In its August 2018 update, the Ellerston Australian Share Fund said it was active in re-weighting positions in its portfolio, adding to holdings that continue to look attractive against the fund’s assessment of long-term value.
The Origin Energy (ASX:ORG) share price was sold off following poorly received results, and as a result of being caught in the political crossfire as both sides of politics ratcheted up the rhetoric on electricity prices.
Ellerston said that whilst the noise may dampen short-term enthusiasm for the company, strong cashflow from its holding in APLNG, a rapidly improving balance sheet and the resumption of dividends in FY19 should see Origin shares re-rated over the coming 12 months.
Origin shares currently trade at $8.16.
The fund also increased its holdings in Treasury Wines Estates (ASX:TWE). Although Treasure Wines shares are not obviously cheap, Ellerson is attracted to the company for its improvement in the wine cycle, its stable of premium brands, and its superior earnings growth profile.
The latest TWE share price is $17.88.
QBE Insurance (ASX:QBE) shares have had a wretched time over the past 10 years, falling from around $28 down to today’s share price of $11.10. But you don’t make money by looking in the rear view mirror, with Ellerston adding to its QBE shares in August after the company beat forecast earnings and saw forward earnings revisions higher.
BlueScope Steel (ASX:BSL) was another ASX 200 company Ellerston was buying in August, the fund attracted to the company following its results and attractive mid-term outlook.
Last month the steel manufacturer announced a $250 million share buyback after reporting its full-year net profit more than doubled to $1.57 billion. Looking ahead, Bluescope is forecasting a 10 per cent jump in first-half 2018/19 underlying earnings before interest and tax.
Bluescope shares are currently trading at $16.84.
Ellerston said Nufarm (ASX:NUF) shares continue to have attractive valuation appeal. The fund previously said Nufarm shares were totally mis-priced, trading on a very attractive multiple of just 6 times FY19 consensus EBITDA. The fund said normally the best time to buy agricultural stocks is when it hasn’t rained for a prolonged period and everything is seemingly going wrong.
Nufarm shares continue to trade close to its August lows, currently swapping hands for $6.79.