Wednesday, December 15, 2010

Two slightly late updates

I have made two investments over the last month which I managed not to post:

1. I made a small FX investment in the NZD, believing that it was undervalued (both in general and, in particular, relative to the AUD). Specifically, I was expecting the Reserve Bank to implement an interest rate rise which had been delayed because of the Christchurch earthquake. I was proved wrong, and have realised a loss of 1.4% on my investment as of last week when the contract closed. As I received NZD when the contract closed, I now need to decide what to do with that money;

2. I purchased shares in Automotive Holdings (AHE), listed on the ASX. This is a company which should benefit from a robust Australian economy and should not be adversely affected by the strong AUD. The company has reasonable growth plans in place for both its main car retailing business and its smaller logistics business. While I initially had concerns about the debt levels, a material part of the debt is the floor plan (i.e. inventory financing). The company sells on a FY2011 expected PE of less than 10x and expected dividend yield of more than 7%. I paid AUD2.35 per share.

1 comment:

Ben McGrath said...

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