1
00:00:05,600 --> 00:00:08,400
Speaker 1: Welcome to Fear and Greed, Summer investing series, brought to

2
00:00:08,400 --> 00:00:11,879
Speaker 1: you by Vantera Specialists and compliance lead both. I'm Sean Aylmer.

3
00:00:12,039 --> 00:00:14,320
Speaker 1: Some of the most interesting companies on the AX are

4
00:00:14,320 --> 00:00:17,200
Speaker 1: found among the small caps, So today we're looking at

5
00:00:17,239 --> 00:00:20,880
Speaker 1: the opportunities for investors in smaller companies across the next

6
00:00:20,880 --> 00:00:23,479
Speaker 1: twelve months. As always, this is general information only and

7
00:00:23,520 --> 00:00:27,639
Speaker 1: you should seek independent advice before making investment decisions. Matthew Kidman,

8
00:00:27,720 --> 00:00:30,400
Speaker 1: principal at Centennial Asset Management, has been looking at small

9
00:00:30,440 --> 00:00:33,120
Speaker 1: caps for many, many years. Welcome back to Fear and Greed.

10
00:00:33,520 --> 00:00:35,239
Speaker 2: Hi, sure, thanks for having me.

11
00:00:35,920 --> 00:00:39,080
Speaker 1: So small caps been a rough few years for them.

12
00:00:40,560 --> 00:00:42,680
Speaker 1: You know we're heading into a new year. What do

13
00:00:42,720 --> 00:00:43,120
Speaker 1: you reckon?

14
00:00:43,800 --> 00:00:46,240
Speaker 2: Well? Last year I said the small cap index could

15
00:00:46,240 --> 00:00:47,959
Speaker 2: be up to twenty five percent. I had to look

16
00:00:48,000 --> 00:00:51,320
Speaker 2: at it just today and it's up between eight and

17
00:00:51,440 --> 00:00:54,320
Speaker 2: ninbout eight percent, So a bit disappointing and not a

18
00:00:54,360 --> 00:00:57,680
Speaker 2: disaster like a coupley few years ago was down, but

19
00:00:58,320 --> 00:01:01,840
Speaker 2: I think it can go higher. I would have hoped

20
00:01:01,840 --> 00:01:04,000
Speaker 2: by now that we would have an inch straight cut

21
00:01:04,360 --> 00:01:06,520
Speaker 2: in the bag and talking about another one, but as

22
00:01:06,560 --> 00:01:09,440
Speaker 2: you know, that's been stalled, and we're not quite sure

23
00:01:09,480 --> 00:01:12,360
Speaker 2: when it is, whether it is in February or is

24
00:01:12,400 --> 00:01:14,240
Speaker 2: it later in the year. It all depends on the

25
00:01:14,319 --> 00:01:18,600
Speaker 2: economic data that would kick along small caps. The US

26
00:01:18,680 --> 00:01:21,040
Speaker 2: small caps have started to run the brustle two thousand.

27
00:01:21,600 --> 00:01:26,120
Speaker 2: It's up seventeen percent, so there's good signs ahead, but

28
00:01:26,200 --> 00:01:28,480
Speaker 2: it's just a bit slide out of the blocks unfortunately.

29
00:01:28,920 --> 00:01:31,080
Speaker 1: What is it about small cap As an investor? If

30
00:01:31,120 --> 00:01:32,880
Speaker 1: I want to look at small caps, how do I

31
00:01:33,280 --> 00:01:35,280
Speaker 1: What are the premaitives I should put it around? Small

32
00:01:35,319 --> 00:01:38,240
Speaker 1: caps versus mid caps or versus large caps.

33
00:01:38,680 --> 00:01:41,560
Speaker 2: Yep, So small caps are less liquid, they will move

34
00:01:41,600 --> 00:01:44,640
Speaker 2: around more so the individual stock vol utility is high.

35
00:01:45,080 --> 00:01:47,360
Speaker 2: No small cap is too big to fail. You're not

36
00:01:47,400 --> 00:01:49,920
Speaker 2: going to get boiled out. You're at risk. So it's

37
00:01:49,960 --> 00:01:52,200
Speaker 2: a risky end of the market. What have you got

38
00:01:52,240 --> 00:01:54,320
Speaker 2: to look out for. You've got to look out for

39
00:01:54,680 --> 00:01:58,000
Speaker 2: balance sheets in particular, because banks and lenders can turn

40
00:01:58,040 --> 00:02:01,160
Speaker 2: on small caps very quickly if something goes wrong, and

41
00:02:01,200 --> 00:02:03,480
Speaker 2: at that end of the market most of the time,

42
00:02:03,680 --> 00:02:06,360
Speaker 2: most of the time through a cycle, you want higher

43
00:02:06,400 --> 00:02:08,400
Speaker 2: growth than normal. Otherwise you can go up to the

44
00:02:08,400 --> 00:02:11,600
Speaker 2: big cap bend. Be secure in a bank high liquidity,

45
00:02:11,720 --> 00:02:13,760
Speaker 2: you know the bank's not going to go broke. If

46
00:02:13,760 --> 00:02:17,160
Speaker 2: it does, we're in trouble. But it probably won't, and

47
00:02:17,639 --> 00:02:21,360
Speaker 2: it's got a great franchise that chugs along, where small

48
00:02:21,400 --> 00:02:23,520
Speaker 2: caps are the poll opposite to that.

49
00:02:24,200 --> 00:02:28,600
Speaker 1: Okay, So sector wise, what areas do you like over

50
00:02:28,600 --> 00:02:30,440
Speaker 1: the next twelve months and which ones you think you

51
00:02:30,520 --> 00:02:32,280
Speaker 1: might be a bit cautious on.

52
00:02:32,560 --> 00:02:35,960
Speaker 2: Yeah, So what's worked in Australia or elsewhere as we know,

53
00:02:36,080 --> 00:02:40,120
Speaker 2: has been structural growth. So okay, I mentioned before interest

54
00:02:40,200 --> 00:02:41,920
Speaker 2: rates we would have liked them to come down, but

55
00:02:42,200 --> 00:02:47,040
Speaker 2: they actually have steadied primarily and inflation has been coming down,

56
00:02:47,160 --> 00:02:50,960
Speaker 2: so that has allowed the structural growth stories to run.

57
00:02:51,440 --> 00:02:55,280
Speaker 2: That is primarily technology, but it's not exclusively technology. There's

58
00:02:55,280 --> 00:02:58,320
Speaker 2: some financial stocks that are grown regardless of the economy,

59
00:02:58,320 --> 00:03:00,880
Speaker 2: and that's what I mean by structural. Once we get

60
00:03:00,919 --> 00:03:03,359
Speaker 2: an in straight cut or two, assuming we go down

61
00:03:03,400 --> 00:03:08,160
Speaker 2: that path, I think then we can move into simplical

62
00:03:08,200 --> 00:03:12,240
Speaker 2: growth stocks the benefit from the economy actually starting to

63
00:03:12,320 --> 00:03:15,799
Speaker 2: tick up, and if a cycle plays out normally down

64
00:03:15,840 --> 00:03:18,239
Speaker 2: the track, you can probably get into commodities. We're definitely

65
00:03:18,280 --> 00:03:21,040
Speaker 2: not at that stage. I still think we're in structural growth,

66
00:03:21,400 --> 00:03:24,400
Speaker 2: but I think cyclical growth will appear during the course

67
00:03:24,400 --> 00:03:25,320
Speaker 2: of the next twelve months.

68
00:03:25,720 --> 00:03:27,280
Speaker 1: So if we get into secret could growth in the

69
00:03:27,320 --> 00:03:29,880
Speaker 1: next twelve months, what are the sorts of sectors you're

70
00:03:29,919 --> 00:03:30,320
Speaker 1: looking at.

71
00:03:30,720 --> 00:03:34,160
Speaker 2: Oh, look, you want to be exposed to anything that

72
00:03:34,240 --> 00:03:37,480
Speaker 2: can grow. You want to be exposed to housing sector,

73
00:03:37,920 --> 00:03:42,120
Speaker 2: whether in the financials, whether in building materials. You want

74
00:03:42,160 --> 00:03:45,040
Speaker 2: to be exposed to the consumer in general, because the

75
00:03:45,080 --> 00:03:47,360
Speaker 2: consumer probably has a bit more money to spend. Get

76
00:03:47,400 --> 00:03:49,880
Speaker 2: a couple of in straight cuts. Consumer on the front

77
00:03:49,880 --> 00:03:53,160
Speaker 2: foot rather than playing defense and saving their money using

78
00:03:53,160 --> 00:03:56,400
Speaker 2: the purse strings, a bit more confident. So anything that

79
00:03:56,880 --> 00:03:59,240
Speaker 2: goes around and yet the structural growth stories can probably

80
00:03:59,280 --> 00:04:01,720
Speaker 2: still go k but they won't give you the bang

81
00:04:01,760 --> 00:04:05,120
Speaker 2: for the buck that those companies that say, Okay, Shawn's

82
00:04:05,160 --> 00:04:07,240
Speaker 2: got more money to spend is a little bit more confident.

83
00:04:07,240 --> 00:04:08,840
Speaker 2: He's going to go out and buy a new shirt,

84
00:04:10,000 --> 00:04:13,000
Speaker 2: He's going to go and buy golf clubs, anything that

85
00:04:13,840 --> 00:04:17,320
Speaker 2: a latches into that. And then you'll get companies where

86
00:04:17,320 --> 00:04:20,400
Speaker 2: it really flows on companies. And we've heard this from

87
00:04:20,920 --> 00:04:24,200
Speaker 2: treasure charmers saying, well, where's the where's the spend from

88
00:04:24,200 --> 00:04:27,400
Speaker 2: the Australian companies. Once they see a bit of demand

89
00:04:27,480 --> 00:04:30,080
Speaker 2: for their products, they will then go and spend on

90
00:04:30,160 --> 00:04:32,719
Speaker 2: capex and that feeds into that cyclical growth story.

91
00:04:33,360 --> 00:04:35,240
Speaker 1: And if I can't have you on without asking just

92
00:04:35,279 --> 00:04:36,920
Speaker 1: for one stock tip.

93
00:04:37,160 --> 00:04:38,559
Speaker 2: Well I thought you were going to ask me about

94
00:04:38,560 --> 00:04:40,800
Speaker 2: the banks, which I always get wrong. But one name

95
00:04:40,839 --> 00:04:43,000
Speaker 2: at the small land that we do like, which is

96
00:04:43,080 --> 00:04:46,880
Speaker 2: highly risky, is a little company called quick Fee. Its

97
00:04:46,920 --> 00:04:50,159
Speaker 2: primary business established in Australia. It's going to the US

98
00:04:50,520 --> 00:04:54,839
Speaker 2: and what it does it allows mainly accounting firms and

99
00:04:55,120 --> 00:05:00,120
Speaker 2: some legal firms to actually allow their clients to a

100
00:05:00,720 --> 00:05:04,440
Speaker 2: and it funds that component because as we know, people

101
00:05:04,480 --> 00:05:07,080
Speaker 2: don't pay their accounts and lawyers too quickly. It's basically

102
00:05:07,200 --> 00:05:10,640
Speaker 2: operating and working capital. There's not many businesses like that

103
00:05:10,720 --> 00:05:13,480
Speaker 2: in the US and it's starting to get profitable and

104
00:05:13,520 --> 00:05:14,279
Speaker 2: it's very cheap.

105
00:05:14,640 --> 00:05:16,320
Speaker 1: We'll keep an eye on that one. Matthew, thanks for

106
00:05:16,360 --> 00:05:16,880
Speaker 1: your time.

107
00:05:17,200 --> 00:05:17,680
Speaker 2: Thanks Shan.

108
00:05:18,160 --> 00:05:21,000
Speaker 1: That was Matthew Kidman from Centennial Asset Management. Remember to

109
00:05:21,000 --> 00:05:24,359
Speaker 1: get your own independent advice before making decisions. This is

110
00:05:24,400 --> 00:05:26,560
Speaker 1: fair and greed. Some amre investing series brought to you

111
00:05:26,640 --> 00:05:31,360
Speaker 1: by Van Vanta Automates compliance for frameworks like ISO twenty

112
00:05:31,400 --> 00:05:35,720
Speaker 1: seven one two, CPS two three four and Essential eight.

113
00:05:35,920 --> 00:05:38,479
Speaker 1: Saving time and money while building trust. Join over eight

114
00:05:38,480 --> 00:05:41,640
Speaker 1: thousand companies like at Lassian, Dovetail, and fire Ant managing

115
00:05:41,760 --> 00:05:44,599
Speaker 1: real time risk. Get one thousand dollars off at Vanta

116
00:05:44,720 --> 00:05:48,200
Speaker 1: dot com, slash fear and greed. I'm Sean Elmer. Enjoy

117
00:05:48,240 --> 00:05:53,239
Speaker 1: your day,