Stocks’ Details

Magellan Global Trust

Fund & Index Highlights in September 2020: Magellan Global Trust (ASX: MGG) is a listed investment trust that invests in global equities. As on 2 November 2020, the market capitalisation of the company stood at ~$2.3 billion. In September 2020, the fund declined at 0.5%, as compared to a decline of 0.4% of the index. In the last three and six months, the fund has witnessed a growth of 4.4% and 8.1%, respectively. The company’s geographical exposure by the source of revenues from the US accounted for 40% in September 2020. Whereas, from Rest of World, China and Western Europe, the company’s geographical contribution was 7%, 18% and 12%, respectively. Top 10 investments during the period depicted 53.5% of the portfolio. As at 23 October 2020, MGG had Net Assets Value (NAV) per unit of $1.9442.

Geographical Contribution (Source: Company Reports)

FY20 Key Highlights for the Period Ended 30 June 2020: For the year ended 30 June 2020, the company reported a total net investment income of $114.8 million, down from $336.6 million reported in the previous year. Net comprehensive profit for the period amounted to $81.3 million, down from $304.2 million in FY19, taking the basic and diluted earnings per share to 6.57 cents. As at 30 June 2020, the Fund consisted of investments in 23 companies, with the top 10 investments depicting 50.4% of the Portfolio. The Fund’s cash position was 18% which was mainly held in US Dollars.

Stock Recommendation: Global investment funds are sensitive to trade disputes and geopolitical frictions. The results of MGG’s operations may get affected by a number of factors, including the performance of investment markets in which the Fund invests. However, on the face of the US election, the company might achieve attractive risk-adjusted returns over the medium to long-term for unitholders, while reducing the risk of permanent capital loss. The stock of MGG gave a return of 3.6% in the past one month. On the technical analysis front, the stock of MGG has a support level of ~$1.75 and a resistance level of ~$2.1. The stock is currently trading at $1.850, near to its 52-week high of $2.18. Considering the September’20 fund performance, FY20 performance, higher distribution target and results of US election, we recommend a “Hold” rating on the stock at the current market price of $1.850 on 2 November 2020.

MFF Capital Investments Limited 

Weekly NTA Update: MFF Capital Investments Limited (ASX: MFF) invests in a portfolio of exchange-listed international and Australian companies with attractive business characteristics. As on 2 November 2020, the market capitalization of the company stood at ~$1.41 billion. MFF stated that its weekly NTA per share as of 23 October 2020 stood at ~$2.835 per share (pre-tax) and $2.490 after providing for tax. As at 23 October 2020, net cash was ~19.9% of assets. As at 30 September 2020, top 10 investments during the period depicted 59.9% of the portfolio. The company has increased its number of holdings, and the breadth of activities and domicile geographies.

Investments as at 30 September 2020 (Source: Company Reports)

Managerial Changes: The company recently updated the market that Mr Andy Hogendijk, Independent Non-Executive Director and Chairman of the Audit and Risk Committee has stepped down at the end of the company’s Annual General Meeting on 2 October 2020. The company has appointed, Mr Robert Fraser as the Chairman of the Audit and Risk Committee, whereas, Mr Peter Montgomery AM has been appointed as the member of the Audit and Risk Committee.

FY20 Financial Highlights (For the Period ended 30 June 2020): During FY20, the company reported a healthy balance sheet with a cash balance of $680.1 million. During FY20, MFF’s sales of securities outweighed purchases. In cash terms, proceeds from sales were ~$1,107.4 million and purchases ~$93.6 million. During FY20, total net investment income went down to $45.08 million from $321.40 million, and net profit saw a decline from $218.57 million to $25.09 million.

Stock Recommendation: MFF remains engaged and price sensitive, despite the zero bounds in interest rates on cash and the modest future return expectations for equity markets. As per ASX, the stock of MFF is inclined towards its 52-weeks’ low level of $2.15, proffering a decent opportunity for accumulation. On the technical analysis front, the stock of MFF has a support level of ~$2.28 and a resistance level of ~$3.27. The stock of MFF gave a negative return of ~1.5% in the past one month. Considering the current trading levels, decent NTA position, sufficient liquidity, fluctuation in global and local commodity prices, we recommend a ‘Speculative Buy’ rating on the stock at the current market price of $2.54, on 2 November 2020.

WAM Global Limited

Decent Growth in Shareholders Returns: WAM Global Limited (ASX: WGB) is an investment management company with global and Australian equity market expertise. The market capitalization of the company stood at ~$453.08Mn as on 2 November 2020. In a recent update, the company announced that Geoffrey Wilson has acquired 17,031 ordinary shares for a consideration of $37,297.89. In the month of September 2020, the investment portfolio of the company has provided a return of 8.1% since inception in June 2018. The company added that returns in the month of September have been highly concentrated, such as Thermo Fisher Scientific (NYSE: TMO), Dollar General (NYSE: DG) and Normad Foods (NYSE: NOMD).

Portfolio (Source: Company Reports)

Operating Profit in FY20: During FY20, the company recorded an operating profit after tax of $5 million, which indicates the performance of the investment portfolio. In addition, the company has resolved to pay a fully franked final dividend of 4 cents per share on 30th October 2020. This brought the full-year dividend to 7 cents per share. During FY20, revenues from ordinary business stood at ~15 million, up by 53.8% year over year.  Operating profit before tax stood at $7.1 million, depicting growth in assets during the year. The company is focused on the world’s most compelling undervalued growth opportunities. Below is the picture depicting the top 20 investments of the portfolio as at 30 June 2020.

Portfolio Performance (Source: Company Reports)

Stock Recommendation: The stock of WGB has provided returns of 6.6% and 12.5% in the last three and six months, respectively. In addition, the stock is inclined towards its 52-week high of $2.350. The board remains committed to pay dividend to shareholders, depicting a sufficient profit reserve of the company. The stock is trading at a price to book value multiple of 0.9x as compared to the industry median (Financial) of 1.1x on TTM basis. On a technical front, the stock of WGB has a support level of ~$1.421 and a resistance level of ~$2.257. Thus, in light of returns provided in the past months, the performance of investment portfolio, and dividend payment, we give a “Hold” recommendation on the stock at the current market price of $2.11 per share, down by 0.939% on 2 November 2020.

Comparative Price Chart (Source: Refinitiv, Thomson Reuters)

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