Nikko AM backs troubled Crown Resorts

Nikko crown ESG Aussie equities

11 December 2020
| By Laura Dew |
image
image
expand image

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 ShareAMP 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.”

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

3 weeks 4 days ago

This verdict highlights something deeply wrong and rotten at the heart of the FSCP. We are witnessing a heavy-handed, op...

1 month ago

Interesting. Would be good to know the details of the StrategyOne deal....

1 month ago

Insignia Financial has confirmed it is considering a preliminary non-binding proposal received from a US private equity giant to acquire the firm. ...

1 week 3 days ago

Six of the seven listed financial advice licensees have reported positive share price growth in 2024, with AMP and Insignia successfully reversing earlier losses. ...

5 days 19 hours ago

Specialist wealth platform provider Mason Stevens has become the latest target of an acquisition as it enters a binding agreement with a leading Sydney-based private equi...

4 days 23 hours ago