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
Women are expected to inherit US$124 trillion through the intergenerational wealth transfer, but Capital Group has found they are twice as likely to rely on social media for advice over a financial adviser.
Challenger Investment Management has raised $350 million during the offer period for its new ASX-listed investment structure.
A week after Lonsec downgraded multiple funds from Metrics Credit Partners, rival research house Zenith Investment Partners has opted to retain its ratings for the same funds.
Strong adviser engagement has helped Praemium reach $1 billion in inflows on its Spectrum offering, with a deal with Western Australian wealth firm Euroz Hartleys expected to add as much as $2 billion.
