Cadence Capital Limited returned a negative gross performance of 2.8% in August, compared to the All Ordinaries Accumulation Index which was down 0.7% for the month. The top contributors to performance during August were Newmont, Red 5, Tourism Holdings Rentals, AMP and Stanmore Coal. The largest detractors from performance were Meta Platforms, Iris Energy, Whitehaven Coal, Qantas, and Smartgroup.
Tourism Holdings reported a strong result in August, significantly beating its profit guidance. It also declared it’s first dividend since the COVID-19 pandemic. In 2024 it expects performance to be positively underpinned by continued strong motorhome rental yields, and synergy benefits following the merger with Apollo Tourism and Leisure.
Qantas has been attracting negative press recently, primarily due to the ACCC alleging that Qantas sold tickets on flights that had already been cancelled, and secondly because the Australian government did not allow Qatar airlines to fly more frequently into Australia, which some media commentators are suggesting was due to government lobbying by Qantas aimed at reducing competition. These factors have negatively impacted on the Qantas share price and caused Alan Joyce to bring his retirement as CEO forward.
Fully Franked Year-End Dividend
On 30 August 2023, the Company announced a 3.0 cents per share fully franked year-end dividend, bringing the full-year dividend to 7.0 cents per share fully franked. The full-year dividend of 7.0 cents per share fully franked equates to a 9.0% fully franked yield or a 12.8% gross yield (grossed up for franking credits) based on the share price of $0.78 per share on the date the dividend was announced. After paying this dividend, the Company still has 18.7 cents per share of profit reserves to pay future dividends.
The Ex-Date for the dividend is 16 October 2023. The payment date for the dividend is 31 October 2023.
The dividend re-investment plan (DRP) will be in operation for this final dividend. The DRP will be priced at the weighted average share price over the relevant DRP pricing period. The Company intends to implement an on-market buy-back to repurchase the shares it issues under the DRP. This buy-back will operate when the CDM share price is trading at a discount to the Pre-Tax NTA. Cadence Capital Limited is looking to support its DRP registered shareholders to reinvest their dividends at a discount to NTA, instead of leaving them to manage market orders for reinvesting their dividends.
If you are not registered for the DRP and you would like to participate, please contact Boardroom on 1300737760.
CDM Share Price discount to NTA
At the time of writing this newsletter, CDM is trading at a pre-tax NTA discount of around 6% whilst holding significant cash balances. If all the shares in the portfolio fell by 11%, the pre-tax NTA would still be above the share price. To put it another way, the shares in the portfolio can be bought at a 11% discount to their underlying value.
In the coming weeks we will be releasing the year-end audiocast which will discuss the Company’s performance, the portfolio composition, its current investment themes and holdings, and the outlook for the rest of the year.
Fully Franked Dividends Declared Since Listing
Historic Portfolio Exposure
Portfolio Sector Analysis
Portfolio Market Capitalisation Analysis
To hear CDM’s latest Quarterly Audiocast please click here. In this audiocast, Karl Siegling firstly discusses the Company’s recent performance, CDM’s Total Shareholder Return (incl. franking), CDM’s Share Price vs NTA and the current composition of the portfolio. Karl then discusses some of CDM’s current investment themes and then looks in detail at two of its current investments, Newcrest Mining and Meta Platforms. Karl finishes with the outlook for the rest of the year.
To view all previous Cadence webcasts and interviews please visit the Media Section of the website.
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