Each month NakedFunds directly engages with its Members (investors and potential investors) while conducting detailed research and analysis on a particular industry segment which they call their Investment Focus. The Investment Focus for February, selected by Members via NakedFunds’ state of the art website (www.nakedfunds.com.au), was agriculture.

Commenting on the investment, NakedFunds CEO, Tim Bryden said Graincorp has changed significantly over the last several years. “These changes have given the company more flexibility and greater earnings diversification,” he said. “Graincorp has maintained a dominant position in grain storage and logistics and they are very leveraged to years where grain volumes are up. 2011 is shaping to be a record year and given recent high rainfall the likelihood of the next wheat crop being good is also high.”

Agricultural Overview

Mr Bryden said agriculture is, for obvious reasons, a very seasonal and highly variable sector. “Fundamentally though it continues to enjoy underlying growth momentum driven by continuing global population growth and rising living standards, especially in the major emerging markets,” he said. “Those companies who can manage their seasonal risks while positioning to maximise value from good years are well positioned to provide excellent returns in the medium to long term.”

• Some of the findings included: According to the Australian Bureau of Statistics the gross value of Australian agricultural production was over $41 billion in 2008-09. Close to 55% of this value related to crops while about 15% related to livestock products such as milk and wool, with the balance relating to livestock slaughtering. Interestingly, preliminary estimates for the 2009-10 year suggest a fall in gross value to below $40 billion mainly driven by reduced prices for major crops and livestock products.
• The world’s population is currently approaching 7 billion people with some estimates suggesting this will increase by 30% to reach 9 billion by 2050. During this time it is also estimated that average levels of consumption will rise as living standards increase. The result, some commentators suggest, is that by 2050 global food demand will increase by about 70%. The majority of Members, over 70%, thought these forecasts are reasonable.

Industry Trends

• With respect to mergers and acquisitions activity within the agricultural industry, just over half the Members think this will likely increase in 2011, while most others think it will be at least similar to 2010, which was a reasonably active year. One of the potential drivers of this activity will be companies seeking to increase their level of vertical integration. Most Members believe that vertical integration makes sense within the Agricultural sector.
• Given recent weather events it was not surprising that most Members thought that the biggest risks facing agriculture are ‘drought/water security’ and ‘climate change’. Mr Bryden said that drought has been a significant factor in most of the Australian agricultural landscape over the past decade, although recent levels of rainfall in many parts of Australia (but not all) have largely addressed this issue in the short-term. “What this highlights is that companies need to have good risk management capabilities while ensuring they are positioned to extract maximum value in the good years,” he said.

Consumer Preferences

Members were asked which factor would most influence their eating habits over the next 5 years.  The choices included: Convenience, Ethics, Health, Price/Value, and Quality/Flavour/Taste.  About half of Members selected Price/Value while a quarter selected Health and 15% Convenience. These results certainly suggest that price competition will continue to be a major influencer of consumer behaviour although we can expect to see a continuation of efforts to differentiate products and/or food groups on health and quality.

The NakedFunds Investment Process

NakedFunds reviews all listed Australian companies within the chosen focus and publishes a shortlist. During the month Members, who can sign up for free, are invited to share their opinion on likely trends and changes within that Focus via simple multiple choice questions. The question process gives NakedFunds unique insights and has the added benefit of letting investors and potential investors really engage with NakedFunds and learn more about how their money is being managed.

Transparency is the Key

By being transparent NakedFunds allows investors and potential investors to ‘see everything’. This means that Members can invest in the fund and then see exactly what underlying shares are held, participate in the overall process and learn more about those companies. Members also have a NakedFunds status which measures involvement and can lead to significant fee rebates on the Funds already competitive Fees.  Commenting on this Mr Bryden said “this is great for people who want to get a better understanding, and have an interest in, where their money is being invested. We have a mix of younger investors and also people running their own self-managed super funds. That diversity is also really useful in the question process and results”.

The questions and related analysis relating to this month’s investment focus can be viewed on the NakedFunds Website at the February 2011 – Agriculture Questions Page

Before making any decision to invest, consult the PDS available at www.nakedfunds.com.au

For more information visit www.nakedfunds.com.au

The post NakedFunds uncovers investment in Graincorp appeared first on AdviserVoice.

Commenting on the investments, NakedFunds CEO, Tim Bryden said, “iiNet have positioned themselves well in the maturing telecommunications landscape and, as a driving force behind industry consolidation, their recent and potential acquisitions should add significant value.  Vocus Communications, as an independent wholesale provider of network bandwidth and related services, is leveraged to the increasing demand for data and has demonstrated impressive growth both in terms of customers and earnings.”

The decision to invest was made after NakedFunds conducted detailed analysis and external research on the telecommunications sector and polled its members for insights.

In an Australian funds management first, NakedFunds directly engages with its investors and potential investors who become ‘members’ and are invited to share their opinion on a weekly basis about a specific investment focus each month. Members are asked a number of broader opinion and prediction questions. The investment focus for January 2011 was telecommunications.

Mr Bryden said telecommunications continues to be a dynamic industry and the proliferation of new devices and the massive increase in data downloads both point to ongoing change. “The National Broadband Network and the strategic actions of Telstra will also play a key role in shaping the industry going forward,” he said.

NakedFunds members provided several useful insights:

Consumer Preferences

• ‘Speed/reliability/coverage’ was seen overwhelmingly as the most important aspect of telecommunications from a consumer perspective.

“This finding did not surprise us,” Mr Bryden said. “It highlights that network quality is a key differentiator, although taking this a step further, an apparent contradiction in the results was that while most members believe Telstra provides the best speed/reliability/coverage on their mobile network, they don’t think its mobile market share will increase over the next two years.”

• Bundling of telecommunications services was seen as likely to become the norm.  Over 45% of members indicated they had already bundled and most other members thought it was likely they would bundle over the next two years.

“It’s therefore critical that providers have compelling offers in this space” Mr Bryden said. “The trend toward bundling is one of the key factors driving industry consolidation and this response by members just highlights that the trend is very likely to continue.”

• When asked about the least important aspect of telecommunications from a consumer perspective the majority of members (55%) selected ‘Brand/Experience/Size’, but in a surprise finding, close to 25% of members ranked ‘Content/Products/Services’ as least important.

“The fact that a quarter of our members selected ‘content/products/services’ really surprised us,” Mr Bryden said. “It suggests that product differentiation as perceived by consumers is difficult and that any successful new innovation is rapidly adopted by all the major players.”

The National Broadband Network (NBN)

• Most members (about 70%) think that the Government spending $27.5 billion on the National Broadband Network (NBN) will be worth it.

Demand for Data Predictions

• Members have a clear expectation that the demand for data will continue to increase with about 27% predicting further increases of 30-60% over the next two years, and 29% predicting an increase of 160% or more.

Mr Bryden said that figures published by the Australian Bureau of Statistics (ABS) reveal that 50% more data was downloaded by Australian internet users in the three months ending June 2010 than a year earlier. These figures are supported by statements from Telstra, which outline that the amount of information carried on their mobile network is doubling every 12 months and, on their fixed network, doubling every 20 months.

The Results

Overall, most members thought iiNet would make the best investment although TPG Telecom and Vocus Communications also received good support.

The questions and related analysis can be viewed on the NakedFunds Website at the January 2011 – Telecommunications Questions page link http://nakedfunds.com.au/Questions.aspx?FocusID=9

The post NakedFunds Reveals Investment in iiNet and Vocus appeared first on AdviserVoice.

By investing as little as $100 in the fund, investors will join one of the most innovative fund managers in the market – a manager that engages, encourages and rewards input from both investors and potential investors alike.

Founder and CEO, Tim Bryden, says the philosophy behind NakedFunds was born during the GFC when he recognised that investors want to know and understand what they are investing in.

“NakedFunds is true to label,” he says. “Unlike most fund managers, we reveal all of our holdings and all of our trades. This means the typical ‘smoke and mirror’ scenario around how a fund is managed and what it invests in are removed.”

The NakedFunds Australian Share Fund aims to provide investors with capital growth and performance in excess of the S&P/ASX All Ordinaries Accumulation Index over a period of at least five years.

By embracing online capabilities, NakedFunds directly engages investors and potential investors so they can understand why investment decisions are being made.

“To participate, people become members. It’s free to join and the process is simple, similar to signing up to Facebook,” Mr Bryden explains. “Once signed in, members can share their opinion on a weekly-basis about a specific investment focus each month.”

Members are asked to respond to a handful of online multiple-choice questions, some of which are knowledge-based, opinions or predictions.

“The answers to these questions are then published on our website, further educating our members about a particular sector,” Mr Bryden says. “They get a feeling for some of the key issues and an understanding of the companies which we may ultimately invest in.”

This information is combined with the sophisticated investment research, analysis and valuation modelling carried out by NakedFunds’ investment committee and is regarded as a highly valuable input into the decision-making process of the Fund.

“The philosophy behind this progressive communication model is that everyone has a valuable contribution to make,” Mr Bryden says. “And by engaging with our members, we believe we gain a unique investment edge. Our investment committee takes a deeper look and may even potentially change its thinking on a stock or trend if members’ insights are a surprise or are at odds with what the market thinks.”

And for their contribution, NakedFund members are rewarded. Each month, members who earn the most points for their contributions receive a reward in the form of units in the Fund.

“Each member also has their own status which measures their historical feedback,” Mr Bryden explains. “With every status level, members receive further benefits including ongoing fee rebates. Up to 70% of the fund’s fee could be rebated through this reward system. That’s what we call value.”

The post Innovative boutique fund manager strips bare Sydney appeared first on AdviserVoice.