This retailer has been savaged on results

but does it provide an opportunity?

Novaport Capital

February 2023

Funds operated by this manager:

NovaPort Microcap Fund, NovaPort Wholesale Smaller Companies Fund

This material has been prepared by NovaPort Capital Pty Limited (ABN 88 140 833 656, AFSL 385 329) (NovaPort). It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Any projections are based on assumptions which we believe are reasonable, but are subject to change and should not be relied upon. Past performance is not a reliable indicator of future performance. Neither any particular rate of return nor capital invested are guaranteed.

Market Commentary - January

Glenmore Asset Management

February 2023

Funds operated by this manager:

Glenmore Australian Equities Fund

Magellan Infrastructure Strategy Update

Magellan Asset Management

January 2023

Magellan's Deputy CIO, Head of Infrastructure and Portfolio Manager, Gerald Stack, mentions the challenges that the Infrastructure portfolio faced in 2022. Gerald describes how the portfolio is positioned now to take advantage of growth trends such as the re-opening of the global economy and the transition to renewable energy. 

Funds operated by this manager:

Magellan Global Fund (Hedged), Magellan Global Fund (Open Class Units) ASX:MGOC, Magellan High Conviction Fund, Magellan Infrastructure Fund, Magellan Infrastructure Fund (Unhedged), MFG Core Infrastructure Fund

Important Information: This material has been delivered to you by Magellan Asset Management Limited ABN 31 120 593 946 AFS Licence No. 304 301 ('Magellan') and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation.  This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should read and consider any relevant offer documentation applicable to any investment product or service and consider obtaining professional investment advice tailored to your specific circumstances before making any investment decision. A copy of the relevant PDS relating to a Magellan financial product or service may be obtained by calling +61 2 9235 4888 or by visiting www.magellangroup.com.au.

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any strategy, the amount or timing of any return from it, that asset allocations will be met, that it will be able to be implemented and its investment strategy or that its investment objectives will be achieved. This material may contain 'forward-looking statements'. Actual events or results or the actual performance of a Magellan financial product or service may differ materially from those reflected or contemplated in such forward-looking statements.

This material may include data, research and other information from third party sources. Magellan makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material.  Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Magellan. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon.

Any trademarks, logos, and service marks contained herein may be the registered and unregistered trademarks of their respective owners. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan.

Hedge Clippings | 03 March 2023

Last week's Hedge Clippings warned readers to beware of politicians with a hand in one's pocket. This week, let's double down on that, and just make it "beware politicians".

Of course in this specific case, we're referring to the Treasurer, Dr. Chalmers, and PM Anthony Albanese, and their changes to the taxation of superannuation balances above $3 million, although it applies pretty universally to the lot of them (politicians that is, not super balances). However, specifically, everything Chalmers and Albo have said and done on this has either been smart, sneaky, or maybe a bit of both, depending where you're coming from.

Where do we start? Let's go back a year to when both were in election (aka "don't scare the horses") mode when they were at pains to assure voters there would be no changes to superannuation. How to overcome that little obstacle?  Delay the introduction of the changes until July 2025, beyond the current parliamentary term. Sneaky or smart? You be the judge.

Then there's Jim Chalmers saying just a couple of weeks ago that "we need to have a conversation about super's sustainable future." Lo and behold, just a week or so later it's set in stone, and it wasn't so much a "conversation" as an edict. Much like the "conversations" yours truly was invited to have many years ago in the headmaster's study, when there was only going to be one, or normally six, painful outcomes. Either Chalmers had been doing more than writing his 6,000 word essay over his Christmas holiday, or he's suddenly had an epiphany of the taxation kind.  

Leaving the politics and weasel words aside, let's take a look at the policy itself: It's hard to argue that those with more income shouldn't, or are unable, to pay a greater proportion of it in tax. But Chalmers' plan doesn't hit those with high income from their super accounts, it is triggered based on the value of a member's balance, but taxed on the earnings - plus those earnings include un-realised gains.

As far as the overall benefit to the budget's bottom line, Treasury's modeling indicates that there is over $250 billion a year in taxation concessions from a variety of sources, including negative gearing, franking credits, and CGT, of which super accounts for around $45 billion. Of that $45 billion, $23.3 billion is made up of concessional tax rates on contributions, and $21.5 billion from concessions on earnings. Increasing the tax on earnings from 15% to 30% on balances over $3 million will raise $2 billion a year.

The government doesn't seem to have thought this through - although they've certainly thought about the politics.  There's outcry and opposition enough, even though less than 1% of the population are impacted in an effort to claw back $2 billion from the overall concession pool of $250 billion. Think of the response if negative gearing ($24.4bn), CGT on a main residence ($48bn), CGT on assets held for more than 12 months ($23.7bn), or franking credits ($17.2bn) had been in their sights. Of course, Bill Shorten discovered the response to any changes to franking credits in 2019 by ignoring the fact that there are 3.1 million direct recipients from that source.

It's pretty easy to sell the policy to the 99.5% of the population theoretically not impacted by it, as long as that's an accurate estimate, as clever Jim has deferred indexation of the $3 million until it is someone else's problem. (Meanwhile, the FSC has estimated that up to six times as many workers will be affected over time.)

And while the critics have Chalmers and Albanese in their sights, let's not forget that successive governments have tinkered with the taxation of super ever since it was introduced by Paul Keating way back when.

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