Written by Wilson Asset Management
10 October, 2019
The challenge for WAM Global is finding decent returns in markets where cyclical stocks are unloved, but money is pouring into high-tech growth stocks.
Catriona Burns is blunt on the conundrum of falling interest rates and surging equity markets.
“I don’t think that disconnect can continue for much longer. The question is: Are bond markets or equity markets reading the future correctly?”
As the lead portfolio manager for Wilson Asset Management’s listed investment company WAM Global, Burns is watching data points from the US economy closely, and trying to get a sense of the state of the economy from on the ground.
We are not trying to call whether a recession is imminent.
“You’ve got to do some digging, get on the ground and go out and meet management.” Part of this is being willing to look outside the US.
For example, one of Burns’ picks for 2020 is Japanese supermarket operator Kobe Bussan. Unlike in Australia, where the grocery sector is relatively concentrated, the top 10 players in Japan have a total market share of about 15 per cent.
Burns says Kobe Bussan, which has seen its shares rise 61 per cent since the start of the year, looms as the equivalent of Aldi in the Japanese market.
“They’ve got a really compelling private label offering, at prices that are 50 per cent to 70 per cent below other players in the market, because they’ve got a vertically integrated model.
“Japan has some exciting opportunities, but sometimes it does get overlooked in favour of the US, and there are some high quality companies that we still find are well placed to grow despite the difficult macro environment.”
Come see Wilson Asset Management talk about their strategy in more detail on Saturday 26 October at 2:00pm, or Sunday 27 October at 3.00pm at the Property Buyer & Investor Expo. Get your free tickets here.