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At present, the base interest rates on savings accounts from Westpac Banking Corp (ASX: WBC) are an ultra-low 0.05%.

With rates as low as this, it is near impossible to generate a sufficient income from them.

So, if you’re an income investor, I would suggest you skip savings accounts and look to the share market. Especially given the good number of quality dividend shares you’ll find there.

But which ASX dividend shares should you buy? Two that I like are listed below:

Accent Group Ltd (ASX: AX1)

I think that Accent Group would be a great option for income investors. It is the footwear-focused retail group responsible for popular store brands such as The Athlete’s Foot, HYPE DC, and Platypus. Accent Group has been a very positive performer over the last few years and even during the pandemic. This has been driven by the popularity of its exclusive brands and its growing online business. The latter was incredibly important during the height of the pandemic.

The good news is that I’m confident these positive trends will drive further growth in the coming years. This should be supported by its expansion plans. For now, I’m forecasting Accent to pay a 9 cents per share fully franked dividend in FY 2021. Based on the current Accent share price, this equates to a generous 5.2% dividend yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Another top option for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. I think this would be perfect for investors that don’t have the funds required to build a truly diverse income portfolio.

This is because the Vanguard Australian Shares High Yield ETF provides investors with exposure to 66 of the highest yielding shares on the Australian share market. This diverse group of shares include the likes of BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), Fortescue Metals Group Limited (ASX: FMG), Telstra Corporation Ltd (ASX: TLS), and Westpac and the rest of the big four banks. I estimate that its units offer a FY 2021 dividend yield in the range of 4% to 5%.

More reading

• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• ASX 200 jumps more than 1%, big ASX banks rise
• ASX 200 Weekly Wrap: Budget, US election sparks 5% surge in ASX shares
• Is the Westpac (ASX:WBC) share price a buy?
• Top brokers name 3 ASX shares to buy next week

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool Australia has recommended Accent Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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On Wednesday the S&P/ASX 200 Index (ASX: XJO) ended its incredible seven-session winning streak with a small decline. The benchmark index fell 0.3% to 6,179.2 points.

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

ASX 200 futures pointing slightly lower.

The Australian share market is expected to edge lower on Thursday after a weak night of trade on Wall Street. According to the latest SPI futures, the ASX 200 is poised to open the day 1 point lower this morning. In late trade on Wall Street the Dow Jones is down 0.3%, the S&P 500 has fallen 0.4% lower, and the Nasdaq is down 0.5%.

Perpetual annual general meetings.

The Perpetual Limited (ASX: PPT) share price will be one to watch today when it holds its virtual annual general meeting. The fund manager is likely to provide the market with an update on its performance during the first quarter at the event.

Gold price rebounds.

It could be a good day for gold miners such as Newcrest Mining Limited (ASX: NCM) and Saracen Mineral Holdings Limited (ASX: SAR) after the gold price rebounded. According to CNBC, the spot gold price is up 0.7% to US$1,907.70 an ounce. A pullback in the U.S. dollar and economic uncertainty gave the precious metal a lift.

Bank of Queensland shares rated as a buy.

The Bank of Queensland Limited (ASX: BOQ) share price could be heading higher from here according to analysts at Goldman Sachs. In response to its full year results yesterday, the broker has retained its buy rating and lifted its price target to $7.39. Goldman believes Bank of Queensland’s net interest margin outperformance will continue.

Oil prices rise again.

Energy shares such as Santos Ltd (ASX: STO) and Woodside Petroleum Limited (ASX: WPL) could be on the rise after oil prices pushed higher again. According to Bloomberg, the WTI crude oil price is up 2.25% to US$41.11 a barrel and the Brent crude oil price is up 2.3% to US$43.42 a barrel. Traders were buying oil amid hopes that U.S. crude oil stockpiles are falling.

More reading

• Is Transurban’s (ASX:TCL) share price 18% undervalued?
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash
• Why the Flight Centre (ASX:FLT) share price slumped despite new tourism campaign
• 4 ASX shares rated as strong buys by brokers

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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If you’re planning to add a few blue chip ASX shares to your portfolio in the near future, then I would suggest you consider the two listed below.

I believe these are among the best on offer on the Australian share market right now. Here’s why I think they are in the buy zone:

Coles Group Ltd (ASX: COL)

I believe this supermarket giant could be a great option for investors looking at blue chips. Even those its shares have been on fire this year, I still see a lot of value in them for a long-term investment. This is due to its defensive qualities, refreshed strategy, and solid growth prospects.

In respect to the latter, I believe Coles’ focus on cost cutting through automation and efficiencies will underpin solid earnings growth over the next decade. Another positive is its favourable dividend policy. Coles intends to pay out upwards of 90% of its earnings as dividends each year. This could mean plenty of dividend growth over the 2020s, which is very welcome in this low interest rate environment.

CSL Limited (ASX: CSL)

Another quality blue chip ASX share to buy is CSL. I’m a big fan of the biotherapeutics company due to its high quality CSL Behring and Seqirus businesses. CSL Behring is the global leader in plasma therapies and Seqirus is the second biggest player in the influenza vaccines industry.

I believe both businesses can grow their sales at a strong rate over the next decade thanks to their leading therapies and vaccines, robust demand, and lucrative research and development pipelines. Each year CSL invests somewhere in the region of 10% to 11% of its sales into research and development. This investment keeps its pipeline filled with ground-breaking products that have the potential to generate billions of dollars of sales in the future. Overall, I feel this could make CSL the perfect buy and hold option for investors today.

More reading

• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• Here’s why Medical Developments (ASX: MVP) share price has soared 12% today
• ASX 200 flat: Bank of Queensland impresses, CSL guidance update, AUSTRAC clears Afterpay
• CSL (ASX:CSL) share price pushes higher on FY 2021 guidance update
• 3 ASX 200 growth shares to buy today

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of COLESGROUP DEF SET. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Transurban Group (ASX: TCL) share price was down 0.5% at close of trade today.

That’s broadly in line with the wider market moves, which saw the S&P/ASX 200 Index (ASX: XJO) fall 0.3% by the closing bell.

Still, October’s been a good month for Transurban shareholders, with the share price up 6.2% so far this month. Following the massive COVID-19 driven sell-off in March, year-to-date the share price remains down 6.5%. 

So why do I think the Transurban share price is undervalued by at least 18%? We’ll get to that in a tick. But first…

What does Transurban do?

Transurban is one of the world’s largest toll road operators. Atop collecting toll payments from road users, the company also designs and constructs new road projects. Transurban is Australian-owned and operates in Melbourne, Sydney and Brisbane. It also runs toll roads in Montreal, Canada and the wider Washington DC area in the United States.

Transurban first listed on the ASX in 1996.

Why the Transurban share price could go up

Less than 8 months ago, on 20 February, the Transurban share price hit an all-time closing high of $16.26 per share.

That’s just over 14% above today’s price of $13.93 per share. This means if things were simply to ‘return to normal’ the share price could gain 18%.

And traffic counts on the company’s toll roads indicate that the return to normal is already well under way.

At last week’s annual general meeting (AGM), the company revealed that while average daily traffic (ADT) was still down 58.6% on its Melbourne tollways for the September quarter, traffic numbers in Sydney were up 1.5%.

That’s not huge. But it does indicate that once restrictions are lifted, people are prone to return to their cars. And with angst over potential infections on public transport likely to linger in Australia and North America, car travel should see a boost from people turning away from buses and trains.

Then there’s the multi billions of dollars in the recovery budgets that the Australian, US, and Canadian governments have pledged for infrastructure (including roads) projects. This should also offer long term gains for Transurban’s road design and construction branches.

Connecting the dots, I believe Transurban’s share price could be at least 18% higher by this time next year.

More reading

• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash
• Why the Flight Centre (ASX:FLT) share price slumped despite new tourism campaign
• Here are 10 years of ASX 200 historical returns
• Ramsay (ASX:RHC) share price firms as its UK hospitals reopen to private patients

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban Group. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Global Health Limited (ASX: GLH) has been developing software for the healthcare industry for more than 30 years. Today it announced a new partnership between the company’s Lifecard consumer health platform with Asthma Australia. The news sent the Global Health share price rocketing up almost 74% to 40 cents at the time of writing.

What moved the Global health share price?

Almost 3 million Australian’s live with asthma. Asthma Australia aims to halve avoidable asthma hospitalisations by 2030. Using the The Lifecard platform, users are able to better manage their health and wellbeing. 

Lifecard connects consumers with their care team so they can work in tandem to comply with prescribed care plans. ReferralNet, Global Health’s secure message platform, integrates with Lifecard. Consequently, subscribers can receive health and medical information directly into their Lifecard Personal Health Record. 

Furthermore, work has begun to integrate Lifecard with wearables and remote monitoring devices. This additional data will provide a more complete and real-time view of a consumer’s health, enabling more informed decisions. The company plans to integrate asthma-related data, such as peak expiration flow rate, from wearables.

What did management say?

Global Health managing director Mathew Cherian said:

We are looking forward to the year ahead and what we can achieve together with Asthma Australia. Our shared belief and vision is that the Lifecard platform is an invaluable tool to help consumers manage their long-term conditions and encourage a healthy lifestyle through pro-active engagement.

Asthma Australia CEO Michele Goldman also welcomed the partnership, saying:

People with asthma will often see more than one health professional over the course of time, even multiple visits to different emergency departments. We often hear that people with asthma get rather exhausted retelling their health history, which can be complex and traumatic, and that doctors appreciate the opportunity to assess a health record. 

Lifecard is all about more complete information with a holistic picture that enables more insightful conversations between a patient and their doctor. We see this partnership as a great opportunity
for people with asthma to embrace a health tool, and another step toward individualised, person centred health care.

The Global Health share price closed the day up 73.91%.

More reading

• Why the Clean TeQ (ASX: CLQ) share price is up today
• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• Are Seek (ASX: SEK) shares a good pick for long term investors?
• Here’s why the SciDev (ASX:SDV) share price has exploded today
• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Clean TeQ Holdings Ltd (ASX: CLQ) share price today climbed 3.33% to 31 cents before dropping back to 30.05 cents at the time of writing. This came after the company released its report for the quarter to 30 September 2020.  

What was in the report?

Highlights during the September quarter included discussions with potential funding partners to develop Clean TeQ’s Sunrise asset, which the company described as “one of the world’s lowest cost sources of sustainable nickel and cobalt”.

Clean TeQ also discussed its collaboration with Relativity Space Inc. to provide scandium oxide from the Sunrise project. The scandium will be used to develop scandium-aluminium alloys for the 3D printing of launchers for commercial orbital launch services. 

During the quarter, the company also announced that a high grade platinum resource had been identified within the Sunrise project named the Phoenix platinum zone.

Clean TeQ said Sunrise hosted 103.1 million tonnes at 0.33 grams per tonne of platinum for 1,076,170 total ounces of platinum with 90% of this resource in the measured and indicated categories. Within the Phoenix platinum zone, significant historic downhole intersections included 4m at 7.4 grams per tonne platinum, 0.13% nickel and 0.01% copper in addition to 1 metre at 6.5 grams per tonne platinum, 0.15% nickel and 0.01% copper and 1 metre at 4.2 grams per tonne platinum, 0.15% nickel and 0.01% copper. A 6 drill hole diamond core drilling program is planned for the current half of the 2020 calendar year.

Clean TeQ is continuing with its plan to separate its water division from the remainder of the business, including the Sunrise Project and its other mineral exploration activities. It is also considering delisting from the Toronto Stock Exchange, with a cost benefit analysis being undertaken. 

CleanTeQ had cash of $34.02 million at 30 September 2020, down from $40.08 million at the end of the previous quarter. The company’s biggest cost during the quarter was exploration, costing $3.18 million.

About the Clean TeQ share price

Clean TeQ is a minerals development company that also holds patented technology which can be used for water purification and resource extraction. It has been listed on the ASX since 2007.

Earlier this month, Clean TeQ advised it was consolidating its securities, with security holders receiving 1 share for every 10 held.

The Clean TeQ share price is up 210% from its 52-week low of 10 cents. It has risen 40.91% since the beginning of the year. The CleanTeQ share price is up 14.81% since this time last year.

More reading

• ASX 200 finishes lower, Afterpay (ASX:APT) shares rise
• Are Seek (ASX: SEK) shares a good pick for long term investors?
• Here’s why the SciDev (ASX:SDV) share price has exploded today
• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash
• PayGroup (ASX:PYG) share price moves higher on contract win

Motley Fool contributor Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX:XJO) fell by 0.27% to 6,179 points today.

Here are some of the highlights from today:

Afterpay Ltd (ASX: APT)

The Afterpay share price climbed by over 2% today after giving an update regarding AUSTRAC.

Afterpay said that after AUSTRAC looked at the final audit report from independent auditor Neil Jeans and Afterpay’s response to the findings, it has decided it won’t be taking any further regulatory action.

AUSTRAC noted that Afterpay has lifted its anti-money laundering and counter-terrorism financing compliance framework and financial crime function, and satisfactorily completed all required remediation activity.

Zip Co Ltd (ASX: Z1P)

Fellow ASX 200 buy now, pay later business Zip provided an update for the quarter ending 30 September 2020.

Zip reported record quarterly revenue of $71.7 million, up 88% year on year. It achieved record quarterly transaction volume of $943.1 million, up 96% year on year. Zip said its transaction volume is now annualising at $3.8 billion.

Its customer numbers grew by 114% year on year to 4.5 million. Merchants on the platform grew by 69% year on year to 34,400.

Zip’s Australian monthly arrears, which it views as a forward indicator of future losses, reduced from 1.33% in June to 0.91% in September.

During the quarter, it completed the acquisition of QuadPay in the US. Last quarter, Quadpay achieved $322.5 million of transaction volume, $23.4 million of revenue and it finished with 2.2 million customers.

The Zip share price finished lower by around 4%.

CSL Limited (ASX: CSL)

CSL held its AGM today and increased its FY21 guidance.

The biggest ASX 200 company is now expecting revenue to grow in the range of 6% to 10% in FY21. Net profit after tax (NPAT) is expected to come in between US$2.17 billion to US$2.265 billion in constant currency terms, which would represent growth of between 3% to 8%.

That profit prediction for FY21 is an upgrade from the previous guidance, which was growth of between 0% to 8%.

CSL is expecting strong demand for its plasma and recombinant therapies to continue. With Seqirus, it’s expecting to continue to benefit from its differentiated products and strong demand for flu products. Sales of albumin are expected to normalise after the transition to the new business model in China.

In terms of R&D, the company is expecting to spend between 10% to 11% of R&D due to the COVID-19 response and new R&D initiatives.

The CSL share price went up by 1.4%.

Westpac Banking Corp (ASX: WBC)

The major ASX 200 bank has been reviewing its Asian, European and US businesses.

Westpac has decided to consolidate its international operations into three branches: Singapore, London and New York.

This means that Westpac is going to exit Beijing, Shanghai, Hong Kong, Mumbai and Jakarta.

The acting chief executive of Westpac’s institutional bank, Curt Zuber, said: “Westpac’s priority is to focus on its core Australian and New Zealand customers and to support them in areas where we have scale and capability.

“To support this, WIB will be focusing on our international footprint in three critical locations and streamlining the product set and customers we support outside Australia and New Zealand.

“For WIB, the change will enable us to deliver products and services to customers more efficiently. Our ambition is to be the leading Australia and New Zealand-focused institutional bank for customers while delivering sustainable returns.”

“We are fully committed to supporting our employees, customers and partners through this changes.”

The changes are not expected to have a significant impact on cash earnings and the bank hopes it will improve the capital efficiency, including by reducing risk-weighted assets by over $5 billion.  

The Westpac share price fell 1.2% today, though all of the big ASX banks’ share prices dropped today.

More reading

• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash
• Here’s why Medical Developments (ASX: MVP) share price has soared 12% today
• Why the Flight Centre (ASX:FLT) share price slumped despite new tourism campaign
• Here are 10 years of ASX 200 historical returns
• My top 5 ASX growth shares to buy right now

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. and ZIPCOLTD FPO. The Motley Fool Australia owns shares of AFTERPAY T FPO. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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While SEEK Limited (ASX: SEK) was not immune from the impact of the COVID-19 pandemic, the Seek share price has recently returned to its pre-COVID level of around $23 per share.

The online job seeking platform announced a loss of $414.9 million (-9%) in earnings before tax from June 2019 to June 2020. However, its diversified business model is the reason why I think Seek is a diamond in the rough, despite its underperformance in FY20.

Diversified markets and products

As an Australian employment marketplace that matches jobseekers and employers, Seek’s main revenue stream comes from job advertisements.

Accordingly, the jump in the national unemployment rate from 5.2% in March to 6.2% in April led to a dip in Seek’s share price. The company’s second quarter billing dropped by 65% compared to the same period in FY19.

However, Australia is showing signs of recovery. The Australian Bureau of Statistics revealed a rebound on payroll numbers by almost 5% since June. Despite the signs of a pickup from April’s lows amid the national lockdown, the prospects for Seek.com and the domestic employment market in general are still uncertain. We are battling with the virus until a vaccine is ready.

The local Australian market may not be at its best for Seek, as evidenced by its negative revenue growth of 12% in FY20. The company has been relying on its investment in Zhaopin, a Chinese online recruitment web platform (which posted revenue growth of 16% in FY20) and early stage ventures (with revenue growth of 18% in FY20) to diversify downside risks.

The company also operates in Asian countries such as Hong Kong, Malaysia, Singapore, Philippines, Thailand, Indonesia and Vietnam using different brand names. In addition, it has scaled up its investment in early stage ventures such as Coursera (an online open course provider) and Go1 (a digital learning library) in 2020. As such, I think Seek can capture a large market opportunity globally and generate a sustainable return on investment given the increasing need of home learning.

Investing in the future of work

There is no doubt that COVID-19 has highlighted existing workforce challenges in Australia. As the Australian Federal Budget 2020–21 was focused on the future of work, jobs and reskilling local workers, I see an opportunity for Seek to build on this momentum in the human capital market.  

For example, the company has made a long-term future investment plan to tap into 3 niche segments (online education, human resources software as a service, and contingent labor) with a target return rate of 15–20% over the next 5 years. 

This year the company delivered strong results in these 3 areas. Additionally, its growth strategy is a complement to the Government’s plan to look at the future of work. Seek’s share price has revived steadily to the pre-COVID level with good business potential. 

Foolish takeaway

Based on the company’s growth plan, I believe that the value of its international assets and early stage ventures will become an important driver of the Seek share price in 2021.

At the current time, it appears the domestic job advertisement recovery is already being factored in. I think the Seek share price could be appealing to long-term investors – investors should pay attention to Seek’s offshore growth and its ability to unlock the full potential of its ventures. 

More reading

• 3 top ASX shares to buy and cash in on the Federal Budget
• Would Warren Buffett buy SEEK (ASX:SEK) shares?
• 4 high quality ASX blue chip shares to buy right now
• Buying and holding these ASX shares could be the key to becoming wealthy
• Why I think the Seek (ASX:SEK) share price is primed to surge in 2021

Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has recommended SEEK Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Scidev Ltd (ASX: SDV) today published a quarterly report which builds on steady progress over the past two years. Accordingly, the SciDev share price has surged up 10.2% to 75 cents at the time of writing.

The company develops chemistries and engineering solutions to help clients with a range of operational issues associated with water. For instance, it develops coagulants and flocculants to treat wastewater. Moreover, it has a proprietary system to provide real-time monitoring of solid-liquid separation in mineral processing. Furthermore, it also produces products to recycle and minimise the use of oilfield waters. 

The headline of the quarterly report is a record $9.4 million in sales, which is likely the issue that drove the share price up. This includes $4.6 million in sales during September alone. 

SciDev performance highlights

Strong performance in the quarter was reflected across all sectors, including mining & mineral processing (32%), oil & gas (32%), construction & infrastructure (29%), and water & wastewater (7%). Specifically, revenue was strong in oil & gas as a result of improved drilling activity in the US shale sector. In addition, SciDev conducted direct work with several key customers, adding to revenue strength.

In addition, the company added the Shell Oil Company as an R&D partner for new technology development focussed on gas to liquid solvents. Critical to this project was the addition of a new PhD qualified R&D manager to the team, seconded to Shell, to develop new applications for this type of chemistry.

 Existing business in the mining sector continued. In addition, the contribution from the infrastructure sector also continued to grow as the company expands further. The SciDev share price has been rising gradually over the past 6 months in response to regular announcements of new contracts and work. 

What’s the future for the SciDev share price?

The company has a strong business development pipeline with field qualifications under way across all sectors. This includes plans to expand further into construction, and new services in oilfields and mining. In particular, companies in the mining sector have invited SciDev to participate in several competitive tenders. 

Within water and wastewater the company continues to participate in a major national tender. Its ability to produce though its plant in Sydney delivers security of supply, which is an attractive proposition.

Reflecting on Q1 FY2021, SciDev chief executive officer Lewis Utting said:

The September quarter business performance was outstanding and sets the scene for a strong FY2021. After a COVID-19 impacted June quarter, our growth across all verticals in the September quarter was exceptionally pleasing… We look forward to continuing to deliver on our range of growth opportunities over the coming quarters.

The SciDev share price has risen by 17% over the past 6 months. In the past 5 days of trading alone, it is up by 12.78%.

More reading

• ‘Vomit buying’: How fundie spent $110m during COVID-19 crash
• PayGroup (ASX:PYG) share price moves higher on contract win
• Little Green Pharma (ASX:LGP) share price leaps 10% on this ASX announcement
• Why the Nearmap (ASX:NEA) share price is surging 8% higher today
• Here’s why Medical Developments (ASX: MVP) share price has soared 12% today

Motley Fool contributor Daryl Mather has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Late February and most of March, we saw something we hadn’t seen in more than 10 years. 

A share market crash.

You know the story. The S&P/ASX 200 Index (ASX: XJO) hit 7,162.5 points on 20 February, then COVID-19 came — and it had sunk to 4,546 on 23 March.

That’s almost a 37% drop in just one month.

Long-held investor wisdom says one must buy when the market sinks to such lows. Pick up the bargains, they say!

But we are all human and it takes even seasoned professionals a tremendous amount of courage to buy when everyone else is selling.

Pengana Capital Group Ltd (ASX: PCG) was in the fortunate situation of sitting on a decent cash pile when the markets plunged as the world went into lockdown.

The company’s chief investment officer and Australian Equities senior fund manager, Rhett Kessler, used that stockpile to buy ASX shares during the crash.

His nerves were shot though, he admitted.

“It was fantastic we did this, but I can honestly say it was one of the toughest periods in my 30 years of experience in this industry,” Kessler told an investor briefing.

“It enabled us to apply $110 million of our cash into shares, at really attractive prices.”

Vomit buying

Kessler said that buying shares when everyone is selling is called “reaching across the abyss” — as in trying to get to the other side of a canyon. Or perhaps the other side of the price graph.

But there’s also a more experientially literal term: vomit buying.

“You literally buy something, then you stand up. You walk around the desk, trying your hardest to settle your stomach so that you don’t throw up,” said Kessler.

“Then you sit back down, and you buy some more at 5% lower.”

Kessler’s team did this repeatedly during those harrowing weeks in late February and March.

And it has paid off handsomely for Pengana investors, with the ASX 200 climbing more than 36% since the March trough.

Although Kessler considers his Australian Equities Fund to be reasonably careful with its capital, he said you can’t procrastinate during such frantic times.

“It’s no good just saying you’re conservative. You have to be able to act when opportunities present themselves,” he said.

“By deploying so much cash that we went from one of our highest levels of cash to our lowest level of cash in the history of our fund over the period of a month… Speaks to our discipline and our ability to act when needed.”

Kessler said Pengana had already cashed in a lot of its winnings to build its cash reserve back up.

“Bizarrely things have turned almost 180 degrees. Not only did the market correct… it bounced back enormously. In our view, to some extent it’s trading above fair value,” he told investors.

“We’ve gone from our lowest level of cash to net sellers, at very attractive prices.”

The Pengana share price itself has almost doubled since the COVID-19 bottom, trading at $1.50 on Wednesday afternoon AEST. It had tumbled to 82 cents back in March.

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Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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