Tag: Motley Fool

Ask A Fund Manager

The Motley Fool chats with the best in the industry so that you can get an insight into how the professionals think. In this edition, Schroders portfolio manager Ray David looks into his crystal ball to reveal the ASX sectors that will be hot this year.

Investment style

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

Ray David: Schroders Long Short Fund, as the name says, it is a long-short fund. So we do take short positions and we do take long positions but, in general, we are about 100% invested in the market. And typically the short positions make up about 20% to 30% of the portfolio. And the funds taken from the short positions are then reinvested back into the market, which then gives us a long position about 120%, 130%. 

It’s important to say that we are not betting on the direction of the market. So if the market goes up, we’re fully invested, we’ll go up too. If the market goes down, our fund will generally decline with the market too. But the short positions look to add additional returns because the benefits of shorting is that we can take advantage of the analysis we do on companies.

If we identify them as poor investments, we’ll typically short them to try and enhance the return to our clients. Whereas a long-only investor, they’ll just simply avoid those poor-quality companies and move on. So we’re playing both sides of the market. 

We’re trying to make money by buying undervalued stocks that go up. At the same time, we are trying to short poor quality or overvalued companies that we think the market’s overly priced. 

MF: With the long side, I know Schroders is very famous as a value investor. Is that how you would describe it?

RD: Correct. We do spend a lot of time on understanding company valuations. And generally, we are trying to buy stocks that we think are undervalued. 

Typically, when people think of value managers, they might think of investors that are contrarian or buying things that are bombed out. We do try to focus on good quality companies and companies that have, what we say is, durable earnings. So just because a stock is down on its knees doesn’t necessarily mean we’re going to own it in the fund. We do the work and if we think it ticks a number of boxes, which is, number one, it’s undervalued, number two, it’s a business that’s got a competitive advantage or it’s a good quality business, it’s got earnings duration. The third point, “Is the management and governance of good nature?” 

MF: 2022 was an unpleasant year for a lot of investors. How did your team go?

RD: The fund did really well. Our total fund return beat the market by about 6% pre-fees. So the market was flat and our fund was net up. 

If we look at our total performance since inception over two-and-a-half years, we’ve outperformed the benchmark or the S&P/ASX 200 Index (ASX: XJO) by 4.6%. 

When we look at that composition or that performance, 70% of it has come from the long positions and 30% has come from shorts, which is what we would expect with a 130-30 structure. 

So we’ve been able to deliver performance in volatile markets, which really plays to our skill as a manager that’s focused on valuations and sort of good quality companies.

MF: You’ve picked the most action-packed 2.5 years ever to run a fund.

RD: Sure. We’ve had COVID in the middle of that. We’ve had the COVID recovery. We’ve gone from quantitative easing to quantitative tightening to inflation that’s at 40-year highs. 

Even though it’s two and a half years, it feels like we’ve gone through three or four cycles already within that period.

A case in point is some of these retail stocks. Everyone was really bearish on retail names [but] actually were coming out with very strong results. 

MF: That leads to the question of where you think the market is heading this year?

RD: The market, we think, is going to be volatile going forward. 

On an aggregate view, the market is looking fairly priced. It’s made up of some really cheap sectors where we see pretty good value, and at the same time, it’s made up of expensive sectors. The market’s trading on about 14.5 times PE, and its long-run average is about 15. So it’s not strikingly cheap; it’s not overly expensive. 

But there are sectors which look very expensive historically and sectors which look cheap. The sector that looks cheap in our view, which we do have positions in our portfolio, is general insurance. The energy sector is quite cheap. We’re overweight energy.

MF: Energy? Even after the bull year it’s just had? 

RD: Yeah, that’s right. If you think about the energy sector, they’ve gone from really unloved to now the market is starting to like them, but the multiples that they’re trading on are still quite low. They’re trading on about six or seven times earnings, especially something like a Santos Ltd (ASX: STO). 

A lot of these companies have benefited from high energy prices. And energy prices have rolled off, but they never really re-rated to the silly levels that we saw with, for example, the tech companies or the iron ore stocks that we saw in 2015. So energy just looks really good. 

And we think the outlook for energy stocks is attractive because there’s just not a lot of supply coming in. No one really wants to invest in fossil fuels or LNG or gas without the high prices to justify the returns, because everyone’s quite worried about renewables and the ESG factors.

Then within the overvalued sectors, we still think ASX technology stocks are quite overpriced. If you look at stocks like WiseTech Global Ltd (ASX: WTC), Pro Medicus Limited (ASX: PME), they’re actually not far from record highs so they’re never really derated in that tech sell-off. 

The other sectors which we think look pretty expensive are real estate investment trusts (REIT) and healthcare. We’re quite cautious on real estate investment trusts because they face the triple headwind of declining asset prices because interest rates have gone up, softening rental income, particularly if you’re in office and retail, and thirdly, their costs are going up — interest repayments and cost to manage the facilities. 

In summary, the market is fairly priced, but there’s still pockets of value and there’s pockets of overvaluation. We’re looking to exploit our views around valuation versus what’s priced by the market.

The post Two ASX sectors to buy right now (and two to avoid like the plague): fundie appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Monday
• Want to invest successfully? You need to do this with your dividends
• Experts betting against a bear market for ASX shares
• These ASX 200 tech shares are leading the market today
• Invested $1,000 in Mineral Resources shares 10 years ago? Here’s how much passive income you’ve made

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 positions in and has recommended Pro Medicus and WiseTech Global. The Motley Fool Australia has positions in and has recommended Pro Medicus and WiseTech Global. 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 Friday, the S&P/ASX 200 Index (ASX: XJO) finished the week on a positive note. The benchmark index rose 0.35% to 7,493.8 points.

Will the market be able to build on this on Monday? Here are five things to watch:

ASX 200 expected to edge higher

The Australian share market looks set to rise slightly on Monday following a positive finish to the week on Wall Street. According to the latest SPI futures, the ASX 200 is expected to open the day 12 points or 0.15% higher this morning. On Wall Street, the Dow Jones was up 0.1%, the S&P 500 rose 0.25 %, and the NASDAQ stormed 0.95% higher.

Oil prices fall

It could be a difficult start to the week for ASX 200 energy shares such as Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS) after oil prices pulled back on Friday. According to Bloomberg, the WTI crude oil price was down 2% to US$79.38 a barrel and the Brent crude oil price fell 1% to US$86.66 a barrel. Oil prices fell in response to a stronger supply outlook.

ResMed rated as a buy

The ResMed Inc (ASX: RMD) share price could be good value according to analysts at Goldman Sachs. In response to the sleep disorder treatment company’s quarterly update, the broker has retained its buy rating with an improved price target of $38.00. Goldman commented: “Steady improvements in diagnosis rates and supply chain could widen opportunity for share gains.”

Quarterly updates

It is likely to be another day filled with quarterly updates. Among those scheduled to release updates this morning are rare earths producer Lynas Rare Earths Ltd (ASX: LYC) and copper miner and BHP Group Ltd (ASX: BHP) takeover target, OZ Minerals Ltd (ASX: OZL).

Gold price softens

Gold miners Newcrest Mining Limited (ASX: NCM) and Northern Star Resources Ltd (ASX: NST) could have a soft start to the week after the gold price edged lower on Friday. According to CNBC, the spot gold price fell 0.1% to $1,927.6 per ounce. Despite this, the precious metal secured its sixth successive weekly gain.

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

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More reading

• $20,000 invested in these ASX shares 10 years ago is worth how much now?
• Want to invest successfully? You need to do this with your dividends
• Experts betting against a bear market for ASX shares
• Why is the BHP share price in the green today?
• Why Accent, Mineral Resources, Newcrest, and Whitehaven Coal shares are dropping

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. 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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Last week saw a number of broker notes hitting the wires once again. Three buy ratings that investors might want to be aware of are summarised below.

Here’s why brokers think investors ought to buy them next week:

Goodman Group (ASX: GMG)

According to a note out of UBS, its analysts have upgraded this integrated property company’s shares to a buy rating with an improved price target of $23.00. The broker has been looking at the property sector and favours Goodman. This is particularly the case with its logistics exposure, which UBS prefers due to high rent growth potential and record low vacancy rates. The Goodman share price ended the week at $19.92.

Pilbara Minerals Ltd (ASX: PLS)

A note out of Morgans reveals that its analysts have retained their add rating and lifted their price target on this lithium miner’s shares to $5.40. Morgans made the move in response to the release of a quarterly update that was well ahead of the broker’s expectations. The broker has also lifted its medium-term lithium price assumptions on the belief that tight conditions will continue. This is due to a trend of project slippage from other lithium producers. The Pilbara Minerals share price was fetching $4.90 at Friday’s close.

Universal Store Holdings Ltd (ASX: UNI)

Analysts at Goldman Sachs have reiterated their buy rating on this youth fashion retailer’s shares with an improved price target of $7.55. According to the note, a recent update from a fellow retailer has given Goldman incremental confidence in the youth consumer discretionary category during the key holiday period. The broker has boosted its earnings estimates and valuation to reflect this. The Universal Store share price closed the week at $5.89.

The post Top brokers name 3 ASX shares to buy next week appeared first on The Motley Fool Australia.

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More reading

• $20,000 invested in these ASX shares 10 years ago is worth how much now?
• What’s with ASX 200 lithium shares today?
• Here are the 3 most heavily traded ASX 200 shares on Friday
• Morgans names 8 ASX retail shares to buy
• Experts say these are the ASX 200 blue chip shares to buy now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Fortunately for income investors, the Australian share market is home to countless dividend shares that provide investors with attractive yields.

Two from opposite sides of the market that are highly rated right now are listed below. Here’s why analysts say they are buys:

South32 Ltd (ASX: S32)

The first ASX dividend share that brokers have named as a buy is diversified mining and metals company South32. Morgans is a fan and has an add rating and $5.60 price target on the miner’s shares.

This is due to its attractive valuation, the de-risking of its growth portfolio, and its earnings-linked dividend policy. Last week, the broker commented:

We maintain a positive view on S32. The company offers an attractive mix of raw material and base metal exposures, combined with an effective management team. S32 continues to deploy capital efficiently, while gradually transitioning its portfolio out of trickier assets and into more base metals focus (with acquisitions in copper and zinc).

As for dividends, the broker is forecasting fully franked dividends per share of approximately 23 cents in FY 2023 and FY 2024. Based on the current South32 share price of $4.71 this will mean yields of 4.9%.

Suncorp Group Ltd (ASX: SUN)

This banking and insurance giant could be a top ASX dividend share to buy. That’s the view of analysts at Goldman Sachs, which have just initiated coverage on the company with a buy rating and $13.88 price target.

There are a number of reasons for its bullish view, Goldman explained two of them last week. It said:

Clear rational focus on pricing /margins to offset higher reinsurance costs, perils allowances and underlying claims inflation. We think rate increases have been strong and accelerating through 1H23. […] Significant capital return opportunity remains with the potential completion of the sale of SUN bank to ANZ resulting in cash proceeds of A$4.1bn.

In respect to dividends, the broker is forecasting fully franked dividends of 78 cents per share in FY 2023 and 82 cents per share in FY 2024. Based on the latest Suncorp share price of $12.81, this implies yields of 6.1% and 6.4%, respectively.

The post Income investors rejoice! Analysts say these quality ASX dividend shares are buys appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy today
• Here are the top 10 ASX 200 shares today
• Move over bank deposits! These ASX 200 mining shares are forecasting yields of over 5%
• 5 things to watch on the ASX 200 on Tuesday
• South32 share price higher on quarterly update

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

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The tech sector has been a difficult place to invest over the last 12 months. With interest rates rising across the globe, tech valuations have been hit hard.

The good news is that analysts at Morgans believe the sector is now trading at an attractive level. When upgrading Megaport Ltd (ASX: MP1) shares last week, the broker commented:

In CY22 we had an underweight view on the technology sector. CY22 was brutal for technology and growth stocks. Inflation/interest rates were the main culprit. As we look into CY23 we think it’s improbable interest rate rises will be anywhere near as dramatic as CY23 so the macro backdrop looks better for tech.

Valuations for quality tech are now back to 20 year / long run averages (fair value). […] With the risk of multiple compression now hopefully behind us, fundamentals will once again matter. Quality tech can grow regardless of weak economic conditions. Profit growth should reignite interest in the tech sector once again and this profit growth should drive share price appreciation.

With that in mind, if you’re wanting to gain exposure to the tech sector, then you could consider doing so with exchange traded funds (ETFs).

Two highly rated tech-focused ETFs to consider are listed below. Here’s what you need to know about them:

BetaShares Global Cybersecurity ETF (ASX: HACK)

The first tech ETF to consider is the BetaShares Global Cybersecurity ETF. This fund gives investors access to the leading companies in the global cybersecurity sector. This is a sector that has been tipped to grow strongly over the next decade due to the growing threat of cybercrime.

Among the companies you’ll be investing in with this ETF are Accenture, Cisco, Cloudflare, Crowdstrike, Okta, and Palo Alto Networks.

VanEck Vectors Video Gaming and eSports ETF (ASX: ESPO)

Another tech ETF to consider is the VanEck Vectors Video Gaming and eSports ETF. This ETF gives investors access to a portfolio of the largest companies involved in the video game industry. This is huge and growing industry that is estimated to comprise almost 3 billion active gamers.

This includes industry leaders such as graphics processing units giant Nvidia and games developers Take-Two Interactive (GTA, Red Dead), Electronic Arts (FIFA, Sims, Apex Legends), and Roblox.

The post Time to return to tech? Here are 2 ASX tech ETFs to buy appeared first on The Motley Fool Australia.

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More reading

• Top ASX growth shares to buy in 2023
• 3 highly rated ETFs for ASX investors to buy right now
• 3 wonderful ETFs for ASX investors to buy next week
• Tech rebound! Here are 2 ASX ETFs to buy before it’s too late
• US inflation is cooling: I’d buy these 3 ASX shares right now

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended BetaShares Global Cybersecurity ETF and Megaport. The Motley Fool Australia has positions in and has recommended BetaShares Global Cybersecurity ETF. The Motley Fool Australia has recommended VanEck Vectors Video Gaming And eSports ETF and Megaport. 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’s no secret that I’m a big fan of buy and hold investing. In fact, I believe it is the best way for investors to grow their wealth.

In light of this, every so often I like to demonstrate how successful this investment strategy can be by picking out a number of popular ASX shares to see how much a single $20,000 investment 10 years ago would be worth today.

And while you might think that you would need to unearth some rising stars to generate big returns, that’s not actually the case.

For example, listed below are three ASX shares that have comprehensively beaten the market and were no secret to investors back in 2013. Let’s see how investments in these shares fared:

Goodman Group (ASX: GMG)

This integrated industrial property company’s strategy of building sustainable properties that are close to consumers and provide essential infrastructure for the digital economy has been a huge success. Demand has been so strong, that Goodman has delivered stellar earnings growth over the last decade. This has ultimately led to this ASX share generating an average total return of 17.23% per annum since 2013. This would have seen a $20,000 investment turn into almost $100,000 over the period.

Macquarie Group Ltd (ASX: MQG)

This investment bank has been a strong performer for investors over the last decade. During this time, Macquarie’s shares have smashed the market with a total average return of 19.25% per annum. This would have turned a $20,000 investment 10 years ago into almost $120,000 today.

ResMed Inc. (ASX: RMD)

Thanks to the growing awareness of sleep disorders and this medical device company’s industry-leading solutions, it has reported consistently solid sales and earnings growth over the 2010s and now into the 2020s. This has led to this ASX share providing investors with an average total return of 22.26% per annum since 2013. This means that a $20,000 investment back then would have grown to be worth almost $150,000 now.

The post $20,000 invested in these ASX shares 10 years ago is worth how much now? appeared first on The Motley Fool Australia.

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More reading

• Experts say these are the ASX 200 blue chip shares to buy now
• House prices are tanking. Will ASX property shares go down with them?
• ASX 200 healthcare share charges higher as quarterly revenue surges
• Buy Macquarie and this ASX 200 dividend share: analysts
• 5 things to watch on the ASX 200 on Friday

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ResMed. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Macquarie 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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The A2 Milk Company Ltd (ASX: A2M) share price has been a strong performer over the last 12 months, rising by around 30%. That compares to a rise of around 10% for the S&P/ASX 200 Index (ASX: XJO).

But, many other ASX growth shares have suffered in the last year. For example, the Xero Limited (ASX: XRO) share price is down 28% and the Block Inc (ASX: SQ2) share price is down 25%.

A2 Milk shares went through a lot of pain once households stopped stocking their pantry during the COVID-19 pandemic. But, the business seems to be on a recovery path again.

Let’s remind ourselves about what the latest update from the infant formula company said.

Latest update

At the annual general meeting (AGM), in mid-November 2022, the company reminded investors that in FY22 it saw significant progress in implementing its refreshed strategy, which helped with “improved performance”.

A key part of this has been inventory management actions, which are “effective”. Channel inventory is at target levels, leading to product freshness and improved market pricing.

The business is seeing “new highs in brand health”, along with “record market shares and return to growth”.

A2 Milk said the outlook is positive, with continued revenue and earnings growth expected in FY23.

The company has also been buying back millions of A2 Milk shares, with an on-market share buyback of up to $150 million.

A2 Milk is working on its state administration for market regulation (SAMR) registration process, which is “progressing”. The approval is anticipated in the second half of FY23. The company also noted that the China State Farm exclusive import and distribution agreement has been renewed for five years from 1 October 2022.

The business also announced last year that it received US Food and Drug Administration (FDA) approval, with an enforcement discretion, to import infant milk formula into the US.

A2 Milk has a target of achieving $2 billion of revenue by FY26 and improving the earnings before interest, tax, depreciation, and amortisation (EBITDA) margin over time.

Is the A2 Milk share price going to sour from here?

A2 Milk’s earnings are expected to rise each year between FY23 to FY25, according to projections on Commsec.

The current estimates put the company at 37x FY23’s estimated earnings and 29x FY24’s estimated earnings.

After the strong performance by A2 Milk shares and expectations of profit growth, is it worth buying?

Looking at the analyst ratings collated by Commsec about the business, three rate A2 Milk shares as a buy, four rate it as a hold, and five rate it as a sell.

With the company seemingly on track for a recovery, it could be an effective investment – it’s still down around 65% from the high in July 2020.

However, I think A2 Milk will need to make progress in both China and the US for it to continue to excite investors this year.

The post A2 Milk shares are up 30% in a year, is this price sweet or sour? appeared first on The Motley Fool Australia.

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More reading

• 3 ASX shares to cash in on China’s reopening to the world: Jun Bei Liu
• If I invest $1,000 in A2 Milk shares now, what could my return be this year?
• 5 ASX All Ords shares cracking new 52-week highs on Tuesday
• My 3 best ASX shares of 2022 – and why I think they’ll win again in 2023
• The A2 Milk share price rocketed 20% in 2022. Is it too late to buy for 2023?

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Block and Xero. The Motley Fool Australia has positions in and has recommended Block and Xero. The Motley Fool Australia has recommended A2 Milk. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Returns from investing in ASX shares typically come in two forms.

The first is the capital gains we all know and love. This one is pretty basic. If you buy a share and then sell it at a later date for a higher price than what you bought it for, you make a profit. This is where the old maxim ‘buy low, sell high’ comes from.

But, as most ASX investors would be aware, there is another way to make money with ASX shares – receiving dividends. A dividend is a cash payment made by companies to their investors.

On the ASX, dividend-paying shares tend to dole out said dividends every six months. But some ASX shares can pay dividends quarterly or even monthly.

Some investors think of dividends as just a payment on the side, made to reward investors for holding a company’s shares. But dividends are far more important than that.

In fact, when it comes to the S&P/ASX 200 Index (ASX: XJO), a greater proportion of investors’ overall returns have come from dividend income, as opposed to capital gains.

Treat your dividends well, and they will treat you

To illustrate, let’s take one of the oldest ASX 200-tracking exchange-traded funds (ETFs) on the market.

The SPDR S&P/ASX 200 Fund (ASX: STW) has been listed on the ASX since August 2001. Over the 22 (and a bit) years that this ETF has been listed, it has averaged an annual return of 7.74% per annum after fees.

Of that 7.74%, only 3.05% per annum on average came from capital growth. The remaining 4.7% per annum came from dividend returns.

If an investor is to be successful at their craft, then treating these dividends properly is of paramount importance. When some investors receive income from shares, they might use it as an excuse to hit the town, have a nice meal, or buy a new outfit.

While our decisions are all our own, going down this path could cost you dearly. Compound interest relies on the consistent and never-ceasing reinvestment of all returns along the way.

If you aren’t ploughing your dividends back into more and more shares, which will then pay out more and more dividends over time, your returns will be far worse.

How much worse?

Well, $10,000 invested at a rate of return of 7.74%, compounded semiannually, will turn into around $97,590 after 30 years.

But say you go out and blow your dividends every time you get paid. Then, you will only receive a rate of return of 3.05% per annum over these 30 years. That would leave you with just $24,796.

In George S. Classon’s personal finance classic The Richest Man in Babylon, spending the cash returns of an investment is described in the following way:

You do eat the children of your savings. Then how do you expect them to work for you? And how can they have children that will also work for you?

Dividends beget more dividends. So don’t kneecap your portfolio’s returns by underappreciating this important source of wealth.

The post Want to invest successfully? You need to do this with your dividends appeared first on The Motley Fool Australia.

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More reading

• Experts betting against a bear market for ASX shares
• Invested $1,000 in Mineral Resources shares 10 years ago? Here’s how much passive income you’ve made
• 5 things to watch on the ASX 200 on Friday
• Could this ASX 200 share be a dividend gem hiding in plain sight?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor Sebastian Bowen 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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Just under 7% of the capital in the BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) is currently being short-sold by the experts, according to the latest ASX shares short sale report.

This is a dramatic change compared to three months ago when 0.33% of the stock was being shorted.

The change in short positioning may indicate that some experts think the bear market is over — at least for now.

As we explain in our Education Centre, shorting is not available to most ASX retail investors. Thus, it largely reflects what the pro ASX shares traders think, and which stocks they reckon will fall in value.

That’s how you make money from shorting. You bet the share price will fall and you profit if it does.

Why is this bear market ETF being shorted?

To understand why the experts are shorting this bear market ETF, we need to understand the product.

According to the BetaShares Australian Equities Strong Bear Hedge Fund fact sheet, this is an ‘inverse ETF’. It invests in cash and cash equivalents and sells ASX SPI 200 futures contracts.

The ETF generates a “magnified positive return” when the S&P/ASX 200 Accumulation Index (ASX: XJOA) falls on any given day, and a magnified negative return when the index rises.

A 1% fall in ASX 200 shares generally delivers a 2% to 2.75% increase for the fund, and vice versa.

Over the past three months, the S&P/ASX 200 Index (ASX: XJO) has risen by 10.5%. So, that explains why an increasing number of experts have been shorting this bear market ETF over the period.

The BetaShares Australian Equities Strong Bear Hedge Fund share price finished at $3.23 on Friday, down 0.62%. It also hit a new 52-week low of $3.20 in Friday’s session.

Which other ASX shares are being shorted?

According to the ASX report, these are the top 5 most shorted ASX shares at the moment. Here we show the percentage of issued capital shorted this week:

1. Global X Ultra Long NASDAQ 100 (ASX: LNAS) 10.9%
2. Global X Ultra Short NASDAQ 100 (ASX: SNAS) 9.8%
3. BetaShares Australian Equities Strong Bear Hedge Fund (ASX: BBOZ) 6.9%
4. VanEck Small Companies Masters ETF (ASX: MVS) 5.2%
5. Global X US Treasury Bond (Currency Hedged) ETF (ASX: USTB) 5.2%

The post Experts betting against a bear market for ASX shares appeared first on The Motley Fool Australia.

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More reading

• Invested $1,000 in Mineral Resources shares 10 years ago? Here’s how much passive income you’ve made
• 5 things to watch on the ASX 200 on Friday
• Could this ASX 200 share be a dividend gem hiding in plain sight?
• Here are the 3 most heavily traded ASX 200 shares on Wednesday
• Investing in ASX 200 copper shares? Here’s the outlook for the red metal in 2023

Motley Fool contributor Bronwyn Allen 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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While Warren Buffett is not a fan of paying dividends, having labelled the one and only Berkshire Hathaway dividend a mistake, he certainly is a fan of receiving them.

Over the years, Buffett has consistently bought stakes in high-quality businesses that share their profits with shareholders each year.

And while the Oracle of Omaha tends to focus on the US market, that doesn’t mean there aren’t any Buffett-style dividend stocks for investors on the ASX.

Listed below are a couple of ASX dividend stocks that might tick a few boxes for the legendary investor. Here’s what you need to know about them:

APA Group (ASX: APA)

Buffett is no stranger to utilities. In fact, Berkshire Hathaway has a subsidiary called Berkshire Hathaway Energy that owns and operates energy businesses across the United States, Canada, and even the United Kingdom.

APA Group is similar to Berkshire Hathaway Energy. It deals in the ownership and operation of energy infrastructure assets and businesses. This includes energy infrastructure, comprising gas transmission, gas storage and processing, and gas-fired and renewable energy power generation businesses located across Australia.

According to a note out of Morgans, its analysts expect APA to pay dividends per share of 55 cents in FY 2023 and 56.5 cents in FY 2024. Based on the current APA share price of $10.65, this will mean yields of 5.15% and 5.3%, respectively.

QBE Insurance Group Ltd (ASX: QBE)

Another area of the stock market that Buffett is known to frequent is the insurance sector. Berkshire Hathaway owns or owns stakes in insurers including GEICO, Gen Re, and Berkshire Hathaway Speciality Insurance.

Luckily for Australian investors, there are a number of insurance shares on the local share market. One, Insurance Australia Group Ltd (ASX: IAG), even counts Berkshire Hathaway as a shareholder.

In addition, there is insurance giant QBE. It is involved in underwriting general insurance and reinsurance risks globally.

Goldman Sachs is expecting some big dividend yields from the insurer. It is forecasting dividends per share of 75 cents in FY 2023 and 80 cents in FY 2024. Based on the current QBE share price of $13.86, this will mean 5.4% and 5.8% yields, respectively.

The post 2 Warren Buffett-style ASX dividend stocks for big income appeared first on The Motley Fool Australia.

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More reading

• Why Accent, Iluka, Myer, and QBE shares are charging higher today
• Goldman Sachs gives its verdict on the IAG share price
• 7 reasons to buy QBE shares: Goldman Sachs
• Broker names 2 high yield ASX 200 dividend shares to buy now
• How to invest $10,000 this year to create ‘safe’ passive income

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long January 2023 $200 calls on Berkshire Hathaway, short January 2023 $200 puts on Berkshire Hathaway, and short January 2023 $265 calls on Berkshire Hathaway. The Motley Fool Australia has positions in and has recommended Apa Group and Insurance Australia Group. 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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