Argo Investments (ARG), the country’s second largest listed investment company believes the recent falls across global equity markets have brought the Australian share market index back to a level where it is “closer to fair value and longer term averages, based on consensus forward earnings expectations.”
Shareholders were told at yesterday’s AGM that the company though remains "cautious due to challenges in the domestic economy, although the fall in the Australian dollar should provide some support as we move into 2016.”
The company said it had invested a further $120 million into the market since June 30, principally through capital raisings by leading companies, such as the banks.
The major new additional investments were the Commonwealth Bank, Westpac, Origin Energy, DUET Group, ANZ, CBL Corporation (a new float), BHP Billiton and Primary Healthcare.
CEO, Jason Beddow told the meeting that Argo is "comfortable with our diversified portfolio of quality companies and will look to participate in any opportunities that these market fluctuations may provide.”
The meeting was told that Argo retains cash reserves of approximately $100 million.
In the year to June, Argo, exited 9 holdings, including 2 by takeover, being Toll Holdings and David Jones. The company also reduced its investment in a further 5 companies, increased its stakes in 43 existing stocks and added 7 new holdings to the portfolio.
Mr Beddow said that since the June 30 balance data Argo has continued to sell down its holdings in Medibank Private and Milton Corporation.
"Overall, the Argo portfolio currently has 103 holdings, and while we will continue to assess any upcoming IPOs or new investments with rigour, we remain disciplined on any additional investment choices. New investments allow us to broaden the portfolio’s diversification and gain exposure to industries with potentially higher growth,” he said.
When comparing Argo’s 20 largest equity investments, based on market values at September 30, 2015, to the same time last year, Westpac and ANZ remain our two largest holdings, while BHP Billiton has slipped from 3rd to 6th largest.
“Although the top 20 holdings still account for approximately 63% of the overall portfolio, there has been a more meaningful change to its composition than usual over the last 12 months,” Mr Beddow told the meeting yesterday.
"There are four new additions to the top 20, being APA Group, Sydney Airport, Amcor, and also QBE Insurance which has replaced Suncorp Group as our 20th largest holding. Of note is the removal of Origin Energy, Santos and Woodside Petroleum from the top 20, largely due to the substantial fall in the oil price over the past 12 months.”
