Report Date: 2 November 2015
Where are we in the Cycle?
Looking back on October, four out of the five PortfolioDirect cyclical
guideposts remained on “red”. Only the stance of monetary policy remained
supportive but central bank fund flows drive asset prices not the real
economy on which the mining industry depends. More...
Market Directions
Sharp share market reversals typified October. The mining/materials
sectors were one of the biggest winners but the momentum was drifting badly
by the end of the month with declining stocks beating advancers on the
Australian market by four to one in the last week.
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Portfolio Performance and Positioning
Portfolio model returns beat the benchmark in October for the sixth
consecutive month and for the nineteenth month out of the 22 months since
the beginning of 2014. There were no recommended portfolio composition
changes in the past week. The biggest gains in October came from Phase I
stocks benefiting from the bottom of the cycle leverage.
More...
Stock Reviews and Rating Analysis
A PortfolioDirect rating update for Excelsior Gold
(EXG:AU) was completed recently. There was a time when the quality
of a mining project was judged by how much capital its development
required. Not now. Excelsior Gold has escaped the capital market burden
confronting many other gold producers by striking a deal with the owners of
the Paddington mill to process its mine output on a ‘pay as you go’ basis.
Cutting back on capital spending commitments slows development and reduces
near term profitability but also raises the likelihood of development
actually occurring. Companies display a longer duration growth trajectory as
they deploy operational cash flows to support ongoing production expansions.
The resulting positive value momentum should support future market value
appreciation.
For recent company reports...