During the first of our fortnightly portfolio and market updates focussing on the investment implications of the spread of COVID-19, Jacob Mitchell discusses how Antipodes views companies and sectors during a market crisis.
To view the full webinar, including comprehensive insights into where Antipodes sees value opportunities in current global markets click here.
You can register for upcoming webinars in the series here.
Episode 1 Part 4 – Transcript:
Thinking about which companies and which sectors come out of this in better shape, or are positioned well for a potential change in the regime.
We genuinely believe that the underperformance of low multiple stocks is – yes there’s arguably some cases where you could say that is justified by some of those sectors and some of those companies being in our view, traps – but there is also something that is just an outcome of lower interest rates.
What I would encourage investors to think about is, in a world where, if you think about Japan – and we communicated last year a lot about what we learnt from our experiences investing in Japan – was that even in a world of very low interest rates in Japan the equity risk premiums stayed quite high. That was because investors quite rightly understood that holding down interest rates encourages disruption and ultimately you do get the zombification of many companies, many sectors. You know, the weaker companies don’t go broke, returns on capital fall. You ultimately get protected not by avoiding low multiple stocks but by buying companies that are genuinely resilient.
In environments where stimulus starts to get traction there is definitely a period where economic growth accelerates and typically the cheaper cyclicals outperform. But don’t just buy them because they’re on low multiples, buy the ones that you think have ultimately got secular tailwinds which have been hidden by investor’s concerns around the near term economic environment.
View the full webinar
This communication was prepared by Antipodes Partners Limited (ABN 29 602 042 035, AFSL 481 580) (Antipodes). Antipodes believes the information contained in this communication is based on reliable information, no warranty is given as to its accuracy and persons relying on this information do so at their own risk. This communication is for general information only and was prepared for multiple distribution and does not take account of the specific investment objectives of individual recipients and it may not be appropriate in all circumstances. Persons relying on this information should do so in light of their specific investment objectives and financial situations. Any person considering action on the basis of this communication must seek individual advice relevant to their particular circumstances and investment objectives. Subject to any liability which cannot be excluded under the relevant laws, Antipodes disclaim all liability to any person relying on the information contained on this website in respect of any loss or damage (including consequential loss or damage), however caused, which may be suffered or arise directly or indirectly in respect of such information.
Any opinions or forecasts reflect the judgment and assumptions of Antipodes on the basis of information at the date of publication and may later change without notice. Any projections are estimates only and may not be realised in the future. Information on this website is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. Unauthorised use, copying, distribution, replication, posting, transmitting, publication, display, or reproduction in whole or in part of the information contained on the website is prohibited without obtaining prior written permission from Antipodes.
Pinnacle Fund Services Limited ABN 29 082 494 362 AFSL 238371 is the product issuer of funds managed by Antipodes. Any potential investor should consider the relevant Product Disclosure Statement available at www.antipodesonespartners.com when deciding whether to acquire, or continue to hold units in a fund. The issuer is not licensed to provide financial product advice. Please consult your financial adviser before making a decision. Past performance is not a reliable indicator of future performance.