MAGELLAN GLOBAL TRUST

Magellan Global Trust (ASX: MGG) incepted on October 18, 2017 is an investment trust that actively manages global equities fund. The fund holdings have been diversified across various sectors and industries. The fund has increased its holding in Insurancesector by 1% in the month of October to 2% as compared to its holding of 1% in the month of September. It has reduced its holding under Consumer Discretionary by 1% in the month of October to 4% as compared to its holding of 5% in the month of September.


Fund exposure and performance (Source: Company Reports)

Volatility in equity markets cannot be ignored, which is witnessed by almost all the sectors and industries; but MGG with its holdings of 19% in Consumer Defensive space and 9% under Healthcare sector which gain attention usually in times of volatility, will help the overall improvement in the fund performance.

Technically,the scrip after making 52 weeks’ high of $1.80 in the month of September has witnessed some dip. At current juncture the scrip is forming a candle with long wick, indicating rejection to any downside move and absence of upper wick indicates, buyers taking over sellers and more upside move to occur in near term.

The market cap of MGG was recorded at $1.71bn, with P/E around 9.6x and beta below 1x.Strong composition of defensive sectors will improve the overall fund performance, and we give a “Buy” on MGG at the current levels of $1.625.

WAM CAPITAL LIMITED

WAM Capital Limited  (ASX: WAM) with a wide range of products covering right from micro-cap equities, to mid-cap, large-cap Australian companies, small to mid-cap and international companies, has succeeded with its takeover offer for Wealth Defender Equities Limited. The announcement for the same was made on October 26, 2018.

Global financial crisis impacted the performance: Globally all equity markets witnessed strong volatile sessions and remained in red zone for the entire month of October, with technology sector reported as the worst sector and falling by 114%, and the fall in crude prices impacted the energy sector which recorded a fall of 10.3%. Thus, a 7.8% fall under WAM Capital investment portfolio was noted.

Share price impacted by the selloff made by Perennial:Perennial Value management being the investment manager of Wealth Defender equities which is recently been taken over by WAM had 8.3% stake in WDE. With this takeover Perennial converted all of its shares in WDE to WAM capital shares and sold its illiquid securities for cash which impacted the share price of WAM.

Technically, the scrip has formed “Doji” on a daily chart, and a positive crossover has occurred on price chart with candle taking support at the moving average. Majorindicators like Relative strength index and MACD (moving average convergence and divergence indicator) reflect a positive crossover.

The market cap of WAM was recorded at $1.64bn, with P/E of 12x and beta much below 1x as on November 15. Volatility in the equity markets has impacted WAM to a certain extent. We give a “Hold” on WAM at the current levels of $2.31given the shortcomings while the stock has resilient fundamentals.
 
 

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