August Update – Week 2

August 14, 2020

The market this week stayed true to its Australian roots, being Kangaroo-like. Only difference from last week is bouncing around the 6,100 points compared to 6,000 as it has been previously.

Signs of recovery? Too early to tell.

For our portfolio, it has been an absolute rollercoaster with momentum swings in a couple of our holdings. We went from 70% in the green down to 48% and back up to 70% again today. We’ve seen enough Kangas to know what to do and stick to our plans.

Reminds us of this quote:

“The stock market is a device for transferring money from the impatient to the patient”

Warren Buffet

Another milestone for us is having picked 5 companies since March that have more than doubled, or grown 100% plus in their share price. We fist-bumped over video to that. Another two holdings are close to doing the same.

We’re doing pretty well on the COVID front too. Us Victorians are doing our bit with stage 4 lockdowns, mandatory masks and our 1 essential trip out. Cases are down to the high 300s from a peak of 700+.

CEO Insights

Employment & Workforce

“We believe that the post-COVID world will see an increase in distributed [remote] work in all industries” 

Scott Farquhar, Co-CEO, Atlassian Inc

“If right now roughly 5% of the workforce is permanently at home pre-Covid, we think that will double. We think as much as 10%, 11% of the workforce could be at home permanently” 

Brett White, CEO, Cushman & Wakefield plc [global commercial real estate company]

Travel & Leisure

“The fixed costs to operate airports have not changed throughout this period, with runways still needing to be kept open and safety and security screening maintained despite the greatly reduced numbers of passengers” 

James Goodwin, CEO, Australian Airports Association

“We have seen increased [bookings] momentum in the latter half of July” 

Mark Hoplamazian, CEO, Hyatt Hotels Corporation

Chinese Economy

“China has been able to very, very quickly recover from the origin of the crisis. In our business, China is actually up compared to last year’s period, so we’ve seen higher numbers in demand then we used to see pre-crisis” 

Joe Kaeser, CEO, Siemens AG

US Economy

“If we continue down this path with no significant stimulus…we estimate that between 35-45% of 30 million small businesses in America will begin to permanently close by Labor Day [first Monday of September]. It is no longer a crisis. This is a five-alarm emergency” 

Howard Schultz, CEO, Starbucks Corporation

Retail & E-Commerce

“We see an even more pronounced fashion shift towards leisure. The increase in workplace flexibility is here to stay. And the majority of companies plan more and more permanent remote working and of course, when you sit at home, you don’t wear your suit, you don’t wear your tie, but you tend to wear sneakers from Adidas or hoodies” 

Kasper Rorsted, CEO, Adidas AG

“Goodman has seen increased demand for both temporary and permanent space from customers in the food, consumer goods and logistics sectors, particularly related to e-commerce operators and those transitioning to online” 

Greg Goodman, CEO, Goodman Group

“Right now everybody needs to be pivoting digitally because that’s how consumers are interacting with companies, because they need to, I don’t know what will happen when they don’t need to [shop online post COVID-19]” 

Jim Clayton, CEO, Breville Group Ltd

Residential & Commercial Property

“The easing of restrictions in June led to an immediate increase in enquiry back to pre-COVID levels, which gives us confidence that demand [for seniors living] will quickly pick back up when restrictions lift again” 

James Kelly, CEO, Lifestyle Communities Ltd

“We’ve been surprised by the volume of [home loan] applications we received. At least so far, housing has been more robust that we have anticipated” 

Matt Comyn, CEO, Commonwealth Bank of Australia Ltd

“Historically, in the early stages of most downturns, almost all occupiers facing a leasing renewal decision in a market shock do one or two things: they either delay that decision as long as they can or they try to agree with the building owner to renew on a short-term basis. I mentioned this because roughly 75% of leasing activity represents existing tenants with expiring leases” 

Brett White, CEO, Cushman & Wakefield plc [global commercial real estate company]

Transport & Logistics

“The impact coming from COVID-19 is incomparably larger than the Lehman failure [GFC]” 

Shuichi Ishibashi, CEO Bridgestone Corporation

“Our reading for now is that we will see [the COVID-19] impact and the impact will persist until the first half of 2022, so the severity will persist longer. However, thereafter, our future expectation is that people will start to move about, and the movement of goods will become much more invigorated. 

Shuichi Ishibashi, CEO Bridgestone Corporation

Media & Advertising

“I think as it relates to the sponsorship side, I think things went pretty quiet just in the early stage. As I said the first month or two of the virus period…We actually feel pretty good about the traction in the last few months. We’re actually in a pretty good place in terms of renewals so I think the sponsorship is a place we clearly believe there’s real room to grow” 

Chase Carey, CEO, Formula One Group


“The prospects of lower-for-longer interest rates, increasing climate-related weather events, some continuation of heightened casualty loss trends and, indeed, losses directly arising from COVID-19, left insurers with almost no alternative but to materially increase pricing” 

Pat Regan, CEO, QBE Insurance Ltd


“[An] opportunity is the full exploitation of hydrogen as an energy-carrier of the future. Hydrogen has the potential to be a game-changer in the complete decarbonization of industry, transport and housing” 

Johannes Teyssen, CEO, E.ON SE [global major electricity utility company]

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