Trading Day

The S&P/ASX 200 Index closed up 1.6% or 66 points today to 4071. In after hours trading, the market is steady whilst the Euro and US futures point to similar gains.

Asian markets experienced similar moves, with the Nikkei 225 up 1.69% to 8662 points, whilst the Hang Seng was steady at 19073 points.

In other risk assets, the AUD returned to just above 1.02, whilst WTI crude fell slightly to to $88.57 USD per barrel.

Gold was weakly bid up in the morning Asian session after crawling above the $1800 low again, and is now at $1812 USD an ounce.

Movers and Shakers
A generally green day across the board on the ASX, with energy and healthcare sectors the biggest gainers, whilst IT was slightly off.

The banks were all bid up between 1.7% and 2.6% percent. Macquarie (MQG) gained 1% whilst Woolworths (WOW) recovered over 1% from its recent falls.

BHP Billiton (BHP) climbed almost 2% alongside RIO booked 1.5% gains

The Charts
Intraday selling has put downward pressure on the market in recent days. There is still no commitment to get over the 4100 point level.


  1. Hi The Prince,

    Your call on COH was somewhat out. What is the time horizon of your call? medium term (12mths to 3yrs) or long term (> 3yrs)?

    Key to COH’s value would be its growth, where do you see its growth coming from?

  2. Our valuations are done within a 5 year time reference. If a suitable ROR (15% CAGR after CGT) is reached before that time, and there are other better investments, we’d sell before then (and have done so as part of our private fund).

    COH normalised earnings CAGR has been 22% since 2001, although in 2004 and of course FY2012 it suffered (and will suffer) a reduction in earnings. Future earnings are always unknowable.

    Growth comes from the fact that COH cannot supply enough implants to its current market, and that market is growing (particularly developing). COH is no longer in the start up or near middle growth stage, it is a maturing business that still reinvests almost one third of earnings (at nearly 50% normalised ROE to shareholders)

    The recall has of course hurt COH’s intangible value, and this is an unknown quantity. It is probable that future PE ratios, combined with the maturing of the business will be forced down.

    Coupled with an FX risk, that’s why you apply a margin of safety, and more importantly, you develop and carry out a robust capital allocation model.