Blackrock, the world’s biggest fund manager has spent $5 billion or more building 5% plus shareholdings in four of Australia’s biggest companies over the past 18 months, with more than $2 billion being spent in the first five and a half months of this year alone – a massive buying that a mockery of continuing broking and media reports (such as in this morning’s Fairfax Media newspapers) about how big global investors are going off Australian shares, and selling.
Blackrock has been identified buying stakes 5% stakes (level where shareholders have to reveal their holdings) in Amcor (August 2016), Wesfarmers (January 2017), Qantas (May 2017) and Woolworths (Wednesday of this week).
It has spent heavily in a big punt on an improving outlook for the Australian economy (especially consumer demand) and the buying has also taken advantage of relatively low prices for the target companies.
The holdings range from 5% exactly in Woolies to 5.23% in Qantas. It also has 5.07% in Wesfarmers and just over 5% in Amcor where it has traded under and above the 5% substantial shareholding level since revealing its holding in September of last year.
It is likely Blackrock’s stakes in Wesfarmers, Qantas and Woolies will also wobble around the 5% level as some of the shares appear to be held by so-called passive or index tracking funds which require shares to be sold and bought according to movements in various indices.
The Woolies stake is the latest and took the best part of five months to assemble (as did Qantas).
What’s interesting is that Blackrock’s holdings in the country’s two biggest retailers have been assembled in the face of all the hot air about how Amazon is going to damage the entire Australian retailing sector when it arrives in September.
The world’s biggest global investor has taken advantage of those illogical fears about Amazon and the sell off in the shares of Woolies to build a $1.6 billion stake in the country’s biggest retailer over the since the start of 2017.
Blackrock dominated global investing wit more than $US5.4 trillion under management (up from $US4.7 trillion a year ago) across a range of asset classes. Of that its website says it had $A86 billion under management in Australia at March 31 this year.
Now it has added more than $2 billion to that with a buying spree in Woolies that started on February 20 (when around 1.3 million shares were bought) and ended this month when the holding reached the 5% disclosure limit. The Qantas stake started in January of this year, just after Blackrock had declared its Wesfarmers stake.
In a filing with the ASX on Wednesday of last week Blackrock said it had purchased 64.776 million Woolies shares At current prices that stake is worth $1.620 Billion. Most of the holding was bought at prices above $25 a share, with a good proportion ought at $26 and above. Woolies shares ended at $25.59 on Monday, up 0.8%
On May 23, Blackstone emerged with a 5.23% stake in Qantas worth $530 million at yesterday’s price of around $5.63. The stake appears to have cost around $4 a share, so Blackrock is sitting on a nice fat profit.
In September of last year Blackrock revealed it had spent more than $900 million (over six months) in assembling a 5% stake in Amcor. And last December Blackrock emerged as 5% holder in Wesfarmers after building up its stake in the previous five or so months. That was done at a cost of more than $2.4 billion.
Wesfarmers’ shares rose 0.8% yesterday to $41.06. Amcor shares though eased half a per cent to $16.50.
In early May Blackrock appeared with a 5.02% stake in Fairfax Media worth just over $90 million, but by the end of the month (May 31) had fallen back under the 5% level and further in a series of sales orchestrated by the company’s Australian mangers that took advantage of the takeover speculation at Fairfax with possible bids from TPG and Hellman and Friedman.
