Barramundi lifts cash holdings after stock rally

Tuesday 27th October 2009

Barramundi Investments, the Fisher Funds-managed investor in Australian small-to-medium listed companies, held more cash last quarter, taking advantage of the rally to trim its holdings.

Cash grew to 18.5% of the portfolio as at September 30, from 16.5% at June 30 and 14.8% as at March 31th. Among shares sold, Barramundi reduced its stake in Arrow Energy to just over 10% of total investment from around 20%. The selldown reflected “taking some chips off the table” after the rally rather than a change of view on the stock, the fund said in its quarterly update today.

Barramundi has benefited from a revival in shares across the Tasman this year, helped by a resilient economy that skirted recession and enjoyed ongoing Chinese demand for raw materials. The S&P/ASX Small Ordinaries Index has climbed 80% from its lows in March, having slumped 63% in 2008. Barramundi’s NZX-listed shares have soared 150% from their March low. They fell 11% to 75 cents today.

“Returns were driven by surprisingly strong company earnings and by the continued improvement in economic data and hence investor sentiment,” said Barramundi senior portfolio manager Frank Jasper.

“The economy has rebounded much more strongly than investors had expected both in Australia, where the economic performance has been truly amazing given the scale of 2008 global meltdown, and around the world,” he said.

Barramundi is looking for new shares to buy.

“Our view tends to be on a stock by stock basis, compared with others who might have a top down view,” Jasper said.

Stocks that may be particularly attractive now are the engineering and mining support companies whose share prices took a particular pounding during the financial crisis. As Australia’s mining companies gear up for new growth, those companies servicing them will in turn be expanding.

“There’s nothing over the line yet, but we do see some strong growth emerging,” Jasper said. Barramundi’s net tangible asset value (NAV) grew by 22% to 91 cents as at September 30.

In August, the company announced the adoption of a fixed long-term dividend policy where quarterly distributions are made to shareholders of 2% of average NAV. Jasper said Australian shares were hit too hard by the global downturn.

“The companies’ underlying share prices went to very depressed levels as Australian investors panicked and oversold,” said Jasper. “Prices went ridiculously low compared to the real value in these firms. There’s been a strong bounceback as investors realized that prices had become unbelievably attractive.”

Fisher Funds also manages the New Zealand equities fund Kingfish and Marlin, a global equities investor.

Businesswire.co.nz

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