What Worked Australia - 16 Dec 2016 - Profit taking into the end of the year

What Worked – Certainly not momentum this week. While last week saw a string selloff in momentum, in particular 12 month momentum, as profit taking into the end of the calendar year continues. While there was a slight uptick in the laggard names for the year, the real movements were in names that were up for the year. The metals and mining sector took a lot of the punches this week, with names like Resolute Mining (RSG, -13.3%), South32 Ltd (S32, +6.5%) and Orocobre (ORE, -9.8%) amongst the worst affected. It was not limited to that sector, and a2 Milk (A2M, -14.1%), Infinigen Energy (IFN, -3.5%) and Seven Group Holdings (SVW, -4.9%) also down this week.

Dividend Yield posted good results this week, largely on the back of the momentum sell-off.  Cromwell Property Group (CMW, +2.1%), Seven West Media (SWM, +6.1%) and Growthpoint Properties (GOZ, +3.2%) all posting positive returns for the week yet remaining amongst the highest yielding names in the index.

Who Moved – 24 names managed to move on higher than normal volumes this week, finishing up the year on a positive note volume wise. Seven West Media (SWM, +6.1%), Asaleo Care Limited (AHY, +4.5%) and AusNet Services (AST, +3.8%) all finishing the week higher on strong volume, while SKY Network Television (SKT, -15.3%), Santos Limited (STO, -8.4%) and Iron Mountain (INM, -7.9%) all finished the week lower

Summary

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What Worked Australia - 02 Dec 2016 - Earnings Revisions continue their outstanding run

What Worked – 1 Month Earnings Revisions have had a run of positive (albeit weak in all but 3 weeks) since the end of September; and this week was no different. Earnings Revisions saw its strongest week since May this week against the backdrop of an all but flat market. Santos (STO, +4.8%), Fortescue Metals (FMG, +2.6%) and Aristocrat Leisure (ALL, +5.0%) are among those names with the highest FY1 EPS Revisions over the last month and all giving good returns for the week.

PER also had a good week this week, the first strong showing since the abysmal week at the start of November.  Seven West Media (SWM, +5.1%), Flexigroup (FXL, +3.5%) and Metcash Limited (MTS, +6.3%) all rebounding this week, and still on the cheaper side of the market.

Who Moved – 11 nA good week for volumes as the year end looms. 22 names from the 200 moved on higher than normal volumes this week. The best of the positive movers included Origin Energy (ORG, +6.4%), Metcash Limited (MTS, +6.3%) and IOOF Holdings (IFL, +5.4%). On the flip side, Vocus Communications (VOC, -26.6%), Rio Tinto (RIO, -5.0%) and Amcor Limited (AMC, -4.0%) all finished up weaker.

Summary

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What Worked Australia - 25 Nov 2016 - Dull week for factors, great for the index

What Worked – A pretty dull week in terms of factor direction in the Australian market this week. Beta was the best performing factor, and maintains its position in the top ranked factors over the last 3 months. High Beta names ticked up making up losses from the previous week, and largely involved the miners. Santos Limited (STO, +7.5%), Whitehaven Coal (WHC, +9.0%) and South32 Limited (S32, +10.5%) all benefitting, while Fisher & Paykel health (FPH, -4.9%), Newcrest Mining (NCM, -3.9%) and Trade Me Group (TME, -3.0%) all took a hit.

ROIC did not perform well at all this week with the switch into Beta, with low return names like NewsCorp (NWS, -0.8%), AusNet Services (AST, -0.3%) and Boral Limited (BLD, -12.9%) all finishing the week weaker.

Who Moved – 11 names moved this week on significantly higher than normal volumes. Boral (BLD, -12.9%), iSentia Group (ISD, -6.4%) and Automotive Holdings Group (AHG, -5.4%) all finishing the week lower, while a2 Milk (A2M, +11.4%), Technology One (TNE, +8.0%) and IPH Limited (IPH, +6.7%) all finished up higher than the index.

Summary

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What Worked Australia - 18 Nov 2016 - High Dividend Yield and Large Cap names did well this week

What Worked – This week was all about high Dividend yield and Large cap names. High dividend yield names that did well this week were BT Investment Management up 11%, Asaleo Care up 8% and James Hardie Industries up 6%.

Growth names and names up over the last 12 months did not do well this week. Names up over the last year that went down this week were Saracen Mineral Holdings down 12%, Resolute Mining down 12% and Whitehaven Coal down 11%. Growth names that were also hurt were Aconex down 21%, Evolution Mining down 11% and Nextdc Limited down 9%.

Who Moved – 31 names moved on volume this week. On the positive side, BT Investment Management is up 11%, Transurban Group is up 5% and Iron Mountain Inc is up 4% on strong volume. Names mentioned above also moved on volume. On the other side, iSentia Group is down 29%, Aconex is down 21% and Whitehaven Coal Limited is down 11%. All down on strong volume.

Summary

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What Worked Australia - 11 Nov 2016 - Beta comes up Trumps

What Worked – Yes, pun intended. Beta ran this week with high Beta names coming off a two-week losing streak and hitting an 18-month high on an excess return basis. Whitehaven Coal (WHC, +3.3%), Santos Limited (STO, +6.2%) and Worleyparsons (WOR, +8.5%) all beating the index this week, while their low beta brethren such as Regis Resources (RRL, -6.0%), St. Barbara *SBM, -3.9%) and Saracen Mineral Holdings (SAR, -3.0%) all finished weaker.

Value in all its guises was also hit hard this week, with more expensive names posting great returns. Aconex (ACX, +12.2%), NextDC (NXT, +8.5%) and Western Areas Limited (WSA, +34.2%) all finishing the week more expensive, while Seven West Media (SW#M, -0.7%), Resolute Mining (RSG, -3.1%) and Nine Entertainment (NEC, -2.1%) all finished the week looking a little cheaper…

Who Moved – The biggest week in a long time for names moving on volume, with the vast majority of them finishing the week higher. 32 names moved on significantly higher than normal volumes this week, with Western Areas (WSA, +34.2%), SIMS Metal (SGM, +20.9%) and Independence Group (IGO, +20.2%) all finishing the week with great returns, while Caltex Australia (CTX, -3.0%), Evolution Mining (EVN, -2.4%) and Premier Investments (PMV, -1.0%) all finished the week softer on strong volume.

Summary

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What Worked Australia - 28 Oct 2016 - Momentum reversal as div yield bounces

What Worked – This week saw both long and short term momentum signals reverting in a poor week for the index overall. Momentum was largely hurt by profit taking in the names that were up over the last 12 months, while there was some buying into the laggards. One year performers that were hurt this week included Galaxy Resources (GXY, -4.3%), Resolute Mining (RSG, -9.9%) and Credit Corp Group (CCP, -10.0%), while Estia Health (EHE, +0.4%), Spotless Group (SPO, +1.0%) and Incitec Pivot (IPL, +1.4%) all managed to make positive returns for the week.

Dividend Yield, while it has been back and forth over the last month, finally saw an uptick in the higher yielding names in the market, however the numbers where largely driven by a sell-off in the low yielding space. Low yielding names that were hit this week included Australian Agricultural Company (AAC, -11.5%), Orocobre Limited (ORE, -8.6%) and Syrah Resources (SYR, -11.9%).

Who Moved – This week saw 14 names from the moving on higher than normal volumes. Four names managed to end the week in the positive, and included Aconex (ACX, +10.7%), Corporate Travel management (CTD, +3.4%) and Macquarie Atlas Roads (MQA, +1.7%), while Bega Cheese (BGA, -20.6%), Ardent Leisure group (AAD, -17.9%) and Wesfarmers Limited (WES, -8.6%) all finished the week significantly down and backed by volume.

Summary

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What Worked Australia - 21 Oct 2016 - Book rules as profitability sold

What Worked – PBR continued to produce solid numbers this week, but once again driven by a sell-off in the more expensive names by these measures in the market. That being said, the cheaper names on a PBR basis have produced excess returns consistently since June. Periods of value working like this have been historically followed by a large sell-off soon after. Expensive names on a PBR basis that were hurt this week included Amcor Limited (AMC, -4.9%), Dominos Pizza (DMP, -2.8%) and Iron Mountain Inc (INM, -4.0%) while some of the cheaper names saw positive returns like Origin Energy (ORG, +2.2%), Genworth Mortgage (GMA, +3.3%) and Santos Limited (STO, +3.0%).

Dividend Yield suffered this week also, with higher yielding names seeing a continued sell-off including Nine Entertainment Holdings (NEC, -4.8%), Seven West Media (SWM, -3.3%) and Cromwell Property Group (CMW, -2.7%). On the other side, lower yielding names bounced including Infigen Energy (IFN, +22.9%), NextDC (NXT, +9.6%) and Galaxy Resources (GXY, +4.5%) leading the charge.

Who Moved – 9 names from the 200 strong index managed to move this week on significantly higher than normal volumes. Finishing the week down included Crown Resorts (CWN, -17.0%), Start Entertainment (SGR, -9.4%) and Fisher & Paykel Healthcare (FPH, -4.2%), while Tatts Group (TTS, +14.6%), Credit Corp Group (CCP, +5.5%) and Tabcorp Holdings (TAH, +2.0%) all finished the week well above the index.

Summary

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What Worked Australia - 14 Oct 2016 - Big move out of expensive names and Growth names down

What Worked – For the first time this year Value signals have produced an IC of greater than 25%, a big number in terms of weekly results. This was not however the market buying cheap names, but rather a large sell-off in the more expensive names. Value itself has been working as an overall signal for the last few weeks, but while the cheaper names have continued upwards rather steadily, the more expensive names have been hurt. Since the beginning of August, more expensive names on an FY1 PER basis have underperformed the market by almost -2.5%, and off -3.8% from the mid-August peak. Names that are expensive on a forward PER basis that did poorly this week included Aconex (ACX, -4.6%), Nextdx Limited (-7.6%) and Technology One Limited (TNE, -5.4%). Technology Services as a sector saw no names posting a positive result this week.

Growth was negatively impacted this week also, although a more even distribution – the low growth names did well, while the high growth names were sold off. Syrah Resources (SYR, +5.4%), Goodman Group (GMG, +1.1%) and Westfield Corp (WFD, +1.6%) amongst the low growth names that outperformed the index this week, while Galaxy Resources (GXY, -9.0%), Orocobre Limited (ORE, -3.3%) and Bellamy’s Australia (BAL, -4.6%) where all sold off while being amongst the highest growth names in the index.

Who Moved – Not a big week for volume this week, with 7 names from the 200 moving on higher than normal volumes. Those that underperformed this week included OFX Group (OFX, -10.7%), Bank of Queensland (BOQ, -0.8%) and Tabcorp Holdings (TAH, -0.8%), while BT Investment Management (BTT, +10.6%), Sigma Pharma (SIP, +1.0%) and Telstra (TLS, +1.0%) all finished the week higher.

Summary

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What Worked Australia - 07 Oct 2016 - Beta and Short term momentum rockets

What Worked – This week saw Beta moving strongly, along with names that have done well over the last month. Metals and miners took off this week, and not a small cap driven move either. Santos (STO, +10.8%), South32 Limited (S32, +5.4%) and Beach Energy (BPT, +8.4%) just some of the high beta names that well outperformed the index this week. While the names that have performed well over the last month have done well this week, the biggest movers were in the names that have underperformed. TPG Telecom (TPM, -4.8%), Vocus Communications (VOC, -6.4%) and Bluescope Steel (BSL, -4.1%) were sold off further this week.

Names with strong EPS Revisions over the last 3 months also saw a selloff this week. Amongst them, Saracen Mineral Holdings (SAR, -15.6%), Independence Group (IGO, -5.7%) and Newcrest Mining (NCM, -5.6%) all hit this week, and all having very strong earnings revisions.

Who Moved – Not a big week for names moving on volume being a shorter trading week. Only 4 names out of the 200 managed to move on significantly higher than normal volumes. For those coming off this week there was Syrah Resources (SYR, -16.4%) and TPG Telecom (TPM, -4.8%), and those finishing the week higher were Henderson Group (HGG, +13.4%) and Southern Cross Media (SXL, +5.1%).

Summary

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What Worked Australia - 30 Sep 2016 - Div Yield hurt once again

What Worked – The sell-off in high yield names continued from last week into this week with some of the highest yielding names names taking a hit. Genworth Mortgage (GMA, -0.7%), Cromwell Property Group (CMW, -2.1%) and Suncorp Group (SUN, -4.0%) among the worst affected, while the lower yielding small cap names bounced against the general market. Bradken Limited (BKN, +4.3%), Karoon Gas (KAR, +4.9%) and Sundance Energy (SEA, +8.1%) all posting strong returns for the week.

ROE also continued its decline in performance, ranking it amongst the worst performing factors over the last 6 months. Platinum Asset Management (PTM, -1.6%) Magellan Financial (MFG, -3.5%) and Sydney Airport (SYD, -0.3%) all taking a hit this week.

Who Moved – Only 9 names managed to move this week on higher than normal volumes. Finishing the week lower and backed by volume was Southern Cross Media (SXL, -8.5%) and Premier Investments (PMV, -5.3%), while SAI Global (SAI, +29.7%), AGL Eneregy (AGL, +9.0%) and Nufarm (NUF, +4.2%) all finished higher.

Summary

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