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The share price of S&P/ASX 300 Index (ASX: XKO) stock Mayne Pharma Group Ltd (ASX: MYX) has soared since the company dropped its half-year earnings on Tuesday morning.

Right now, the pharmaceutical manufacturer’s stock is trading at $4 – 27% higher than it was before it broke a trading halt with news of its results, a divestment, and its capital return.

Let’s take a closer look at what’s been going right for the ASX 300 share this week.

ASX 300 share Mayne Pharma rockets 27% in 2 sessions

Here are the key takeaways from Mayne Pharma’s first-half earnings:

• $101.2 million of revenue excluding discontinued segments – a 33% drop on that of the prior comparable period (pcp)
• Earnings before interest, tax, depreciation, and amortisation (EBITDA) came to a $99.2 million loss
• $129.2 million net loss after tax – down from a $66.3 million loss in the pcp
• Basic earnings per share (EPS) came in at 17.6 cents
• No dividend declared

The company’s earnings were dinted by lower revenues, driven by higher inventory levels, discontinued products, and foreign exchange losses.

The company’s branded products division saw revenue more than triple to $13.4 million last half amid strong growth in NEXSTELIS sales. Its portfolio products division saw revenue fall 49% to $60.1 million. Finally, its international segment’s revenue was flat at $27.6 million.

What else did the company announce this week?

The Mayne Pharma share price was put into a trading halt on Monday morning, returning to trade on Tuesday, as the ASX 300 company prepared to release news of a material divestment and its capital management.

Later that day, it announced the sale of its US retail generics portfolio business for up to US$90 million cash and up to US$15 million of contingent milestone payments.

The move supports the company’s aim to transform into a speciality pharmaceutical company with leading positions in women’s health and dermatology.

It also announced the cancellation of its $113 million capital return on Tuesday. It said the return was no longer in the company’s best interests.

What did management say?

Mayne Pharma CEO Shawn Patrick O’Brien commented on the news seemingly driving the ASX 300 share sky-high in recent sessions, saying:

We have taken decisive action this half to address the issues that have created the disappointing results in both our PPD and International businesses.

We are creating a leaner company with strong commercial and sales execution capabilities and [with the sale of the US retail generics business] we move a step closer to achieving our goal of generating operating cash and returning the business to profitability.

The board is supportive of our strategy and ambition, and the cancellation of the capital return is a prudent step to retain balance sheet flexibility whilst we drive improved operating performance, and the board considers the appropriate capital structure to support profitable growth and a restoration of shareholder value.

What’s next?

The company heralded an encouraging start to the second half. It flagged improvement in its dermatology segment and positive impacts from the scaling up of its US women’s health business.

The latter is on track to exit financial year 2023 with a positive run rate contribution. Meanwhile, the newly acquired TherapeuticsMD portfolio is expected to deliver positive earnings in the second half.

At the same time, launches of various products are expected to drive growth across the company.

Maybe Pharma share price underperforms the ASX 300

Despite this week’s surge, the Mayne Pharma share price is still in the longer-term red.

It has fallen 5% so far this year and 13% over the last 12 months.

For comparison, the ASX 300 has gained 4% year to date and 2% over the last 12 months.

The post Guess which ASX 300 share has rocketed 27% in 2 days since reporting appeared first on The Motley Fool Australia.

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More reading

• Why De Grey, Kogan, Mayne Pharma, and Mesoblast shares are charging higher

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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AMP Ltd (ASX: AMP) fans likely have their sights on the embattled wealth management share on Wednesday.

Not only is the company trading ex-dividend, but it announced yet another delay to its $225 million domestic Collimate Capital sale.

After starting the day off in the red, AMP shares have turned it around. They’re currently trading 0.48% higher at $1.04.

For comparison, the S&P/ASX 200 Index (ASX: XJO) is up 0.06% right now.

Let’s take a closer look at all that might be going wrong for AMP shares today.

$225 million sale delayed once more

The AMP share price has recovered this afternoon.

Meanwhile, new investors have officially missed out on the company’s long-awaited 2.5 cents per share dividend, to be paid out early next month.

The market may have also been initially disappointed by the latest news of the sale of Collimate Capital’s domestic real estate and infrastructure equity business.

Dexus Property Group (ASX: DXS) agreed to buy the business in April 2022.

However, the sale is conditional on Chinese regulators approving the transfer of AMP’s interest in China Life AMP Asset Management. Gaining such approval has proven challenging.

In fact, AMP and Dexus are in the process of splitting the transaction into two stages.

The first stage is expected to complete without the approvals on or before 20 March. The second is dependent on the ownership of China Life AMP being transferred out of the entities being purchased.

Not to mention, the sale price has been dropped on the back of the delays. Dexus will now pay just $225 million – $25 million less than it would have if conditions were met by Sunday. AMP has also forfeited the remaining $26 million of potential funds under management-based earn-outs.

The sale of Collimate Capital’s international infrastructure equity business was completed early last month for a total realised value of $582 million. The ASX 200 company is eligible for another $180 million cash earn-out, subject to conditions being met.

AMP share price snapshot

The AMP share price has suffered in 2023 despite today’s uptick. The stock has fallen 20% since the start of the year. Though, it’s gained 7% since this time last year.

For comparison, the ASX 200 is up 4% year to date and 2% over the last 12 months.

The post AMP shares drop then pop amid ex-dividend and delay of $225 million sale appeared first on The Motley Fool Australia.

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More reading

• Why is the AMP share price sinking today?
• These ASX 200 shares were crushed in February
• Hoping to bag the newly reinstated AMP dividend? Read this
• 7 ASX 200 shares with ex-dividend dates next week
• Here are the 3 most heavily traded ASX 200 shares on Thursday

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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If you have purchased a lottery ticket online in Australia, there’s a fair chance you’ve used a platform provided by Jumbo Interactive Ltd (ASX: JIN). This ASX All Ords share has cut out a respectable slice of a growing market and raked in considerable profits in the process. Yet, the Jumbo Interactive share price is down 21% in the past year.

I pulled the trigger on adding more Jumbo shares to my portfolio amid the depressed valuation during the second half of 2022.

Here is why I see further upside to this investment over the coming five or so years, potentially making it a cheap ASX share. In addition, I provide my current concerns for the company and what would prompt me to unwind my position.

Compelling solution spreading its wings

Whether it is your bet on the horses, food delivery order, or stab at being a millionaire — everything is shifting online.

The digitisation drivers are simple for the lottery industry… consumers want to purchase a ticket from the comfort of their couch, rather than lining up in a store. Meanwhile, lottery retailers want to make bigger profits through a more scalable approach.

For decades, Jumbo Interactive has catered to these combined demands through its fully compliant lottery software. Along the way, agreements were entered to resell Tabcorp, now The Lottery Corporation (ASX: TLC), on Jumbo’s Ozlotteries website, propelling further growth for the ASX All Ords share.

Over the past five years, Jumbo has achieved profit margins exceeding 20%. Impressively, this was done without any leverage on the balance sheet up until recently. However, the move to expand into the United Kingdom and Canada (pictured below) is a necessary one, in my opinion, to deliver further growth for shareholders.

I’d argue, the main upside in this ASX share is contained in providing its software (Powered by Jumbo) to government and charity lottery operators. Currently, software as a service (SaaS) has the best EBITDA margins of the company’s three segments, at ~68%.

Governments and charities are less likely to deploy the resources to develop their own online solutions. As opposed to the likes of large private lottery operators, such as The Lottery Corporation, which Jumbo is now engaged in a precarious dance with — more on that later…

Furthermore, as discovered by Regulus Partners in their Charity Lotteries and the European Lottery Sector: impact analysis report, charity lotteries typically outperform state lotteries on a revenue growth basis. Sounds like an attractive part of the market for Jumbo to go after, right?

Between a rock and a hard place

Now, more on that precarious dance I alluded to earlier… While I do believe Jumbo shares have been cheap, it is not without some reason.

The company could be coming to a crossroads where it needs to break free from the very thing that boosted it to success in the first place — lottery retailing for Australia’s largest lottery company. I suspect the increased Lottery Corp service fee under the agreement renewal in 2020 has been a major catalyst for Jumbo’s invigorated acquisition strategy.

Under the agreement, Jumbo will pay the larger ASX share a max fee of 4.65% of the ticket price from FY24 onwards, which has been incrementally increasing from 1.5% since FY21. Unfortunately, the lottery retailing segment is Jumbo’s largest revenue source.

Ultimately, Lottery Corp knows that Jumbo needs it, but it doesn’t need Jumbo, as it operates its own digital sales channel through TheLott. Hence, there is a real risk of more service fee increases in the future, which would be painful for the bottom line.

In the first half of FY23, EBITDA margins for the segment shrunk by 3.3% to 30.6% — partly attributed to the 1% fee rise.

As shown above, I believe lottery retailing earnings (red) will struggle to grow significantly over the next five years despite my belief that total transaction value (TTV) growth will remain between 5% to 10%. However, I’m expecting Jumbo’s SaaS operations (yellow) to deliver if the company can capitalise on its entry into new markets.

When would I reconsider holding this ASX share?

Fortunately, The Lottery Corporation is locked in with Jumbo until 2030, barring any contract breaches. In my eyes, that gives the ASX All Ords share around another seven years to de-risk its earnings profile and establish other avenues for growth.

If Jumbo fails to grow its SaaS business meaningfully, i.e. around 20% to 25% segment TTV growth in FY23 and FY24, then I’d seriously have to question the company’s future earnings potential.

Secondly, Lottery Corp offers online charity lotteries through a partnership with the 50-50 Foundation under the Play For Purpose banner. The online solution is operational with more than 500 charitable causes.

In my opinion, it would be a major red flag if any of Jumbo’s current charities decided to switch to this alternative option.

Final takeaway

Investors don’t like uncertainty. Where the relationship between Jumbo and The Lottery Corp goes from 2030 onwards is unknown, adding pressure on the price of this ASX share. But, there is a seven-year window between now and then, and a lot can be accomplished during that time.

Seven years ago, Jumbo Interactive reported a first-half profit of $1.9 million. Last week, the company reported a first-half profit of $17.2 million — a ninefold increase.

My conviction lies in a well-incentivised management team and a structural shift to digital. For those reasons, I believe Jumbo shares could still be a reasonably cheap buy at current prices.

The post I’ve been loading up on this ASX All Ords share while it’s cheap appeared first on The Motley Fool Australia.

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More reading

• Get a second income with these ASX dividend shares: experts
• Leading brokers name 3 ASX shares to buy today
• Jumbo share price slips despite revenue growing 18%
• Tech’s back! Fund names 2 ASX shares to ride the resurgence
• Morgans names the best ASX growth shares to buy in February

Motley Fool contributor Mitchell Lawler has positions in Jumbo Interactive. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Jumbo Interactive. The Motley Fool Australia has recommended Jumbo Interactive. 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 an owner of ASX lithium shares, then the price of the battery making ingredient will no doubt be very important to you.

That’s because share markets are forward-looking, with valuations tied to the profits and free cash flow that companies generate down the line.

And with so many lithium shares still in the development or exploration stage, the price of lithium when they finally start producing will have a big say in the profits they make and whether your investment is ultimately a success or failure.

Lithium price forecast

Unfortunately, I have some bad news for you. Goldman Sachs has reiterated its extremely bearish view that lithium prices are about to crash materially from current levels.

And while it expects Allkem Ltd (ASX: AKE) to be able to offset the impact of these declines on its earnings with its production growth and downstream opportunity, it may not be as easy for smaller and up-and-coming players.

According to the note, Goldman is now forecasting the following average prices for these lithium types in the coming years compared to current spot prices:

Lithium carbonate (per tonne)

• Spot: US$61,350
• 2023: US$53,300
• 2024: US$11,000
• 2025: US$11,000

Lithium hydroxide (per tonne)

• Spot: US$70,350
• 2023: US$58,650
• 2024: US$12,500
• 2025: US$12,500

Lithium spodumene 6% (per tonne)

• Spot: US$5,800
• 2023: US$4,330
• 2024: US$800
• 2025: US$800

Spot prices continue to fall

Earlier this week, the broker noted that spot and forwards prices have continued to come under pressure. It commented:

We note the lithium chemicals spot and forward pricing has continued to decline, with our commodities team reiterating their expectation for lithium prices to decline from 2H23, supported by recent China trip feedback suggesting risk of higher than expected lithium supply, and the larger operating Australian spodumene projects either recently outperforming production expectations (and increasing near term production guidance) or lifting medium term production growth targets.

The post Own ASX lithium shares? Here is the latest Goldman Sachs lithium price forecast appeared first on The Motley Fool Australia.

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More reading

• Broker says buy ASX 200 lithium share Allkem for 34% upside
• Why ASX 200 lithium shares are eyeing this surprising new Chinese move
• Leading brokers name 3 ASX shares to buy today
• Which ASX 200 lithium share takes the crown for dividend yield right now?
• Allkem share price in the green as ASX 200 lithium stock posts record revenue

Motley Fool contributor James Mickleboro has positions in Allkem. 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 Lake Resources N.L. (ASX: LKE) share price closed out the month of February down 24% to 63 cents.

In the first hour of trading on Wednesday, the ASX lithium stock is down 2.88% to 61 cents.

Let’s take a look at the factors putting a drag on the Lake Resources share price.

Why did the Lake Resources share price tumble so hard?

The primary issue is softening spot prices for lithium spodumene, carbonate, and hydroxide.

As my Fool colleague James points out, investors are probably worried that Lake Resources will miss out on what are still historically high prices by the time it actually starts producing lithium.

Lake Resources’ flagship Kachi Project is slated to start producing lithium in 2024.

The trouble with lithium prices is you could probably line up five brokers on one side who will tell you prices are going to fall, and five on the other side who will tell you they’re going to remain high.

Let’s compare the pair.

Goldman Sachs has a bearish outlook for lithium prices. Here are Goldman’s forecasts compared to today’s lithium commodity spot prices:

• Lithium carbonate (per tonne)
  • Spot: US$55,167
  • 2023: US$53,300
  • 2024: US$11,000
  • 2025: US$11,000
• Lithium hydroxide (per tonne)
  • Spot: US$75,400
  • 2023: US$58,650
  • 2024: US$12,500
  • 2025: US$12,500
• Lithium spodumene (per tonne)
  • Spot: US$5,800
  • 2023: US$4,330
  • 2024: US$800
  • 2025: US$800

Now compare to the forecasts of fellow top broker Macquarie, which says lithium prices will remain “higher for longer“.

As my Fool colleague Monica reports, Macquarie analysts think restricted supply due to development delays and capex upgrades could support lithium prices at today’s comparatively high levels.

Ongoing short-seller attack

Lake Resources remains one of the most shorted ASX shares with 6.9% of its capital shorted by the pros.

Short-selling is where investors try to profit from a fall in the share price. They borrow the shares, then sell them, with the intention of buying them back later when they fall in value to make a profit.

It’s generally a strategy only available to professional traders.

US short-selling activist group J Capital is targeting Lake Resources because they don’t think Lake Resources can deliver what it says it can.

Specifically, they have doubts about the company’s technology and project funding.

The attack began in July last year. Lake Resources says J Capital “puts forth incorrect information on technical matters and inaccurate assertions … “.

J Capital released its latest investor report on Lake Resources in December.

The post Why did the Lake Resource share price sink 24% in February? appeared first on The Motley Fool Australia.

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More reading

• These ASX 200 shares were crushed in February
• Here are the top ten ASX 200 shares today
• Here are the 10 most shorted ASX shares this week
• $20k invested in these ASX shares 10 years ago is now worth over $100k
• These ASX 200 dividend shares are top of Macquarie’s income portfolio

Motley Fool contributor Bronwyn Allen has positions in Allkem and Core Lithium. 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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With the market pulling back last month, now could be an opportune time to invest in ASX shares.

If I were sitting on $10,000, I would consider investing these funds in the ASX shares listed below. Here’s why I rate them highly:

CSL Limited (ASX: CSL)

I continue to believe that CSL could be a great ASX share for investors to buy. It is one of the world’s leading biotherapeutics companies with a portfolio of life-saving, world-class therapies and vaccines. These products include treatments for immunodeficiencies, bleeding disorders, hereditary angioedema, iron deficiency, nephrology, and neurological disorders.

But management isn’t resting on its laurels. Far from it! Each year, CSL reinvests 10% to 12% of its sales into research and development (R&D) activities. This means that the company is currently investing over US$1 billion annually on the treatments of the future, which ensures that it has a pipeline of potentially lucrative products to support its growth and defend its leadership position.

Another positive is that plasma collections have rebounded strongly from the pandemic. Combined with its new collection technology, which is expected to yield stronger results and boost margins, this bodes well for its margins in the coming years. Plasma is a key ingredient in many of its biggest products, so when collection costs reduce, its profits increase.

In light of the above, I believe CSL is well-placed for growth in the coming years and feel its shares are great value at current levels. Particularly given that the CSL share price is still down over 12% from its pre-pandemic high.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX share that I think could be a great option for investors this month is youth fashion retailer Universal Store.

As well as owning the eponymous Universal Store brand, it has the Perfect Stranger and Thrills brands in its portfolio.

The popularity of these brands was on display for all to see during the first half of FY 2023. Last month, Universal Store reported a 34.5% increase in sales to $145.7 million and a 31.7% jump in net profit after tax (NPAT) to $17.8 million.

I remain confident that the company is well-placed to build on this in the second half and beyond. This is thanks to store expansion plans and its target market being younger consumers, who are expected to continue spending in 2023 because of minimum wage increases and their lack of exposure to rising interest rates.

Another reason I would buy this ASX share is its attractive valuation and generous yield. I currently estimate that Universal Store’s shares are trading at 14 times forward earnings and offer a forward fully franked yield of 5%. The former is below the market average and the latter is well ahead of both term deposits and the market’s average yield.

The post I would invest $10,000 into these ASX shares in March appeared first on The Motley Fool Australia.

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More reading

• Why did the CSL share price outperform the ASX 200 in February?
• Goldman Sachs says these high yield ASX dividend shares are buys
• 6 ASX shares to pounce on from a boom reporting season: Morgans
• Brokers name 3 ASX shares to buy now
• 2 ASX retail shares surging over 6% on strong earnings announcements

Motley Fool contributor James Mickleboro has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. 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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It might sound like an astounding statement, but it’s been proven to be true. Most ASX shares ultimately turn out to be bad investments.

It’s been found that just 4% of listed companies were behind the US stock market’s gains over the 90 years to 2016. Such research has since been replicated using Aussie stocks with similar findings.

Luckily there’s a simple trick that can help fans of ASX shares invest in future winners. And it’s backed by a top expert.

Most ASX shares found to lose money

Most ASX shares underperform US Treasury bills, according to Arizona State University finance professor Hendrik Bessembinder.

His widely cited 2018 paper, published in the Journal of Financial Economics, found the most common outcome for an investor buying a random US-listed stock is a near-100% loss.

The research has since been updated to include shares housed on the ASX, concluding with broadly the same findings.

Thus, the returns we’ve grown to know and love from markets have been provided by a few top-performing outliers.

Fortunately, Bessembinder, who is in Australia speaking at forums hosted by MFS, Baillie Gifford, and Orbis this week, has some golden advice for investors wishing to get on board market winners.

Shoot for the moon or scoop up the stars

Bessembinder’s research seemingly kicked off the ‘moonshot investing’ craze. It sent many off to buy shares in companies they believe have the potential to post dazzling returns.

Of course, that’s easier said than done. Few, if any, ASX shares have ever been obvious outperformers from the get-go.

So, is diversification the key to realising massive stock market returns?

By scooping up a diverse portfolio of stocks across various sectors, an investor is far more likely to hold a future star. Bessembinder says, courtesy of The Australian:

The textbooks lay out all the reasons why people should have a broadly diversified, low cost, portfolios.

My study backs that up. You’re just picking stocks at random and the odds are worse than 50-50 in order to outperform the benchmarks.

Thus, diversification can be both a risk management strategy and provide greater exposure to the 4% of ASX shares that are likely winners.  

The post Most ASX shares lose money. Here’s how to overcome the odds: expert appeared first on The Motley Fool Australia.

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More reading

• What would Warren Buffett do?
• Why is the Telstra share price sliding lower on Wednesday?
• Which ASX 200 company just put aside $150 million for fines and penalties?
• Why is the AMP share price sinking today?
• Broker says buy ASX 200 lithium share Allkem for 34% upside

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So, you might have heard of Warren Buffett.

He’s kind of a big deal.

Because he’s rich. And successful.

But not just that.

The now-92 year old has been investing for more than 80 years, but notably for the last 58 years as the CEO and Chair of a conglomerate called Berkshire Hathaway (I own Berkshire shares, for the record. But the cheap ones, not the US$463,000 ones!).

There is no-one who has managed to get even close to Buffett’s success over that sort of timeframe.

And just how successful?

Get this:

In the 58 years since he assumed control of the company, Berkshire’s share price has gained an average of 19.8% per year.

Which is… impressive.

The US benchmark index, the S&P 500, has gained 9.9% per year.

So Buffett has doubled that return.

Except, because of the magic of compounding, you don’t end up with just twice as much money.

Over the last 58 years, the US market’s almost-10% annual gain has resulted in a total gain of 24,708%.

That’s excellent.

And a 19.8% annual gain?

Not 48,000%.

Not 100,000%

Not even 1,000,000%

19.8%, over 58 years, turns into a total gain of 3,787,464%.

That’s… astonishing.

Which is all to say that Buffett isn’t just incredibly smart, though he is. He’s also been outrageously successful.

And that makes him both credible and worth listening to.

The good news?

He’s been very, very generous, for years, in sharing his expertise with anyone who cares to read what he’s written, or listen to what he has to say.

Which brings me to his latest annual letter to Berkshire Hathaway shareholders, which was released over the weekend.

Please do me – and yourself – a favour and read the whole thing.

But, if you don’t want to, or you just want me to highlight what I think were the most important parts, read on!

Buy businesses, not stocks

“Our goal … is to make meaningful investments in businesses with both long-lasting favorable economic characteristics and trustworthy managers. Please note particularly that we own publicly-traded stocks based on our expectations about their long-term business performance, not because we view them as vehicles for adroit purchases and sales. That point is crucial: Charlie and I are not stock-pickers; we are business-pickers.”

Take a ‘portfolio’ approach, and expect variable results…

“[O]ur extensive collection of businesses currently consists of a few enterprises that have truly extraordinary economics, many that enjoy very good economic characteristics, and a large group that are marginal. Along the way, other businesses in which I have invested have died, their products unwanted by the public.”

… and keep a long-term perspective

“Our satisfactory results have been the product of about a dozen truly good decisions – that would be about one every five years”

And:

“The lesson for investors: The weeds wither away in significance as the flowers bloom. Over time, it takes just a few winners to work wonders. And, yes, it helps to start early and live into your 90s as well.”

The value of buybacks

“The math isn’t complicated: When the share count goes down, your interest in our many businesses goes up. Every small bit helps if repurchases are made at value-accretive prices. Just as surely, when a company overpays for repurchases, the continuing shareholders lose. At such times, gains flow only to the selling shareholders and to the friendly, but expensive, investment banker who recommended the foolish purchases.”

Don’t believe the anti-buyback crowd

“When you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).”

The disgrace of ‘managing earnings’ to ‘beat expectations’

“Finally, an important warning: Even the operating earnings figure that we favor can easily be manipulated by managers who wish to do so. Such tampering is often thought of as sophisticated by CEOs, directors and their advisors. Reporters and analysts embrace its existence as well. Beating “expectations” is heralded as a managerial triumph.”

“That activity is disgusting. It requires no talent to manipulate numbers: Only a deep desire to deceive is required. “Bold imaginative accounting,” as a CEO once described his deception to me, has become one of the shames of capitalism.”

Paying more in tax means you made more money… and is a moral responsibility

“At Berkshire we hope and expect to pay much more in taxes during the next decade. We owe the country no less”

And a bonus quote from his business partner, and Berkshire vice-Chairman, the 99-year old Charlie Munger:

“There is no such thing as a 100% sure thing when investing. Thus, the use of leverage is dangerous. A string of wonderful numbers times zero will always equal zero. Don’t count on getting rich twice.”

That’s just a hand-picked list of highlights. Please read the letter yourself – you’ll be smarter and a better investor for doing so.

And that, I guess, is the key point here.

Life is too short to learn all of life’s lessons for yourself – you’re much better served learning from the successes and mistakes of others.

And that goes doubly when the ‘others’ you choose to follow have the intellect, common sense, investing track record and, yes, moral compass, of Warren Buffett and Charlie Munger.

Just think about it for a second: you can try to make your own way in the investing world, coming up with your own brand new way of making a motza.

Hell, you might even find one.

But the odds are long.

Or, we can put our egos away for a second, and hitch a (free!) ride on the wisdom and experience of two of the all-time greats.

It’s true that my investing style isn’t a carbon copy of Buffett’s. It doesn’t need to be.

But I would wager a decent amount of money that almost every person’s investing returns could be meaningfully improved by, when faced with a conundrum, asking a very simple question:

“What would Warren do?”

Fool on!

The post What would Warren Buffett do? appeared first on The Motley Fool Australia.

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Motley Fool contributor Scott Phillips 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 S&P/ASX 200 Index (ASX: XJO) has opened sharply lower so far this Wednesday. At the time of writing, the ASX 200 seems to have gotten out of the wrong side of the bed, with the flagship ASX index down a rather depressing 0.53% to just above 7,220 points. But let’s talk about the Telstra Group Ltd (ASX: TLS) share price.

Telstra shares are seemingly faring even worse than the broader market. This ASX 200 blue-chip share closed at $4.16 a share yesterday.

But this morning, Telstra shares opened at just $4.05 each, and are currently going for $4.055. That’s a nasty 2.52% drop from yesterday’s closing price.

So what’s going on with Telstra shares this Wednesday that would elicit such a dramatic underperformance of the broader market today?

Why is the Telstra share price getting smashed by the ASX 200 today?

Well, investors shouldn’t get themselves into too much of a twist over this drop. That’s because Telstra shares are falling today for what might just be the best possible reason to have your shares drop in value. Telstra has just traded ex-dividend for its latest shareholder payment.

Yes, the Telstra share price has just gone ex-dividend. Last month, the company reported its latest earnings, covering the six months to 31 December 2022.

As we covered at the time, this saw the telco announce an 11.4% rise in earnings before interest, tax, depreciation and amortisation (EBITDA) to $3.9 billion, as well as a healthy 25.7% increase in net profit after tax (NPAT) up to $900 million.

That enabled Telstra’s earnings per share (EPS) to surge 27.1% to 7.5 cents per share, which in turn allowed the telco to announce an increase to its next interim dividend.

Investors will receive Telstra’s upcoming interim dividend of 8.5 cents per share, fully franked, on 31 March later this month. That’s up from the company’s last interim dividend of 8 cents per share.

This is the second earnings report in a row that Telstra has raised its dividend after the telco hiked its final dividend last year by the same amount. It’s also the first time in seven years that investors have enjoyed two consecutive dividend increases from Telstra. So 31 March will be a happy day indeed.

But only for investors who already hold Telstra shares. The company has traded ex-dividend today, which means that anyone who buys Telstra shares from today onwards will miss out on this latest dividend.

Why is there a drop before a dividend is paid?

As we warned yesterday, when a company trades ex-dividend, it cuts off any new investors from receiving said dividend payment. So investors who bought Telstra yesterday are entitled to this next dividend. Those who buy today are not.

This is why we are seeing a big drop in the value of Telstra shares right now. It reflects the reality that Telstra is now nominally less valuable to investors since they are now ineligible to receive the company’s next payment.

This is a very normal situation when a company goes ‘ex-div’, particularly for a dividend heavyweight like Telstra.

At $4.055 a share, the Telstra share price is currently up by 2.65% year to date: 

At this share price, the ASX 200 telco now has a dividend yield of 4.19%

The post Why is the Telstra share price sliding lower on Wednesday? appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Telstra Group. 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 Telstra Group. 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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To say casino operator Star Entertainment Group Ltd (ASX: SGR) is having a difficult time of late is an understatement.

Multiple government enquiries in the past year have accused the company of allowing money laundering at its venues. Those reviews raised doubts about Star Entertainment’s fitness to hold casino licences in New South Wales and Queensland.

The share price has rightly more than halved over the past 12 months and a new chief executive has been installed.

As if that wasn’t enough, this week the corporate regulator revealed it has been in Star’s ear about its concerns.

Massive provision, massive loss

The Australian Securities and Investments Commission on Wednesday morning took credit for Star’s revelation in its financial reporting that it had set aside $150 million for potential fines and penalties.

“Following a review of The Star’s financial report for the year ended 30 June 2022, ASIC raised concerns that no provision had been recorded for likely fines and penalties — despite some uncertainties as to their amount — for non-compliance by The Star with Anti-Money Laundering and Counter-Terrorism Financing laws,” stated the watchdog.

So that’s $150 million that Star Entertainment now cannot touch, to ensure it has funds to cop whatever punishment arises out of the ongoing AUSTRAC investigation.

Star Entertainment reported a whopping $1.26 billion loss for the half-year ending 31 December.

According to ASIC, it warned the company as a part of its “financial reporting surveillance program”. 

“ASIC’s financial reporting surveillance program aims to improve the quality of financial reporting and to ensure financial reports have been prepared in accordance with the law, supporting investor confidence and the integrity of Australia’s capital markets.”

There’s a lot going on with Star shares

To add to its woes, a Hong Kong company with alleged associations to criminal gangs was revealed to have participated as an investor in the Star’s $1 billion capital raising last week.

The Australian Financial Review aired the claim last weekend, calling it “a mark of desperation” or “shortsightedness”.

The same publication revealed Tuesday night that Ord Minnett’s part-owner Bruce Mathieson has been rapidly buying up the discounted shares in recent times.

“Mathieson’s understood to have climbed to nearly 10% of Star’s shares on issue, which is the most any investor can buy without clearance from casino regulators,” reported the AFR.

“Ords did 70% of the Star volume on Tuesday – or nearly 10 times any other broker – and more than 50% on Monday.”

The post Which ASX 200 company just put aside $150 million for fines and penalties? appeared first on The Motley Fool Australia.

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

from The Motley Fool Australia https://www.fool.com.au/2023/03/01/which-asx-200-company-just-put-aside-150-million-for-fines-and-penalties/