Ask a fund manager
The Motley Fool talks to the best in the industry so you can get an idea of how professionals think. In this issue, Shaw and Partners Senior Investment Advisor Adam Dawes offers us a trio of interesting buying tips.
Investment style
The Motley Fool: How would you describe your services to a potential customer?
Adam Dawes: I work for Shaw and Partners, but I’m a stockbroker who deals with clients to talk about their financial wealth, increase their financial wealth, and look after their investment needs. It’s pretty simple.
MF: Do you have a particular investment philosophy?
AD: Our investment philosophy is always to look at the best companies within the ASX or the S & P / ASX 300 (ASX: XKO). But then have a little more alpha to try to find some of these smaller companies that will really excite your clients ’portfolios.
But generally, stick to this main aspect of the portfolio of things, and then just try to find some of these smaller stocks that will perform better over the longer period.
MF: Does the horizon sound longer in the long run than in the short run?
AD: Well, it’s long-term. I think you have to be, in investing.
People, they want to be rich in a year. And I say, “Well, I’m not that kind of advisor.”
The most popular stocks of ASX
MF: What are the top three stock purchases right now?
AD: Okay. So right now, we really like Wesfarmers Ltd (ASX: WES). Obviously, there is a lot of talk not only about the discretionary side of the consumer business, but about other businesses that have it, which is lithium battery technology and that sort of thing. So I think he will definitely do well.
We saw the market update numbers at Wesfarmers the other day. So I think [it’s a] good quality blue-chip stock. I think it’s a good buy at the moment.
MF: The stock price has gone down a bit, right?
AD: Yeah, he certainly did. That’s why I think there’s a definite value right now.
Speaking of prices that have gone down, so there are [also] Xero Limited (ASX: XRO). It looks very, very good. Down there, it’s $ 87, $ 88 where it is today.
I think it is certainly one of those, those technological values that have stuck more than 40% and look pretty good in the future.
My third is a small speculative value, which is what I have myself. It is a company called Terracom Ltd (ASX: TER) and is a coal reserve.
This, obviously, coal is a bit on the nose right now, but it’s certainly a very interesting business.
MF: The stock price has gone spectacularly well this year.
AD: Yes, yes. We have a lot of customers at 50 cents and we will continue to do well because they have just paid off all the debt they have had for the last two or three years. All this has been paid for now.
And they have talked about returning to the market to be a dividend-paying stock in the future.
Now you never buy a stock of dividend resources, but Terracom wants to pay some pretty big dividends nearing the end of the fiscal year and the end of the calendar year. And they have a mine called Blair Athol, which is a former mine of Rio Tinto Limited (ASX: RIO). And certainly with the coal prices where they are right now, it’s a good little business to have, in advance.
MF: How do you feel about the price of coal? The higher it is, could you argue that there is more room to fall?
AD: Well, if you take out Russia and Ukraine. I don’t know about you guys, but I don’t think it will be resolved any time soon. This is definitely something that will keep the price of coal higher.
Obviously, the world is moving towards a coal-free position or towards a greener energy position. But during this time, coal is definitely needed to feed India, to feed many countries in the world.
People like to have cheap energy and we are not seeing that at the moment. It’s definitely something that I think will generally be quite difficult. So I think that will definitely mean that things will continue to support the price of coal in the future.