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Starting with quality of the earnings, the data was encouraging. Revenue growth continues to be strong reflecting the recovery in the mining cycle. More encouraging was the expansion in EBITDA margins (from 16.5% to 19.2%) and this was despite the disclosure of an additional $5 million invested...

The vast majority of stocks in the Australian microcap equities market are still lacking in formal coverage by brokers and analysts, leaving vast opportunities for value investors to uncover hidden gems in the sector. That is the view of leading equities manager Perennial Value, whose Microcap...

Where do you look to invest in a low interest rate environment? It’s maybe simpler better to start by ruling out the assets that are likely to underperform, and work up from there. The least exciting, as ever these days, is cash or term deposits at...

It is conventional wisdom that the Australian share market is largely comprised of mature businesses with a particular emphasis on financials and resources. Happily, if you explore beyond the stocks covered by the larger brokers it becomes obvious that this is not the case and that...

One of the biggest mistakes amateur investors make is to get more concerned with fees than with net returns. They are mesmerised by the prospect of saving money rather than growing their super pie. It’s true, as superannuation expert Jeremy Cooper memorably pointed out not long after...

After several years of underperformance, investors were initially attracted to the better valuations which were available in Small Caps. However more recently there has been a noticeable improvement in risk appetite. This has added fuel to the rally with investors taking comfort from the almost...

Why have small caps been performing so strongly? Do you expect this to continue, and why? After several years of underperformance investors were initially attracted to the better valuations which were available in Small Caps. However more recently there has been a noticeable improvement in risk...

Recent broker reports have highlighted that the Australian Small Cap market is beginning to look stretched from a valuation perspective. The chart below tracks the average P/E ratio of the Small Cap market over time and clearly shows that it is currently at elevated levels. Forward P/E...

Modern portfolio theory, a hypothesis from the 1950’s (Markowitz) has been the traditional strategy for protecting portfolios from drawdown. Investors are increasingly asking whether this is still the best way to build a resilient portfolio. The traditional view is that diversification should be enough to...

Donald Rumsfeld’s phrase has joined the group of terms synonymous with risk. When he said this in 2003 he was not talking about financial markets, however financial markets have adopted it. Today there are many known (but not widely known) risks in the derivative instruments...