SMALL CAPITALIZATION STOCKS – AUSTRALIA

Small caps ‘offer best opportunity’

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Original article by James Frost
The Australian Financial Review – Page: 24 : 27-Jul-17

Allan Gray Australia’s Simon Mawhinney is upbeat about the outlook for small-capitalisation stocks, forecasting that they are set to outperform their larger peers. Smaller Australian companies have tended to have lower returns over the last several decades, but Mawhinney expects non-S&P/ASX 100 companies to outperform over the next five years. Allan Gray particularly likes stocks such as Capral, Mineral Deposits and HT&E.

CORPORATES
ALLAN GRAY AUSTRALIA PTY LTD, STANDARD AND POOR’S ASX 100 INDEX, CAPRAL LIMITED – ASX CAA, MINERAL DEPOSITS LIMITED – ASX MDL, HT&E LIMITED – ASX HT1, ALUMINA LIMITED – ASX AWC, WOODSIDE PETROLEUM LIMITED – ASX WPL, NEWCREST MINING LIMITED – ASX NCM, ORIGIN ENERGY LIMITED – ASX ORG, METCASH LIMITED – ASX MTS, NATIONAL AUSTRALIA BANK LIMITED – ASX NAB, STANDARD AND POOR’S ASX 300 ACCUMULATION INDEX

Small cap stock the winners in slow-growth local economy

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Original article by Myriam Robin
The Australian Financial Review – Page: 27 : 7-Jun-17

Victor Gomes of UBS says any economic slowdown in Australia means small-capitalisation stocks with significant offshore earnings are likely to perform well. Large-cap stocks have outperformed in recent years, and some small-caps were heavily sold down during the February 2017 reporting season. Robert Talevski of Activus Investment Advisors says investors need to focus on the long-term investment horizon when buying into small-caps.

CORPORATES
UBS HOLDINGS PTY LTD, ACTIVUS INVESTMENT ADVISORS PTY LTD, FORAGER FUNDS MANAGEMENT PTY LTD, STANDARD AND POOR’S ASX SMALL ORDINARIES INDEX, STANDARD AND POOR’S ASX 20 INDEX, AMAZON.COM INCORPORATED, YOWIE GROUP LIMITED – ASX YOW, GENWORTH MORTGAGE INSURANCE AUSTRALIA LIMITED – ASX GMA

Small-cap party could end in tears when the next crash comes

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Original article by Philip Baker
The Australian Financial Review – Page: 26 : 20-Oct-16

The Dow Jones Industrial Average has gained almost 944 per cent since the Black Monday sharemarket crash of October 1987, while the S&P 500 has risen by 854 per cent. In contrast, Australia’s All Ordinaries Index has increased by nearly 245 per cent. However, analysis by Richard Coppleson of Bell Potter suggests that when dividends are taken into account the All Ordinaries Accumulation Index has only slightly underperformed the S&P 500. Meanwhile, Coppleson warns that the current rally in small-cap stocks is unsustainable and a major fallout is inevitable.

CORPORATES
DOW JONES INDUSTRIAL AVERAGE INDEX, STANDARD AND POOR’S 500 INDEX, STANDARD AND POOR’S ASX ALL ORDINARIES INDEX, BELL POTTER SECURITIES LIMITED, RESERVE BANK OF AUSTRALIA

Trimmed down miners tipped as next hot sector

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Original article by Vanessa Desloires
The Australian Financial Review – Page: 31 : 27-May-16

UBS Small Companies Fund portfolio managers Stephen Wood and David Haddad are upbeat about the outlook for smaller Australian-listed mining companies. They note that many small-capitalisation mining groups have significantly reduced their costs over the last five years, which has made them attractive to investors. UBS favours stocks such as Fortescue Metals Group, Sundance Resources, Whitehaven Coal, Galaxy Resources, Orocobre and Pilbara Minerals.

CORPORATES
UBS HOLDINGS PTY LTD, FORTESCUE METALS GROUP LIMITED – ASX FMG, SUNDANCE RESOURCES LIMITED – ASX SDL, WHITEHAVEN COAL LIMITED – ASX WHC, GALAXY RESEARCH AND PLANNING PTY LTD, OROCOBRE LIMITED – ASX ORE, PILBARA MINERALS LIMITED – ASX PLS, CITIGROUP PTY LTD

Mid-cap returns surge 54pc in past five years

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Original article by Jessica Sier
The Australian Financial Review – Page: 24 : 25-May-16

Australia’s S&P/ASX MidCap 50 Index has gained nearly 14 per cent in 2016, while the benchmark S&P/ASX 200 has shed two per cent. Meanwhile, mid-capitalisation stocks have delivered total returns of 54 per cent over the last five years. While the benchmark index is heavily weighted toward banks and resources groups, the MidCap 50 includes a more diverse range of sectors. Treasury Wine Estates, Domino’s Pizza Enterprises and REA Group are among the top performers in the index over the last 12 months.

CORPORATES
STANDARD AND POOR’S ASX MIDCAP 50 INDEX, STANDARD AND POOR’S ASX 200 INDEX, TREASURY WINE ESTATES LIMITED – ASX TWE, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, REA GROUP LIMITED – ASX REA, COMMONWEALTH SECURITIES LIMITED, HYPERION ASSET MANAGEMENT LIMITED, ARNHEM INVESTMENT MANAGEMENT PTY LTD, SPOTLESS GROUP HOLDINGS LIMITED – ASX SPO, PRIMARY HEALTH CARE LIMITED – ASX PRY, ANSELL LIMITED – ASX ANN

Junior miners ripe for picking, says Lanstead

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Original article by Tess Ingram
The Australian Financial Review – Page: 27 : 30-Mar-16

British fund manager Lanstead Investors aims to invest about $A300m in Australian-listed stocks over the next several years. Its portfolio currently comprises about $A50m worth of Australian shares, and co-founder Greg Kofford is bullish about local resources groups. He believes that smaller resources companies in particular offer good value at present. Lanstead director Andrew Sparke notes that lack of access to capital has forced many smaller miners to shelve quality projects.

CORPORATES
LANSTEAD INVESTORS PTY LTD, WESTERN MINING NETWORK LIMITED – ASX WMN, CARBINE TUNGSTEN LIMITED – ASX CNQ, MUSTANG RESOURCES LIMITED – ASX MUS, LITHIUM AUSTRALIA NL – ASX LIT, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

Small miners close to default: RBA

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Original article by Geoff Winestock, Angela Macdonald-Smith
The Australian Financial Review – Page: 3 : 19-Oct-15

The Reserve Bank of Australia’s latest Financial Stability Review warns that many smaller resources groups are close to defaulting on debt repayments. The central bank says the number of such companies that are at risk of default has reached its highest level since the global financial crisis. Few junior miners have collapsed in 2015, although the outlook for some is uncertain, and several mining services firms have been placed in administration.

CORPORATES
RESERVE BANK OF AUSTRALIA, MIRABELA NICKEL LIMITED – ASX MBN, ATLAS IRON LIMITED – ASX AGO, EMECO HOLDINGS LIMITED – ASX EHL, TERMITE RESOURCES NL, WESTERN DESERT RESOURCES LIMITED, PLUTON RESOURCES LIMITED – ASX PLV, BANDANNA ENERGY LIMITED – ASX BND, WDS LIMITED – ASX WDS, BIG RIM PTY LTD, SARGENT, HEAVY HAULAGE AUSTRALIA PTY LTD, BHP BILLITON LIMITED – ASX BHP, RIO TINTO LIMITED – ASX RIO

Junior explorers under pressure

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Original article by Amanda Saunders
The Australian Financial Review – Page: 18 : 28-Sep-15

BDO estimates that about 20 per cent of the 780 smaller resources companies that are listed on the Australian sharemarket do not have active exploration programs. Smaller explorers spent an average of $A481,000 on exploration programs in the June 2015 quarter, compared with $A980,000 during the same period in 2013. Sherif Andrawes of BDO expects more junior explorers to go private or be subject to a reverse takeover.

CORPORATES
BDO AUSTRALIA LIMITED

Exploration ‘zombies’ on rise as mining cash dries up

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Original article by Tess Ingram
The Australian Financial Review – Page: 21 : 1-Jul-15

Data from accounting firm BDO shows that smaller Australian-listed exploration companies spent an average of $A539,000 on exploration during the March 2015 quarter. However, about 20 per cent of the 793 junior explorers invested less than $A10,000 on exploration during the period, while 12 per cent did not undertake any exploration programs. Only one explorer listed at the lower end of the market during the quarter.

CORPORATES
BDO AUSTRALIA LIMITED, CSIRO, NORTHERN STAR RESOURCES LIMITED – ASX NST, LA MANCHA RESOURCES INCORPORATED, SARACEN MINERAL HOLDINGS LIMITED – ASX SAR, EXCELSIOR GOLD LIMITED – ASX EXG, RAMELIUS RESOURCES LIMITED – ASX RMS

Soaring small caps perturb strategists

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Original article by Rose Powell, Patrick Commins
The Australian Financial Review – Page: 25 : 3-Jun-15

Australian-listed small-capitalisation industrial stocks have rallied since March 2015, while industrials in the S&P/ASX 50 have generally underperformed. Investor support for small-caps has been driven by factors such as an upturn in the sector’s return on equity (ROE), as well as a corresponding decline in ROE for larger stocks. Meanwhile, Matthew Ross of Goldman Sachs says valuations in the small-cap sector may have become stretched.

CORPORATES
GOLDMAN SACHS AND PARTNERS AUSTRALIA PTY LTD, STANDARD AND POOR’S ASX 50 INDEX, STANDARD AND POOR’S ASX 200 INDEX, RESERVE BANK OF AUSTRALIA, IPROPERTY GROUP LIMITED – ASX IPP, NEXTDC LIMITED – ASX NXT, DOMINO’S PIZZA ENTERPRISES LIMITED – ASX DMP, TECHNOLOGY ONE LIMITED – ASX TNE, CORPORATE TRAVEL MANAGEMENT LIMITED – ASX CTD, INFOMEDIA LIMITED – ASX IFM, SIRTEX MEDICAL LIMITED – ASX SRX, ALTIUM LIMITED – ASX ALU, MANTRA GROUP LIMITED – ASX MTR, TFS CORPORATION LIMITED – ASX TFC