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The Commonwealth Bank of Australia Ltd (ASX: CBA) released its FY20 results on Wednesday 12 August. The report reflects the impact of COVID-19 on the Australian economy but a resilient business and strong operational performance. All things considered, could the Commonwealth Bank share price be a buy for long-term investors? 

FY20 Results 

On the morning of the announcement, the Commonwealth Bank share price jumped as much as 2% before finishing the day in the red. The share price has shed more than 5% from the recent peak last Wednesday to its current price of $70.98. The company’s earnings were supported by a fundamentally strong performing business but impacted by higher loan impairment expenses due to COVID-19. While its statutory NPAT increased 12.4% on FY19, the banking behemoth’s cash NPAT fell by 11.3%. Its dividend was also slashed by 31% on FY19 to $2.98 per share. CommBank’s dividend payout ratio of 49.9% was in line with APRA’s suggestion to cap dividend payouts to 50% of earnings. 

Despite a sturdy result, the announcement highlights some inherent risks in home and business lending, which have likely been reflected in the falling Commonwealth Bank share price late last week. In the context of home lending, approximately 8% of accounts have been deferred, representing 135,000 deferrals and a total of $48 billion in balances. Of the deferrals, 25% were making some repayments and 14% had 12 months or more worth of payments already made in advance. There were however, 14% receiving JobSeeker and 58% which came from joint accounts with only one borrower on JobSeeker. 

CommBank’s business lending has active deferrals which represent 15% of balances or $14 billion. 30% have continued to make repayments in full as at 30 June. However approximately 23% of deferred accounts are classified as higher risk and approximately 30% are receiving JobKeeper. 

Should you buy the Commonwealth Bank share price? 

I believe the Commonwealth Bank share price is stuck between a rock and a hard place. It has delivered a fair result given the challenges presented by COVID-19 and record low interest rates. Its dividend payment represents a solid yield of around 4% based on the current Commonwealth Bank share price. This is despite the cut and APRA’s suggested dividend cap. In fact, its revised dividend yield is very reasonable compared to the likes of some ASX 200 companies in the real estate investment trust (REIT) and industrial sectors. 

The full impact of home and business lending deferrals may take some time to surface given factors such as government support schemes and recent ‘second wave’ concerns. All things considered, I believe the Commonwealth Bank share price is fairly valued, but there are better opportunities out there for dividend or growth plays. 

More reading

• These were the highlights of ASX reporting season last week
• Take a look at last week’s worst performing ASX shares
• Take a look at last week’s best performing ASX shares
• Is the CBA share price a buy?
• 2 easy ASX shares for a beginner to buy today

Motley Fool contributor Lina Lim 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 Costa Group Holdings Ltd (ASX: CGC) share price has been a positive performer in 2020 despite the pandemic.

Since the start of the year, the horticulture company’s shares have generated a return of 17.5%.

In light of this, expectations are likely to be high for Costa’s half year results on 28 August.

Ahead of the release, I thought I would take a look to see what is expected from the company when it hands in its report card.

What is expected from Costa in the first half of FY 2020?

According to a note out of Goldman Sachs, its analysts have upgraded their estimates slightly on the belief that Costa will deliver a much improved first half result.

It expects most parts of the business to be trading ahead of last year, with the exception of the Citrus business. It notes that the timing of its harvests this year means the citrus crop could push more earnings into the second half.

Nevertheless, Goldman expects first half revenue of $588.3 million. This will be up 3% on the prior corresponding period.

What about earnings?

The broker is forecasting much stronger profit growth thanks to its international business. It has pencilled in earnings before interest, tax, depreciation, and amortisation before self-generating and regenerating assets, leasing, and material items (EBITDA-SL) of $108 million. This will be a 31% increase on the prior corresponding period.

Produce EBITDA is expected to be up 15% to $54 million, whereas international EBITDA is forecast to be up 61% to $50.7 million.

Finally, on the bottom line net profit after tax before SL is expected to be $51.9 million. This will be up 27% on the first half of FY 2019.

What else should you look out for?

Goldman Sachs has suggested investors look out for costs relating to COVID-19. This includes additional labour costs required to maintain social distancing on farms and to secure labour. It will also be looking for any cost outlook commentary post-COVID.

The broker will also be looking for commentary on certain sides of the business with negative exposure to COVID-19. Goldman notes that Costa is mainly exposed to the supermarket channel, with 70% of revenue coming from here. However, it also has exposure to food service and wholesale markets. It expects these businesses to be a drag in FY 2020 given social distancing restrictions and lockdowns.

Finally, it will be looking for commentary on key produce categories. Although the company has moved away from quantitative guidance, the broker expects an update on conditions in key product categories.

Should you invest?

Goldman Sachs has a neutral rating and $3.30 price target on Costa shares at present.

This price target implies potential upside of 12% over the next 12 months, which isn’t too bad for a neutral rating. However, I’m not in a rush to invest. I would rather wait for its results release to see how it is faring and its expectations for the next six months.

More reading

• Why the Coca-Cola share price and these ASX stocks just got upgraded by brokers to “buy”
• 3 top ASX dividend shares for income investors in August
• My ASX share of the week

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

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The ASX is home to a growing number of exciting tech companies. Each year the number of listed ASX tech shares continues to grow. Just a decade ago this segment was dominated by the traditional sectors of telecommunications and IT services. However, sector coverage has expanded massively since then. It now also includes ASX tech shares linked with a growing number of exciting industries such as data centres, cloud computing, the Internet of Things (IoT) and the buy now, pay later (BNPL) industry.

Here we look at 2 ASX tech shares that are on my buy list right now:  Dicker Data Ltd (ASX: DDR) and Bravura Solutions Ltd (ASX: BVS).

2 ASX tech shares to buy and hold for the long term

Dicker Data

Dicker Data is a local wholesale distributor of computer hardware, software and cloud-based solutions. The company recorded unaudited revenue for the half year to June 2020 amounting to $1 billion. That was a solid 18.3% increase over the prior corresponding period. Heightened demand for remote working solutions during the pandemic was a significant reason for this increase. This also contributed to the strong Dicker Data share price growth we’ve witnessed since April.

What really appeals to me about Dicker Data as an ASX tech share is that it pays an attractive fully franked dividend. At the time of writing, it provides a forward dividend yield of 4.04%. Grossed up, that amounts to an annual return of 5.77%.

I believe that Dicker Data is well placed to maintain this strong dividend in the years to come, as well as seeing additional share price growth. Growth will be driven by its entrenched local market position and a growing demand for local ICT services.

Bravura

Another ASX tech share that is in my buy zone right now is Bravura. This locally based fintech company provides mission-critical enterprise software solutions for the wealth management and funds administration industries.

Despite a dip in the early phase of the coronavirus pandemic, this locally based tech company has seen very strong share price growth over the past 3 years.

I am confident that the Bravura growth story is set to continue over the next few years, driven by increased demand for its industry leading wealth and fund management product set.

Bravura also pays a forward annual dividend yield of 2.5% at the time of writing.

Foolish takeaway

Dicker Data and Bravura are both quality ASX tech shares with strong growth prospects over the next 5 years. In addition, both companies pay an attractive dividend. That’s rare to find amongst tech companies.

More reading

• 3 ASX dividend shares offering generous yields
• Rates on hold until 2023? Buy these ASX dividend shares
• 2 ASX growth shares to buy with $2,000
• 2 ASX dividend shares for income investors to buy right now
• 3 exciting ASX growth shares to buy with $3,000

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

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The Baby Bunting Group Ltd (ASX: BBN) share price has gained 26.4% so far in August. That’s compares to a 2.8% gain from the All Ordinaries Index (ASX: XAO) over the same period. In late morning trading today, the company’s shares are up 5.8% from Friday’s close while the All Ords is down 0.7%

Year to date, the Baby Bunting share price is up 35%, giving the company a market capitalisation of $561 million at the current price of $4.40 per share.

That gain masks the gut wrenching, 60% decline seen by the Baby Bunting share price during the COVID-19 driven sell off from 13 February through to 19 March. But investors who held on — or were lucky enough to buy at the low — were handsomely rewarded. Baby Bunting’s share price has gained a stellar 188% since the company’s 19 March low.

What does Baby Bunting do?

Baby Bunting was established in Melbourne in 1979 as a family-owned business. The company began trading on the ASX in October 2015. Today it’s ranked as Australia’s largest specialty nursery retailer and one-stop baby shop.

Baby Bunting currently has 56 stores across Australia. These offer a broad selection of prams, car seats, cots, nursery furniture, high chairs, bathing and feeding accessories, toys, and of course babywear.

Why is the Baby Bunting share price up 26% in August?

Baby Bunting has been a strong performer all year, with the notable exception of the viral sell-off in the February/March bear market.

The company’s ability to shift much of its sales to its online platform demonstrates the value in adaptability during times of change and immense uncertainty.

This was confirmed when Baby Bunting released its full year results on Friday. The company reported an 11.8% increase in total sales, which reached $405.2 million. Online sales growth was an impressive 39.1%, with online sales reaching 14.5% of total sales over the 12-month period.

Baby Bunting also opened 5 new stores during the financial year, reporting comparable store sales growth of 4.9%. It also confirmed its plans to open 4 to 6 new stores over the coming year.

The company declared a final, fully-franked dividend of 6.4 cents per share, bringing its full year dividend to 10.5 cents per share.

With its success in growing online sales and plans for store expansions, I think the Baby Bunting share price will be one to watch moving forward.

More reading

• Leading brokers name 3 ASX shares to buy today
• ASX 200 rises 0.6%, Mesoblast soars
• Why Baby Bunting, Evolution, Mesoblast, & Xero shares are zooming higher
• Baby Bunting share price in focus after strong FY 2020 profit growth despite the pandemic
• 3 ASX small cap shares with serious growth potential

Motley Fool contributor Bernd Struben 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 Ampol Ltd (ASX: ALD) share price is off to a slow start this week, falling 3.5% this morning following a company announcement. 

Ampol today announced a $1.4 billion property trust deal with partners Charter Hall Group (ASX: CHC) and Singapore’s GIC.

The fuel and convenience giant has been mitigating risks since the initial public offering (IPO) was unveiled last November. The risks include market volatility as a result of COVID-19, extreme shocks to the oil price and a failed takeover bid by Canadian firm Alimentation Couche-Tard. Let’s look at what this means for Ampol shares.

What’s in today’s announcement?

Ampol revealed the unlisted property trust would hold 203 of its core freehold convenience retail sites (petrol stations), with Ampol maintaining a 51% controlling stake, and the Charter Hall & GIC ‘consortium’ acquiring the other 49 per cent.

The consortium will pay $682 million for this stake, which values the entire 203 property trust at $1.4 billion, and Ampol will pay $77 million in rental payments to the trust in its first year.

The plan is that all sites within the property trust will be leased back to Ampol under long-term arrangements, the average being 19.2 years. This lengthy duration gives the fuel company added security, as it will benefit from long-term lease repayments and the liquidity that provides.

Ampol will use the proceeds of the deal to reduce its debts, which have ballooned because of the pandemic and lower demand for both jet and everyday vehicle fuel.

Ampol CEO Matt Haliday said: “Following the completion of our retail network review in 2019, we identified the opportunity to unlock the value of our high-quality retail property assets through a transaction that would demonstrate value, whilst importantly allowing Ampol to retain strategic and operational control over our core convenience retail network.”

Should you invest in Ampol shares?

The property trust deal gives Ampol more flexibility to buy future sites and sell additional properties into the trust over time. I like the company plan, which is to unlock financial capital without being forced to change its operating structure.

The big test from here will be whether the additional funds freed up by this property trust will find their way back to shareholders in the form of dividends.

I’m also waiting to see how Ampol performs when it provides its full-year earnings for FY20 on 25 August. Of particular interest will be the impact of the pandemic on its earnings and operations, and whether there will be some clarity for shareholders with an FY21 forecast.

The market’s adverse reaction to this morning’s news may also be attributed to the upfront $77 million that Ampol will need to fork out to get the ball rolling. In addition, the original announcement last year said that 250 sites would be incorporated in the transaction. The negative price movement in Ampol shares may thus communicate an underwhelming shareholder response.

Foolish takeaway

In principle, it’s good to see Ampol attempting to unlock additional value for its shareholders. I’m enthused by the long-term duration of this agreement and the stability that provides.

Having said that, keep an eye out for Ampol’s FY20 earnings next week to assess both the tailwinds and risks facing the fuel retailer moving forward.

More reading

• Top broker warns Afterpay and these ASX stocks could disappoint on profit results
• Goodman share price hits record high. Is it too late to invest?

Motley Fool contributor Toby Thomas owns shares of Ampol Limited. 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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Magellan Financial Group Ltd (ASX: MFG) co-founder Hamish Douglass has a reputation as being one of the ASX’s top fund managers. And for good reason too. Magellan has a stellar record of market outperformance that would turn other fund managers green with envy. The company’s flagship Global Fund has returned an average of 15.86% per annum over the past 10 years – outperforming its benchmark by an average of 3.67% per annum.

Needless to say, if Douglass has something to say, most investors are happy to listen.

So on that note, today we’ll be looking at the updates Magellan has just provided for its funds for the month of July, which include the shares that Magellan was holdings in its portfolios as of 31 July.

Magellan’s top stock picks for August

For its Global Fund – which is mirrored on the ASX in the form of the Magellan Global Trust (ASX: MGG) – between 20 and 40 global companies are selected. In its latest update, Magellan informed us that its top 10 shares (in alphabetical order) are as follows:

1. Alibaba Group
2. Alphabet Inc.
3. Facebook Inc.
4. Microsoft Corporation
5. Novartis AG
6. Reckitt Benckiser Group
7. SAP SE
8. Starbucks Corporation
9. Tencent Holdings
10. Xcel Energy

Magellan also runs a ‘high conviction’ strategy, where its 8–12 best investment ideas are selected in a high-octane portfolio. So turning to the Magellan High Conviction Trust (ASX: MHH), here are this fund’s top holdings (again in alphabetical order):

1. Alibaba Group
2. Alphabet Inc.
3. Facebook Inc.
4. Microsoft Corporation
5. Tencent Holdings

Takeaways from Magellan’s portfolios

Across both portfolios/strategies, we can see a clear preference for both tech and e-commerce companies. Alphabet and Facebook are both giants of the online advertising space, whereas Microsoft, Alibaba and Tencent are more well-rounded e-commerce companies with a variety of popular services. Interestingly, Microsoft and Tencent are also heavyweights in the console and mobile gaming space.

Some of the other companies that Magellan owns in the Global Fund and Trust are clearly performing a defensive role. Xcel Energy is a US-based utility provider, whilst Reckitt Benckiser is a consumer staples giant and owner of several brands you are probably familiar with (including Mortein, Dettol, Harpic and Nurofen).

What about cash?

Magellan also tells us that for its global portfolio, its funds are currently sitting in 15%. The high conviction strategy is a little more bearish, with a 22% cash position.

This to me indicates that Magellan is having a bet both ways. If markets continue to rise, the funds are ready to capture upside. But if there is a second market crash, Magellan is also relatively well-insulated and will have some dry powder to deploy.

More reading

• Top brokers name 3 ASX shares to sell next week
• My favourite 3 ASX share reports of the week
• 2 easy ASX shares for a beginner to buy today
• Is now a good time to buy Magellan shares?
• ASX 200 drifts 0.1% lower, CBA reports solid FY20 result

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Sebastian Bowen owns shares of Alphabet (A shares), Facebook, Starbucks and Magellan High Conviction Trust. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Alphabet (A shares) and Facebook. The Motley Fool Australia has recommended Alphabet (A shares) and Facebook. 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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Fortunately in this low interest rate environment, the ASX has a large number of shares offering attractive dividend yields.

But which dividend shares should you buy? I think the three listed below would be top options for income investors right now:

Aventus Group (ASX: AVN)

The first dividend share to consider buying is Aventus. It is a retail property company which specialises in large format retail parks across Australia. Retail property is generally not a good place to be right now, however Aventus is different to a company like Scentre Group (ASX: SCG). This is because its retail parks have a relatively high weighting towards everyday needs, where trading has remained strong during the pandemic. This appears to have left the company well-placed to navigate the tough trading conditions facing the retail sector right now. Goldman Sachs certainly believes this will be the case and is forecasting a ~17.3 cents per unit distribution in FY 2021. Based on the current Aventus share price, this equates to a massive forward ~8.4% distribution yield.

Dicker Data Ltd (ASX: DDR)

Another dividend share to consider buying is this wholesale distributor of computer hardware and software. Dicker Data has been a strong performer in FY 2020 and reported stellar growth during its recently completed first half. The good news is that I believe this solid form can continue for the foreseeable future thanks to the robust demand it is experiencing, new vendor agreements, and the benefits of scale. In FY 2020 the company intends to pay a 35.5 cents per share dividend. Based on the current Dicker Data share price, this represents a generous fully franked 4.8% dividend yield.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

Finally, if you don’t have the funds available to maintain a truly diverse portfolio of dividend shares, then you might want to consider buying the Vanguard Australian Shares High Yield ETF. This exchange traded fund gives investors exposure to 62 of the highest yielding shares on the ASX through just a single investment. This includes the big four banks, telcos, and mining giants. At present, I estimate that its units offer a forward dividend yield of at least ~4%.

More reading

• 2 top ASX tech shares to buy and hold beyond 2026
• Rates on hold until 2023? Buy these ASX dividend shares
• 2 ASX dividend shares to buy with $5,000 today
• These high yield ASX dividend shares will help you smash low interest rates
• 2 ASX dividend shares for income investors to buy right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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With so many shares to choose from on the ASX, it can be hard to decide which ones to buy.

The good news is that brokers across the country are doing a lot of the hard work for you.

Three top shares that leading brokers have named as buys this week are listed below. Here’s why they are bullish on them:

Baby Bunting Group Ltd (ASX: BBN)

According to a note out of Morgan Stanley, its analysts have retained their overweight rating and lifted the price target on this baby products retailer’s shares to $5.05. This follows the release of its impressive FY 2020 full year result last week. Morgan Stanley was very pleased with Baby Bunting’s performance and particularly its online sales. It also notes that the company has started FY 2021 in a very positive fashion. This has led to the broker upgrading its earnings estimates for the coming years. I agree with Morgan Stanley and believe Baby Bunting is a quality option in the retail sector due to its dominant market position.

Flight Centre Travel Group Ltd (ASX: FLT)

Analysts at UBS have retained their buy rating but cut the price target on this travel company’s shares to $15.10. According to the note, the broker was pleased with its lower than expected cash burn during the month of July. It believes this is a sign that Flight Centre is well-placed to ride out the storm before recovering back to pre-pandemic levels at the end of FY 2023. Though, it acknowledges that things will remain tough in the near term. I think Flight Centre is a quality company but is just too high risk given current market conditions.

National Australia Bank Ltd (ASX: NAB)

A note out of Credit Suisse reveals that its analysts have retained their outperform rating and $21.30 price target on this banking giant’s shares. This follows the release of NAB’s third quarter update last week. Credit Suisse appears pleased to see the bank’s housing deferrals reduce and its business deferrals remain stable over the quarter. Overall, the broker sees value in NAB shares at the current level and feels recent weakness is a buying opportunity. I agree with Credit Suisse and would be a buyer of NAB’s shares.

More reading

• Why the Baby Bunting share price is up 26% in August
• Why Bendigo and Adelaide Bank, Kogan, NAB, & Treasury Wine are dropping lower
• These were the highlights of ASX reporting season last week
• Take a look at last week’s worst performing ASX shares
• Take a look at last week’s best performing ASX shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Flight Centre Travel Group 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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Many investors have reaped big gains from technology shares both in the US and Australia in recent years.

Afterpay Ltd (ASX: APT) is a good local example. Afterpay shares have risen more than 700% since the Covid-19 lockdown trough in late March.

But the world’s most famous share investor, Warren Buffett, avoids innovative companies like the plague.

“Our reaction to a fermenting industry is much like our attitude toward space exploration: We applaud the endeavor but prefer to skip the ride,” he said in a letter to Berkshire Hathaway shareholders in 1996.

“The reason for that is simple… We are searching for operations that we believe are virtually certain to possess enormous competitive strength ten or twenty years from now.”

The fourth-richest person in the world admits that innovative and fast-changing sectors could provide massive gains, but the long-term uncertainty puts him and his vice chair Charlie Munger off.

“I should emphasise that, as citizens, Charlie and I welcome change: Fresh ideas, new products, innovative processes and the like cause our country’s standard of living to rise, and that’s clearly good.”

Coke is it for Warren Buffett

The portfolio of Buffett’s investment company Berkshire Hathaway certainly reflects the “slow and steady” philosophy. 

Big household names that have stood the test of time, like Walt Disney Co (NYSE: DIS), McDonald’s Corp (NYSE: MCD) and Wells Fargo & Co (NYSE: WFC), have all made plenty of money for Buffett.

But perhaps the best example of the “boring” shares strategy is Coca-Cola Co (NYSE: KO).

Not only does the beverage maker tick all the boxes for investment from Berkshire Hathaway, the business itself operates with a Buffett-like long-term view.

Coca-Cola was founded in the late 19th century, making a very inexpensive product – syrup. Then profiting for more than 130 years selling the image – not the beverage itself – that drinking it fits a certain lifestyle.

Buffett called companies such as this ‘The Inevitables’.

“Obviously many companies in high-tech businesses or embryonic industries will grow much faster in percentage terms than will The Inevitables,” he said.

“But I would rather be certain of a good result than hopeful of a great one.”

Buffett reportedly drinks 5 cans of Coke each day, declaring in 2015 he is “one quarter Coca-Cola” in an interview with Fortune.

But what about Apple?

This is all good and well, but isn’t Berkshire Hathaway’s most valuable holding computer company Apple Inc (NASDAQ: AAPL)?

Buffett has said many times in the past that he’s averse to investing in technology, because he doesn’t understand the sector – and it doesn’t fit the stability criteria.

But indeed, Buffett’s company took a US$1 billion piece of Apple in 2016.

The Oracle of Omaha admitted afterwards that the transaction was executed by one of his investment managers.

Todd Combs and Ted Weschler joined Berkshire Hathaway in 2016, according to CBInsights, and Buffett authorised them to do deals without getting approvals from him.

So Buffett likely would not have felt comfortable with Apple. But he does recognise that his staff, with a different knowledge set, might have a different opinion.

More reading

• Why I would buy Afterpay and this quality ASX tech share
• Can these two ASX buy now, pay later companies become the next Afterpay?
• Take a look at last week’s best performing ASX shares
• 2 important investing lessons you might have forgotten
• Should you invest in Splitit shares?

Tony Yoo owns shares of AFTERPAY T FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Apple and Berkshire Hathaway (B shares) and recommends the following options: short September 2020 $200 calls on Berkshire Hathaway (B shares), long January 2021 $200 calls on Berkshire Hathaway (B shares), and short January 2021 $200 puts on Berkshire Hathaway (B shares). The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Apple and Berkshire Hathaway (B shares). 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 Argo Investments Ltd (ASX: ARG) share price has dropped slightly after market open following the release of the listed investment company’s (LIC) FY2020 earnings report this morning.

At the time of writing, the Argo share price is up 0.39% to $7.70. Argo shares are up nearly 38% from their 23 March lows, although they are also still down around 13.5% year to date. Argo is one of the oldest LICs on the ASX, having been founded way back in 1946. The company also once boasted the legendary cricketer, Sir Donald Bradman, as its chair.

What did Argo report this morning?

Headlining the results was a 22.2% drop in profits for Argo, slumping from $256.6 million in FY2019 to $199.5 million for FY2020. If we include the FY19 demerger dividend from Wesfarmers Ltd (ASX: WES) resulting from the spin-off of Coles Group Ltd (ASX: COL), the decrease in profit from FY19 was 31.9%.

Here’s what Argo had to say on the drop in profits for FY20:

Profit was significantly impacted by COVID-19 effects, with dividends being deferred, cancelled or cut (often substantially) by numerous companies in the investment portfolio, with NAB, ANZ and Westpac having the largest negative impacts on Argo’s dividend income.

Meanwhile, earnings per share (EPS) was also down, dropping 22.8% from 36 cents per share (cps) in FY19 to 27.8 cps in FY20.

As a result, Argo’s final dividend (to be paid on 18 September) will be 14 cps, down 17.6% from FY19’s final dividend of 17 cps. That takes Argo’s total dividend paid in FY20 to 30 cps, down from the 33 cps Argo paid out in FY19.

The company had this to say on the lower dividend:

In light of the uncertain economic outlook, Argo’s Board considered it prudent to lower the final dividend to ensure Argo is positioned to weather a potentially protracted downturn with minimal volatility of dividends paid over time.

Argo’s FY2021 portfolio

As a LIC, Argo invests in its own portfolio of ASX shares for the benefit of its owners. The company reported that it “purchased $243 million of long-term investments” in FY20, as well as receiving “$127 million from sales and takeovers”.

Some of the shares Argo disposed of in Fy20 include AMP Limited (ASX: AMP), Ansell Limited (ASX: ANN), Corporate Travel Management Ltd (ASX: CTD), Milton Corporation Ltd (ASX: MLT) and Nufarm Limited (ASX: NUF).

Positions in Automotive Holdings Group and Dulux Group were also exited as a result of these companies being taken over.

Meanwhile, positions in Downer EDI Limited (ASX: DOW), Freedom Foods Group Limited (ASX: FNP), Oil Search Limited (ASX: OSH), Ramsay Health Care Limited (ASX: RHC) and Suncorp Group Ltd (ASX: SUN) were added to, and a new position in Treasury Wine Estates Ltd (ASX: TWE) was initiated.

Going forward, Argo has this to say on its outlook for FY2021:

With the economic recovery very dependent on the trajectory of the global coronavirus pandemic, the outlook is largely obscured. In our view, there is the potential for further rapid and unexpected changes to trading conditions which could impact the profitability of Australian companies…

We continue to take a consistent and conservative approach to managing Argo’s portfolio, remaining faithful to our long-term investment philosophy which has proven resilient through difficult economic cycles and disruptive events over many decades. With a well-diversified portfolio, no debt and cash available, Argo is well-positioned to capitalise on market volatility in the current environment.

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Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited. The Motley Fool Australia owns shares of and has recommended Corporate Travel Management Limited and Treasury Wine Estates Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool Australia has recommended Ansell Ltd., Freedom Foods Group Limited, and Ramsay Health Care 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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