Rudi’s View: IPH, G8 Education, And NextDC

Always an independent thinker, Rudi has not shied away from making big out-of-consensus predictions that proved accurate later on. When Rio Tinto shares surged above $120 he wrote investors should sell. In mid-2008 he warned investors not to hold on to equities in oil producers. In August 2008 he predicted the largest sell-off in commodities stocks was about to follow. In 2009 he suggested Australian banks were an excellent buy. Between 2011 and 2015 Rudi consistently maintained investors were better off avoiding exposure to commodities and to commodities stocks. Post GFC, he dedicated his research to finding All-Weather Performers. See also "All-Weather Performers" on this website, as well as the Special Reports section.

Rudi's View | Apr 19 2018

In this week's Weekly Insights (this is Part Two):

-Investing In Oil Price Momentum, And Other Twists
-Conviction Calls
-G8 Education, A Yield Trap?
-NextDC, An Update

-Willem Buiter, Myth Buster
-Rudi Talks (updated)
-Rudi On TV
-Rudi On Tour

[Note the non-highlighted items appeared in part one on the website on Wednesday]

Conviction Calls

By Rudi Filapek-Vandyck, Editor

Fund managers at Wilsons have increased exposure to BHP ((BHP)) and to BlueScope Steel ((BSL)) recently, while waving goodbye to Sydney Airport ((SYD)) and to Macquarie Atlas Roads ((MQA)). However, the big deal occurred over at stockbroker Morgans where some of the model portfolios have given up on IPH ltd ((IPH)), with the holding having seriously failed to live up to expectations.

Let's call it a value trap, shall we?

Those responsible for the investment still called it a "difficult decision", given apparent value in today's beaten down share price, but they decided that switching into Bank of Queensland ((BOQ)) ahead of the interim results release was a better way to play the current context. Interestingly, Morgans has also nominated four candidates that might be added in case of further share price weakness: Link Administration ((LNK)), Australian Finance Group ((AFG)) -still erroneously referred to as AFG Group- Rio Tinto ((RIO)) and Aristocrat Leisure ((ALL)).

IPH ltd listed on the ASX in late 2014 and at first enjoyed buoyant investor sentiment which took the share price to $9.30 by late January 2015, but it has been relentlessly downhill since. Recently, the shares have traded range bound around the $3.50 price level, not far off from prices seen at the time of the IPO now 3.5 years ago.

The company's market updates have on multiple occasions unimpressed the market, with further share price losses the result. Over at stockbroker Morgans, the experts concede "Ultimately our confidence in IPH's management, and to a lesser extent its business model, have taken a knock following recent results falling short of expectations".

Morgans' Growth Model Portfolio has been topping up on Apollo Tourism & Leisure ((ATL)) and Motorcycle Holdings ((MTO)), while selling Seek ((SEK)) and CYBG ((CYB)). Preferred yield/income plays are Aventus Retail Property ((AVN)), Viva Energy REIT ((VVR)) and Centuria Industrial REIT ((CIP)).

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