"Equities"

Are earnings estimates too high? It’s a question being repeatedly asked, as the market speculates about the economic outlook. But perhaps the first question should be: are historic earnings too high?

It isn’t uncommon for management teams to systemically overstate their company’s profitability and skew the starting point for evaluating a company’s outlook. In recent years, short-term narratives have often trumped financial reality.

The current market sell-off has many market participants running for cover and waiting till the “uncertainty clears.” Issues concerning the market are well-known – central bank tightening, high inflation, the Ukraine conflict, supply chain shortages and increasing concerns of a recession in 2023.

And in current markets, I am reminded of the timeless words of Benjamin Graham (the father of security analysis and Warren Buffet’s mentor) who made the clear distinction between investment and speculation.

Many would be familiar with Nike’s direct-to-consumer (DTC) strategy, their ambition to generate the majority of sales through their own physical stores and online channels. In this article, we review why we believe the shift to DTC has helped Nike become stronger than ever ― and why the company is increasingly in control of its own destiny due to its ever-improving digital offer and power over product allocation as brand owners. Nike is currently one of the 14 stocks in the Claremont Global portfolio.

Portfolio Manager, Adam Chandler, from Claremont Global, one of Australia’s best performing international funds(1) , discusses opportunities in the current market, which companies they’ve been buying recently, how the fund makes investment decisions and how they think about risk.

2022 has seen a marked shift from “growth” to “value.” This has seen a resurgence in both bank and oil stocks. The former is expected to see an improvement in profitability, as interest rates rise with tighter monetary policy, whilst the latter are expected to benefit from higher oil prices ― more recently accelerated by the situation in Ukraine.

As global fund managers, one of the most important areas of focus for many of the companies we research is around talent acquisition and retention.

As the pandemic kept people at home, we saw a dramatic rise in at-home consumption of spirits and a shift in preferences towards more premium products. We believe both trends driven by the pandemic are sustainable trends.

Diageo is currently one of the 14 stocks in the Claremont Global portfolio. In this article we discuss how Diageo’s leading market position and unique portfolio of brands ― combined with strong category drivers ― has set the company up for long term success.

With the latest US CPI reading over 5%, we have been receiving a number of questions from investors about what this means for the future composition of our portfolio. Well, the simple answer is not that much ― and here’s why.

‍The difficulty with economic forecasts

‍As regular readers of our articles will know, we believe that accurate and consistent economic forecasts are exceptionally difficult, and it is even more difficult to successfully construct a portfolio to express such a view.

When thinking about COVID winners, a 70-year-old US-centric payroll solutions company is unlikely to be top of mind. However, complex requirements for stimulus applications through the pandemic ― combined with the ability to develop solutions to service these changes ― has entrenched NASDAQ-listed ADP with its client base more than ever.

We see ADP as an attractive quality compounder with a 45-year track record of consecutive dividend increases and in this article cover some of the many reasons why ADP has made it into our 15-stock portfolio.

By the measure of whether companies “beat” estimates, the most recent U.S. reporting season was outstanding. At our last count, 79 per cent of S&P500 companies had exceeded consensus estimates.

With the S&P500 at record highs, easy monetary conditions, another fiscal stimulus package and reopening ahead, perhaps that’s all equity investors need to know.