Portfolio Actions and Thoughts
The Fusion Superannuation Fund is up 14% year to date, thanks in the main to strong performance by M2 Telecommunications and Biota. I have been increasing the funds cash position and now hold 12.4% in cash. Cash is an attractive option in Australia where safe 6% returns are easily available. The sales have predominately been in banks, ANZ was first out the door followed by Westpac.
As per my asset allocation strategy for this year I will continue to reduce our equity exposure; increasingly so into a strengthening (fingers crossed) market.
Holdings
Biota has been on a tear and is up over 40% YTD. It appears many investors are solely focused on the upside potential and are giving little regard to the downside. The upside story is an impressive one; Relenza sales continue, fantastic initial LANI sales in Japan give Biota a second income stream, possible government funding for rest of world LANI trials, LANI prophylaxis trial in Japan and a IIb HRV trial is underway. If either the funding comes through or Biota announce good results from the trial then the share price should quickly re-rate to over $2, possibly way over. However, government funding is never easy to come by, especially when deficits are climbing, similarly rhinovirus has proved to be a tough nut to crack. I view fair value at around $2.
ASW is overvalued, but as it is likely to grow into the price it is difficult to sell, though I have been trimming my holding.
MTU is fairly priced, but I’m not selling as I think I may be in love with Vaughan Bowen the CEO 
. Sensational management teams are rare and I think the Bowen’s (Vaughan’s dad is on the board) and team are executing brilliantly. Below is a quick chart of their growth. With the recent acquisition of Clear Communications that growth will continue into 2012 and beyond. Intersuisse continue to see upside and rate M2 as a buy.
Clearview will report this week and I hope to see their promise begin to shine through. The recent increase in price is due to Paradice Investment Management accumulating shares. They now hold 6.3% of CVW. Guinness Peat Group hold 49%.
Amcom is undervalued, but with no love in the market it will have to hit the ball out of the park to get any attention. The specter of NBN is capping AMM’s share price, consequently it may take a while for the share price to reflect the value. Acorn Capital was a recent seller, but that could simply be because Amcom is now more of a sapling than an acorn. I continue to like Amcom for their low valuation, fibre strategy and their strategy stake in iiNet. Amcom report on the 23rd Feb.
Hunter Hall and Telstra continue to spin off cash at acceptable rates and I am happy to hold both. Most of our Telstra is held within our separate investment trust.
Which brings me to Po Valley. Hunter Hall have been aggressively accumulating PVE and now hold 14.8%. While I still see considerable execution risk and are not comfortable with management the potential upside is very attractive.
International Holdings
I sold Oplink Communications after their sensational earnings announcement a week or two back. Oplink are currently executing extremely well and have the technology our streaming world needs. [correction: Only half position sold]
I was also fortunate to sell 1/3 of our Smith Micro Software (SMSI) at close to it’s recent highs, though unfortunate that I was greedy and wanted slightly more for the remaining 2/3′s. On the back of a very bad quarterly forecast SMSI is down nearly 50%.
Cisco and Gilead appear very attractive. So much so that I am planning on using either a long combo or long synthetic future option strategy. Insurance companies continue to be ignored by the market, with companies like Montpelier Re (MRH) trading near a historically low price to book of 0.83. Insurers will have their day in the sun and once institutions have loaded up I expect we’ll hear a lot more about what great value they are.
Disclosure: Long all stocks mentioned, except Oplink which was recently sold and Cisco and Gilead which I am considering long strategies for. [correction: still long Oplink (OPLK)]
Related posts:
Leave your response!