News & Media

Two weeks ago Australia’s largest private health insurer Medibank Private (MPL) provided a surprise upgrade, boosting its operating profit guidance for the 2016 financial year from “above $370 million” to “Operating profit of above $470 million”. This caused a spike in MPL’s share price, making it one of the top performing stocks in the miserable equity markets of 2016, returning +13% vs. the ASX200 fall of -9.3%. This upgrade on the back of improved margins was treated as a shock by some well-respected sell side analysts who then scrambled to upgrade their financial models of the company.

In this week’s piece we are going to look at privatisations and the reasons why they tend to perform better under private ownership than in government hands.

Read more here.

Last week Qube submitted a formal proposal to acquire national rail freight and cargo port Operator Asciano for A$9billion, which is being touted as a company changing acquisition that will make the smaller company Australia’s leading logistics provider. Company changing events are typically major acquisitions or significant new investments requiring equity or debt issues, designed to dramatically boost earnings or change market perceptions of a company, both of which should be beneficial for shareholders. Whilst the valuation or market capitalisation of a company listed on the ASX can vary dramatically with market sentiment, in reality a company’s core business normally changes quite slowly and often the company-changing investment designed to buy growth can actually be very negative.

In this piece we are going to look at recent company changing events from major purchases to significant investments, the entering of new markets that were both positive and negative for shareholders.

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Over the past few weeks there have been no shortage of headlines detailing the woes of the large oil companies as the oil price has continued to fall. Indeed this week, the oil price came under further pressure (hitting 12 year lows), as the prospect of lifting sanctions on Iran raised the spectre of an additional 500,000 barrels of Iranian oil daily hitting the global market. Whilst this has placed a significant amount of stress on oil producers and in particular companies such as Santos and Origin Energy that are completing export LNG projects that require a high oil price to generate commercial returns; the dramatic and sustained fall does have some positive impacts for investors and the economy.

In the first weekly piece of 2016 for The Alternative View we are going to look at the beneficiaries of the sustained decline in hydrocarbon prices.

Read more here.