Author: Hugh Dive

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• February proved to be a very eventful month, mainly dominated by Australian corporate earnings, which were much better than expected and revealed that many Australian companies are managing higher interest rates and inflationary pressures better than expected.
• The Atlas High Income Property Fund fell by -1.5%, mirroring the wider property sector. Overall, it was frustrating not to February showed companies we own to be in good health, mainly owing assets with high-quality tenants that offer non-discretionary goods and services, whose demand is likely to remain consistent in a slowing economic environment.
• It was pleasing to see the companies held in the Fund increase their dividends on average by +12% in the February reporting season, with every company in the Fund paying a dividend. Atlas sees that rising dividends are a better measure than earnings per share of a company’s actual health. While in the short term, the market is a voting machine, rewarding popular companies, in the long term, it is a weighing machine and recognises companies that consistently pay dividends to shareholders and increase income at levels above inflation.

Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2023.

JB Hi-Fi could buck the broader retail trend in a tough year ahead

There are good reasons to believe JB Hi-Fi (ASX: JBH) will buck the trend in what will almost certainly be a tough year for the consumer discretionary sector. That’s according to Hugh Dive of Atlas Funds Management. JBH is one of Australia’s top 10 retailers in terms of market cap.

Is CSL a $300 stock? Fundies unpack its world-class valuation

“When times are good, people don’t sell their blood to CSL,” he said. Indeed, the average 12-month price target is well above today’s price tag at $333, implying CSL is a steal at $307. Sixteen, or 84 per cent, of analysts surveyed by Bloomberg, have a “buy” rating on the company.

• In January, the “Santa Claus” rally came late investors globally shrugged off the concerns that dominated December, namely a recession in the USA and rising inflation. The benchmark 10-year bond rate fell 0.5% to 3.55% based on the
  assumption that central bank rate tightening was ending. This saw the more speculative equities and listed property trusts rally in January. However, these same companies saw their share prices fall in early February, with the US Federal Reserve and the RBA raising rates!
• The Atlas High Income Property Fund had a solid month gaining +3.7% and erasing December’s falls. Whilst pleasing, share prices in December and January always move with vague macro-economic fears and greed, not actual earnings,
  as they trade in a vacuum with company management teams precluded from speaking to the market before releasing their financials in February.
• Atlas is looking forward to the February profit season, which we expect will show both the resilience of company earnings from the companies held in the portfolio and that management will guide to higher distributions through the rest of 2023.

Go to Monthly Newsletters for a more detailed discussion of the listed property market and the fund’s strategy going into 2023.