Nikko AM backs troubled Crown Resorts
Despite the surrounding controversy over Crown Resorts, Nikko Asset Management (Nikko AM) has invested in the company after its share price became an attractive offering.
Crown had been hit by troubles regarding the closure of its sites for COVID-19 reasons, the opening of its new Sydney casino and hotel was postponed in light of an inquiry by the Independent Liquor and Gaming Authority, and questions were asked over whether its owner James Packer was an appropriate person to run the company. Shares in the firm had fallen 15.7% since the start of the year.
However, Nikko AM believed the company would come out “in great shape” once the troubles were resolved.
Brad Potter, head of Australian equity, said: “Crown Resorts, a company that we have not invested in for years, became cheap due to a combination of the Victorian shutdown and the recent regulatory review.
“ESG – particularly governance – has always been an issue for us in regards to Crown. However, the review has acted as a catalyst to clean up the business and governance, and we believe Crown will come out of it in great shape. ESG issues that can be solved provide great entry points for a patient value investor.”
Crown was also held by other funds such as IML Industrial Share, AMP Capital Equity Income Generator and Perpetual Pure Equity Alpha with the largest weighting being a 10% allocation in the Perpetual Wholesale Geared Australian fund.
Other additions to the portfolio included toll road operator Transurban and Coca-Cola Amatil. Shares in Transurban were down 5% since the start of the year but Coca-Cola Amatil had reported positive gains of 19%.
“Unusual opportunities arose during the shutdowns as typically defensive and safe companies found their businesses essentially shut,” Potter said.
“Nikko AM thus entered into attractive new positions in Transurban and Coca-Cola Amatil, which we have not owned for many years given lofty valuations. However, based on our long-term mid-cycle sustainable earnings process, they became cheap.”
AUTHOR
Laura Dew
Recommended for you
Ten Cap has announced it will launch its first active ETF on the ASX later this month, expanding retail access to its flagship Australian equities strategy.
Flows into cash and fixed income ETFs rose by 46 per cent in October with investors particularly demonstrating a preference for Australian credit ETFs as they move away from AT1 bank hybrids.
Having identified Australia as a growth market, J.P. Morgan Asset Management has collaborated with Betashares to offer two multi-asset managed portfolios on its Direct platform, the first funds on the platform from an external manager.
First Sentier has announced it will transition the Stewart Investors investment management responsibilities to its affiliate investment team in light of three senior portfolio manager exits.
