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Investing
Take a peek at the investment portfolios of Australia’s bigwig finance experts
Anthony Black - October 9, 2008
 In times like these it’s comforting to know how other investors are behaving – particularly the experts. Where are Australia’s bigwig finance experts stashing their cash? Are they madly selling stock and property, or are they calmly buying back into the market? Which stocks do they hold in their share portfolios? Let’s find out.
CommSec chief equities economist Craig James recently added ANZ Bank to his existing portfolio of Commonwealth, National and St George Banks, Qantas, Telstra, BHP Billiton, Independence Group and Mincor Resources. James says he bought ANZ at $16 levels as the dividend yield was approaching 9 per cent as the share price fell. ANZ’s share price may fluctuate in these volatile times, but James considers the bank a good long-term investment. “As a long term investment, ANZ is a no brainer,’’ a confident James says. He says he may soon buy Woolworths as “it’s a good stock for portfolios’’ and offers solid long-term value.
But James, who owns a Sydney home and Brisbane investment property, is mostly topping up his cash reserves as part of a plan to meet his children’s education. The father of three says apart from considering Woolworths, he’s waiting for market volatility to subside before working out a suitable long-term equities strategy that includes possibly re-weighting his portfolio. He believes a lot of money is on the sidelines waiting to be invested in the ASX when stability returns. James says investing in cash is a relatively short-term strategy as shares and property out-perform cash over the longer term. But appetite for risk, time frames and personal circumstances need to be considered when investing in any asset class, particularly shares in today’s highly volatile financial markets. James says jittery investors fleeing the sharemarket now to invest in cash or fixed interest run the risk of missing a recovery in the stocks they sold. Also, he says, tax effectiveness should be considered when investing in cash as it’s taxed at the marginal rate.
Alex Dunnin, of financial services research group Rainmaker, is attacking his mortgage with additional sums of money to reduce debt and build equity in his Sydney home. Building equity is part of a medium-term plan to buy an investment property in Sydney, where, he says, a shortage of residential and investment stock will push up prices. Sydney property could be easily “out of reach’’ if you leave it too long to buy. “At the end of the day, people have to live somewhere and there is a massive shortage of rental stock in Sydney,’’ Dunnin says. “Paying down debt gives you the opportunity to borrow more.’’
Dunnin is a research director of a company that monitors superannuation performance and his super is invested in Australian and international equities. He considers superannuation a 60-year investment so the recent turmoil on global financial markets has not tempted him to switch from his fund of 75 per cent Australian shares and 25 per cent overseas equities. He has not altered his personal contributions since the credit crunch began unfolding about 13 months ago. “I’m sticking to my long-term super plan,’’ Dunnin says. “Finance markets will recover.’’ Dunnin says possibly topping up his partner’s superannuation is another viable investment strategy as she is working on a casual basis. Dunnin says negative super returns this year had interrupted strong gains of up to 20 per cent in previous years. “When you lose money, you think it’s the end of the world, but when you win, you forget about your losses,’’ Dunnin says,
Sharemarket veteran Michael Heffernan, of Austock, invests in Australian equities as he juggles his own personal portfolio and self-managed super fund. He says his super fund consists of Commonwealth, Westpac and St George Banks, BHP Billiton, Rio Tinto, Woodside Petroleum, Woolworths, Origin Energy, Bradken, Ausenco, CSL and Cochlear. He buys and sells stocks according to his outlook on future company performance and the economic conditions in global markets. He has offloaded ANZ and National Banks in response to rising bad debts, and WorleyParsons was sold as part of his 15 per cent rule. And that is, he sells a stock if the share price has fallen by more than 15 per cent from its most recent high point. He says: “I can always buy back a stock that I’ve sold if I feel a company is again offering good value. I’ve done that many times.’’ Heffernan says he has cash on the sidelines after trimming down his own personal portfolio to primarily BHP Billiton and Rio Tinto. He says is ready to buy more stock on signs of Wall St settling down, an improving global economy and investor sentiment.
Heffernan owns a home and investment property in Melbourne, but prefers sharemarket investing for building wealth. He says good quality stocks generally reward investors over time. And he likes the liquidity of the market as investments can generally be bought and sold quickly. Heffernan genuinely loves the sharemarket action and can easily recall the dates of momentous events here and overseas entwined with a myriad of market and stock statistics. He is a conservative investor who carefully considers risk. Heffernan says he buys stocks that are fundamentally sound, “well as far as you can tell in this environment’’, and are proven performers. He says he focuses on stocks offering a solid earnings outlook, from multiple and reliable steams, attractive dividends on top of a relatively low price/earnings ratio. Companies with little or no debt and offering a high return on equity certainly appear on his radar.
Heffernan says well-managed companies with an enviable earnings and performance history generally recover from hostile times before going onto prosper in stronger economies. He says there are always bargain hunters, but particularly now as the share prices of many good companies have been punished in response to the credit crunch and negative global sentiment. “Most of the time, I am fully invested in the sharemarket,’’ Heffernan says.
Anthony Black is a long-standing journalist, having worked in newspapers for more than 20 years. He was the Sunday Herald Sun’s finance editor for eight years and his reports were published in News Limited papers across Australia.
More articles from this edition of CompareShares:
Investing: Take a peek at the investment portfolios of Australia’s bigwig finance experts
Stocks: Top dividend paying stocks – how to find them?
Ask the expert: Before you start trading – ask yourself these 5 questions
Stocks: Top 5 CFD stocks for the week
World markets: Markets plunge despite global rate cuts
UK Crisis: Britain unveils bailout for major banks
Currency: Aussie dollar hits 5-year low overnight
Economy: No need for mini-budget, says Tanner
Mortgage: Big banks corner the mortgage market
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