07/04/2016: General advice on investing in ASX
Good afternoon, members, and welcome to Rivkin Virtually Live Local for Thursday, the 7th of April. I’m Scott Schuberg joined by Shannon Rivkin. How are you, Shannon?
Good, thank you Scott. How are you?
Very well thank you.
Any thoughts about ASX?
Yeah, I guess I continue to like ASX. There was always a big fear that it’s monopolistic position was going to be threatened by the introduction from SHIX and New Castle stock exchange a long time ago.
I think the reality is, it’s so entrenched in it’s position in Australia, that I think competition is just not going to make any difference. It’s continued to grow strongly. This continued talk of consolidation in the sector as well, they’ve obviously received interest in the past potentially looking at themselves in making a move as well. Very steady earnings.
It’s a good, high quality stock, like I talked about with Sydney airport before. I don’t think you can really go wrong with it over the long-term, but it’s not cheap and on that basis any concerns or sudden hickups, it can probably get hit quite hard.
They’ve got the ability to surprise with earnings, so while it’s not particularly cheap, I think it trades about 20 times. That doesn’t live up to it’s earnings growth, so it is a little bit expensive. However, they can have some really good years. Volume can change. There’s always that possibility that a bidder will come along. The government’s talked within that regard over the last couple of weeks. Legislatively, it’s become easier now for this thing to be taken out.
At the same time, it’s also easier now for the competition to come along and compete with them. It’s a double edged sword, but I’m holding a little bit of AO6 and I don’t mind it. It’s not paying horrible dividend yields. It’s not a terrible one to sit on. I’m chiefly there for the … I think this thing will be taken off the books at some point. There’s just a global consolidation. It makes sense. It’s sort of an infrastructure asset in a way. It’s really trendy around the world in m&a space