben 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 A2 Milk. 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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Plenty of Australians begin their investing journey with the aim of building passive income. Receiving a regular income with little to no effort is obviously an appealing prospect.  

But it often doesn’t come cheap. Many ways to build a passive income, like buying an investment property or starting a business, typically carry notable upfront costs.

Fortunately, ASX dividend shares can also deliver attractive passive income. And investing on the stock market doesn’t demand mountains of cash.

In fact, I believe I could build a portfolio capable of providing lifelong passive income with just $5 a day.

How I’d build lifelong passive income with just $5 a day

Taking the first step

The first step to building an income from ASX dividends is buying shares capable of paying them.

Plenty of stocks provide investors with a portion of their spare cash in the form of dividends. These are typically paid every six months and often come with franking credits, which can provide tax benefits.

However, buying shares generally incurs brokerage fees. These fees can really add up when regularly buying small parcels of stocks.

For that reason, I’d start by putting my daily $5 into a high-interest savings account until I build a sum large enough to invest. After a year, I’d have deposited $1,825 – more than enough to start building my portfolio.

Right now, the SPDR S&P/ASX 200 (ASX: STW) – an exchange-traded fund (ETF) that aims to mimic the S&P/ASX 200 Index (ASX: XJO) – offers a 4.74% dividend yield.

I think that I could beat that by strategically selecting stocks capable of offering a 6% annual dividend yield.

Building passive income by compounding

But there’s more to my lifelong passive income plan than just buying ASX dividend shares.

For the first year after I invested $1,825, I would realise just $109.50 of passive income. That’s certainly not enough to support my lifestyle.

So, rather than spend it, I’d add it back into my savings account and use it to buy more shares later.

By repeating that process, I’d compound my earnings. Here’s how it would play out over the long term (without considering share price appreciation):

Year	Portfolio value	Passive income (at 6% yield)
1	$1,825	$109.50
5	$12,730	$763.80
10	$27,323	$1,639.38
20	$72,987	$4379.22
30	$154,763	$9,285.78
40	$301,212	$18,072.72
50	$563,480	$33,808.80

Of course, if my shares were also to rise in value over that time – and the market has historically always gone up – I would realise even more passive income.

Risk vs reward

But, like any other investment, ASX dividend shares come with risk. Companies don’t have to provide dividends to investors, nor are shares guaranteed to appreciate.

Further, the market has always operated in cycles, meaning it’s likely to crash at some point (or multiple points) over the coming decades.

Fortunately, such downfalls have always proven temporary. Though, they can dint the value of — and the passive income provided by — an investor’s portfolio in the short term.

While many risks are unavoidable, an investor might choose to better protect themselves by buying safer shares – such as blue chips. They can also mitigate risk by building a diverse portfolio.

The post Start building a lifelong passive income with just $5 a day appeared first on The Motley Fool Australia.

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More reading

• As stock markets dive, here’s Warren Buffett’s advice
• 5 things to watch on the ASX 200 on Monday
• For $1,000 in monthly passive income, buy 18,462 shares of this ASX 200 stock
• Here are the top 10 ASX 200 shares today
• Is the AFIC share price a standout investment right now?

Motley Fool contributor Brooke Cooper 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 Scott Phillips.

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ANZ Group Holdings Ltd (ASX: ANZ) CEO Shayne Elliott has warned investors that there could be more economic and bank pain to come.

Over the past year, there has been a large increase in interest rates in both the US and Australia. Other central banks globally have also increased their interest rates.

While there have been some specific problems for some banks, the rapid rise of interest rises has widespread ramifications. For Silicon Valley Bank (SVB) and Credit Suisse, it has been a disaster.

But ANZ’s boss thinks there could be more impacts to come and that it could hurt some areas of the economy.

ANZ’s warning about the banking sector

Elliott suggested that the current problems hitting the global financial system are similar to the 1980s in the US. It was also a time of strong inflation and higher interest rates, which exposed “a lot of poor businesses to that risk”, Elliott said, according to the Australian Financial Review.

The AFR quoted Elliott:

The GFC was fundamentally a crisis around the quality of assets and the loans that banks make, and that’s not what the risk is here. This is a different issue. This is really to do with the global war on inflation and how central banks are raising rates very quickly in order to combat that, and that has casualties.

According to Elliott, the size and speed of the increase in interest rates means that businesses and households are at risk “because that really has an impact on cost of living, taking money out of their pocket, and not everybody can adjust so quickly, and those that can’t typically fall over”.

He also warned there could be less credit available in the economy as banks “focus more on liquidity and the market emphasises capital adequacy”.

Elliott was also quoted talking about how ANZ is handling the situation:

The first thing we’re going to do is protect the bank, our balance sheet, make sure we can continue to operate, liquidity, capital, protect our people, look after our customers.

We have to adapt to this new world of capital markets.

There’s always a casualty in these events. Of course, the regulator and governments are trying to sort of limit the blast radius, if you will. They’re not intentionally trying to cause harm, but it’s inevitable, and they try to do the best to limit the damage so that lots of people have a small amount of pain, as opposed to a small number of people having lots.

Strong dividend expected

Even if ANZ is feeling cautious about the current situation, the large ASX bank share is expected to generate $2.39 of earnings per share (EPS) after the increase in interest rates, according to Commsec.

The ASX bank share is projected to pay an annual dividend per share of $1.58. This translates into a grossed-up dividend yield of 10%.

The post Banking crisis ‘clearly not over’: ANZ appeared first on The Motley Fool Australia.

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More reading

• Best ASX 200 bank share to buy now: ANZ vs Westpac
• ASX 200 bank shares lift despite Deutsche Bank stock tumble
• How I’d aim for $250 in monthly passive income from ANZ shares
• Want $10,000 of passive income? Check out these ASX shares
• Should ASX 200 banks pay more for this implicit government backstop?

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The ASX, as well as stock markets around the world, have had a rough time of it lately. Despite the bounce that we’ve seen today, the S&P/ASX 200 Index (ASX: JXO) remains down by around 3.5% over the past month and by a meaty 5.4% since 7 March.

It’s been a similar, albeit not quite so severe, experience for the S&P 500 Index (SP: .INX) in the United States.

So most of us would have seen our share portfolios take a bit of a battering over the past few weeks.

This is an uncomfortable situation for most investors to deal with. No one likes seeing the value of their investments tank. But times like these can often spook investors into making poor decisions. Selling out of your investments during times of market trauma can be tempting.

You might think that it’s better to ‘go to cash’ until the market starts going up again. But this is usually a bad decision, one driven by emotion, not logic.

So I think a better way to handle volatility in the share markets is by following the advice of legendary investor Warren Buffett.

Some investing wisdom from Warren Buffett

Buffett is famous for his astronomical returns over more than six decades of investing and the generous investing wisdom he periodically shares with investors.

When markets fall, Buffett’s advice is constant and unwavering. Put simply, he welcomes any market downturns, viewing them as a good chance to buy his favourite shares at a discounted price.

Our first quote illustrating this principle comes from Buffett’s 2008 letter to the shareholders of his company Berkshire Hathaway Inc. Here’s what Buffett said:

…the market value of the bonds and stocks that we continue to hold suffered a significant decline along with the general market. This does not bother Charlie and me.

Indeed, we enjoy such price declines if we have funds available to increase our positions. Long ago, Ben Graham taught me that “Price is what you pay; value is what you get.” Whether we’re talking about socks or stocks, I like buying quality merchandise when it is marked down.

So that gives you a great idea of how one of the best investors in the world deals with falling share markets. Once you have utter confidence in the companies you’ve selected for your share portfolio, it should be easy to accept the lower share prices that shaky markets bring with them.

Be greedy when others are fearful

To build out a better picture of Buffett’s ideas, let’s look to more wisdom from the great man. Buffett penned an op-ed for The New York Times back in the depths of the global financial crisis in 2008. It still makes for some pertinent reading today. Here’s a piece of it:

The financial world is a mess, both in the United States and abroad… In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary. So … I’ve been buying American stocks.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions..

But most major companies will be setting new profit records 5, 10 and 20 years from now. Let me be clear on one point: I can’t predict the short-term movements of the stock market…

What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

Foolish takeaway…

In my view, that is some of the best and most eloquent advice for dealing with share market fear any of us will ever get. So today is the time to keep this priceless wisdom front of mind.

If the share market gets even worse in the coming weeks and months, remember what Buffett says about investing during these times. This legendary investors portfolio has survived and thrived during some of the darkest days the markets have ever seen. Yours can, too, if you learn from the best.

The post As stock markets dive, here’s Warren Buffett’s advice appeared first on The Motley Fool Australia.

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• For $1,000 in monthly passive income, buy 18,462 shares of this ASX 200 stock
• I’m listening to Warren Buffett and loading up on cheap ASX shares
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Motley Fool contributor Sebastian Bowen has positions in Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. 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 ASX tech share Bailador Technology Investments Ltd (ASX: BTI) is one of the next investments that I want to buy.

It’s already in my portfolio, but I think the current 52-week low makes this one too good to miss out on.

For investors that haven’t heard of this one, it describes itself as a growth capital fund focused on the IT sector, with it being “actively managed” by an experienced team with “demonstrated sector expertise.”

Bailador says that it provides exposure to a portfolio of IT companies with global addressable markets. It invests in private tech businesses at the “expansion stage”.

There are three reasons why I think the business is attractive at the current level.

Valuation

I like being able to buy a business at a discounted price – whether that’s after a share price fall or a clear gap between the underlying value of the business and the current share price.

At the end of last week, the Bailador share price dropped to $1.17. With its latest monthly update for February 2023, the business had a $1.61 pre-tax net tangible assets (NTA) value. That means the share price discount is currently 27.3% to the NTA.

That’s a huge discount considering over a third of the value is cash and approximately another third is the listed investments of Siteminder Ltd (ASX: SDR) and Straker Translations Ltd (ASX: STG).

While higher interest rates and inflation have damaged the valuation of ASX tech shares, I think the future is generally promising for tech businesses, so I think the NTA will grow over time.

Compelling businesses and cash position

Bailador says that it typically invests $5 million to $20 million in businesses in the target tech businesses that are seeking growth stage investment.

The companies that it invests in typically have a few characteristics: run by the founders, a proven business model with attractive unit economics, international revenue generation, a “huge” market opportunity, and the ability to generate repeat revenue.

There are a number of ‘verticals’ that it looks to invest in within the tech sector, including software as a service (SaaS) and other subscription-based internet businesses, online marketplaces, software, e-commerce, high value data, online education, telecommunication applications and services.

In terms of Bailador’s private tech investments, it’s currently invested in five other names: InstantScripts, Access Telehealth, Rezdy, Nosto and Mosh. The two biggest positions are digital healthcare businesses InstantScripts and Access Telehealth, worth around $40 million of the portfolio.

The ASX tech share’s investment team is on the lookout for other opportunities, which may be found during this uncertain economic period.

Dividend yield

Baildor has a dividend policy of paying 4% per annum of its pre-tax NTA. With the share price trading at a large discount to the NTA, the actual dividend yield that investors are getting is much higher than 4%.

A 4% yield on the NTA works out to be a 5.5% dividend yield on the Bailador share price, or 7.8% including franking credits.

If Bailador can combine a mixture of good dividends with valuation gains for its portfolio, then I believe it will be able to achieve pleasing shareholder returns. At the end of February 2023, the prior three years had produced an average shareholder return per annum of 12.7% for Bailador.

I’m not expecting this to make huge returns, but I think this low point could be a good entry price for 3-year, 5-year and longer investment timelines.

The post I’m planning to buy this heavily discounted ASX tech share next appeared first on The Motley Fool Australia.

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More reading

• Top ASX dividend shares to buy in March 2023

Motley Fool contributor Tristan Harrison has positions in Bailador Technology Investments. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bailador Technology Investments and SiteMinder. The Motley Fool Australia has recommended Bailador Technology Investments and Straker Translations. 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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