Rudi’s View: Uncorrelated Yield & More Conviction Calls

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 | Oct 18 2019

Dear time-poor reader: more research on ASX-listed uncorrelated yield options, and more Conviction Calls from stockbrokers.

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

-Does (Lack Of) Substance Mean (Lack Of) Momentum?
-Conviction Calls - Part One
-Uncorrelated Yield - Research Reports
-Conviction Calls - Part Two

-Rudi Talks
-Rudi On Tour

[Items not in bold were published in Part One on Thursday morning]

Uncorrelated Yield - Research Reports?

By Rudi Filapek-Vandyck, Editor FNArena

Australian investors have increasingly become more gun-shy when it comes to deciding upon further investments to boost the income potential of their portfolios.

Sure, there is nothing to be gained from sticking with term deposit-like options, but on the other hand, were global equity markets to experience a repeat of late 2018, or worse, that's not an attractive proposition either.

In addition, I have been warning about the increasing likelihood the year ahead will see, on balance, less dividends being paid out in total by ASX-listed companies, which in simple terms means: dividend cuts are coming. Plenty of speculation around bank dividends are no longer as safe as they were, say, five years ago.

The thirst for income is not drying up, which is probably why a new generation of yield providers is enriching the local bourse. And investors, of course, are increasingly paying attention, as witnessed here at FNArena through enquiries and questions from subscribers and other investors.

I wrote about this new market segment a few weeks ago in "The Right Lessons To Learn"

More recently, colleague Greg Peel, put together a general snapshot in "SMSFundamentals: Finding Yield In A Low Rate World"

For those who want to add to their own research on any of the ASX-listed entities involved, we offer the opportunity to download research reports published by Independent Investment Research (IIR):

-Gryphon Capital Income Trust ((GCI)):

-KKR Credit Income Fund ((KKC)):

-MCP Master Income Trust ((MXT)):

-Moelis Australia Fixed Income Fund:

-NB Global Corporate Income Trust ((NBI)):

-Partners Group Global Income Fund:

-Perpetual Credit Income Trust ((PCI)):

-Qualitas Real Estate Income Trust ((QRI)):

We equally received a number of enquiries about the upcoming Latitude Financial Group IPO, for which we do not have a research report to share with you. In my humble opinion, investors will be better off ignoring the ubiquitous market machine that is now enveloping the local market ahead of the Latitude IPO, from which many an institution will be deriving fees.

Non-aligned analysts at Morningstar recently published their view on the Latitude Financial IPO. Here are some of the key conclusions drawn by Morningstar:

"Our research on the upcoming Latitude IPO concluded with a fair value estimate of $2.00 per share at the lower end of the $2.00–$2.25 indicative price range. Consequently, it is not a bargain even at $2.00, and the process of bidding for stock at an unknown price is annoying.

"While Latitude is launching a buy-now-pay-later product to compete with the likes of Afterpay Touch and Zip, we suggest buy later, not now and south of latitude $2.00

According to media news reports, the Latitude introductory share price was at first dropped to $1.78, then canceled altogether. 

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