Asx Listing

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GUEST OBSERVER
Investors have had a tough start to 2016. Financial markets are extremely volatile and many are wondering what investment strategy to pursue.
There are a huge number of approaches used to decide the best time to buy and sell financial assets, such as shares, bonds, commodities, and currencies. This activity is variously referred to using terms such as “active management” and “market timing”.
Hindsight can be a fine thing for the investor or asset manager. But what they need to know is how they can best assess in advance whether an active management technique is going to add value or not. Small gains in performance can result in large amounts of wealth being created given the large amount of money under management.
There have been numerous advances in this area by researchers recently, which may help investors to make decisions with more confidence, especially in the current environment of uncertainty.
The first thing to consider is whether the returns generated over the historical test period are statistically significantly different to zero. Just because an approach generates an impressive average return does not guarantee that it passes the statistical significance test. Large average returns may be driven by a small number of extremely good daily or monthly returns, which are not representative of the usual return.
Traditional statistical significance tests can often give misleading results but new improved methods are very robust. Related to this is the sequence of returns. It is important to investigate this because an approach that generates superior returns overall – but has long periods of sub-standard returns – will be hard to stick with in reality.
Risk is another important consideration. Simply finding that a strategy has generated historical returns is not sufficient as a risky strategy needs to generate larger returns if it is to appeal to the average investor who is risk averse. The risk-adjusted returns of a technique therefore need to be determined. Sharpe ratios are commonly used in this area but recently developed approaches, which overcome some of their limitations, have been shown to be superior.
Testing large numbers of approaches in historical data raises the possibility that one technique will show promise by chance. Indeed, we know of one paper that found over a certain time period the best predictor of movements in the S&amp;P 500 index was butter production in Bangladesh! It is therefore important to account for “data snooping bias” using an appropriate statistical technique before concluding whether an active management approach does in fact produce historical superior returns beyond what might be expected by chance.
Some approaches work well in certain periods but poorly in others. It is therefore important to investigate the historical performance in periods such as bull and bear markets and recessions and expansions. While consistent historical performance over these periods does not guarantee future success, a finding of sub-standard performance in one of these historical settings could be indicative of poor performance in these periods in the future.
It is also important to conduct style analysis to get an appreciation of what influences the returns of an active management approach. Addressing questions such as “do the equities in the portfolio tend to do better when oil prices or the exchange rate are going up or down?” provides some intuition which can be used to determine the likely performance going forward.
This type of analysis can be extended to determine the proportion of historical out-performance that is driven by the assets that are in the portfolio or decisions around when to buy and sell the various components of the portfolio.
Transaction costs are often a large determinant of the returns an investor receives. An investment approach that requires frequent rebalancing will incur larger transactions costs than a more passive approach, and the types of assets that are chosen will also influence the level of transaction costs.
A logical way to quantify the performance of a strategy is to document the level of “break-even” transaction costs, that is level that transaction costs would have to be at before the profits disappeared. If these are much larger than reasonable estimates of actual transaction costs it is clear the strategy’s historical returns are greater than its transaction costs.
Conducting out-of-sample tests is another important approach. Refining a technique on a subset of available data and then testing its performance on remaining data can add confidence around whether it has the potential to add value going forward.
While there is never complete certainty that the superior returns of an active management approach in the past will be repeated in the future, the approaches we have discussed give an asset manager or individual the best chance of identifying techniques with robust returns.
 
Ben Marshall is MSA Charitable Trust professor in Finance, Massey University and can be contacted <a href="https://theconversation.com/profiles/ben-marshall-238925" target="_blank">here</a>.
Nhut (Nick) Hoang Nguyen is associate professor, School of Economics and Finance , Massey University and can be contacted <a href="https://theconversation.com/profiles/nhut-nick-hoang-nguyen-238929" target="_blank">here</a>.
Nuttawat Visaltanachoti is professor in Finance, School of Economics and Finance , Massey University and can be contacted <a href="https://theconversation.com/profiles/nuttawat-visaltanachoti-238930" target="_blank">here</a>.
All are authors for The Conversation.
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jchancellor-FAypfDUnLy

What it takes to invest in volatile sharemarkets

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<div style="text-align: left;" align="center">Rental property technology company Property Connect Holdings Limited (ASX:PCH) has started trading on the Australian Securities Exchange after raising $2.5 million as part of a reverse takeover by Conquest Agri (ASX:CQA).</div>
<div style="text-align: left;" align="center"> </div>
<div style="text-align: left;" align="center">The company first traded at $0.06 per share, a 20% premium to its listing price of $0.05, said a media release.</div>
<div style="text-align: left;" align="center"> </div>
<div style="text-align: left;" align="center">Property Connect issued 50 million shares, implying a <a href="/news/50306-rental-tech-firm-property-connect-set-to-list-on-asx" target="_blank">market cap of A$12.28</a> million upon listing.</div>
<div style="text-align: left;" align="center"> </div>
<div style="text-align: left;" align="center">Trading will commence as Conquest Agri before the name change to Property Connect, and the PCH ticker, comes into effect pre-market open on March 24.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Property Connect's LiveOffer™ technology allows potential tenants to make an offer on a rental property, thus creating a fair market value for properties.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">The renter can adjust the rent paid, move in date and lease term which helps leasing agents get market-driven terms on each property.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">LiveOffer™ can be integrated into existing property management software and will allow renters to place an offer on a property and see in real-time where they are placed against other applicants. </div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">Initially, Property Connect will target the vast US multifamily apartment market with additional real estate sectors and markets anticipated to follow. The company is targeting organisations with more than 5,000 properties (multiple communities) under management and has agreements in place for LiveOffer™ with groups accounting for more than 100,000 apartments under management.</div>
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 Property Connect will charge a set-up fee and monthly fee for each community placed on the LiveOffer™ system by the property manager, in addition to a 1-3% transaction fee per lease passed through the platform.</div>
<div style="text-align: left;"> </div>
<div style="text-align: left;">"Listing on the ASX is an important milestone in the company’s development and we look forward to delivering a technology platform that will allow property managers to optimise the leasing process and maximise property value,” said founder and CEO Timothy Manson.</div>
<div style="text-align: left;">
 Version 2.0 of LiveOffer™ is expected to be launched in the second-half of this year. </div>
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jonathanchancellor-7SQnKwU6yx

Renting tech firm Property Connect debuts on ASX at 20% premium 

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Management and advisers to LJ Hooker are set to embark on a roadshow in May, according to the Australian business column Dataroom.
They suggest the iconic real estate chain, LJ Hooker's long-planned $400 million initial public offering gains some momentum.
It advised LJ Hooker had initially planned to front investors in March but merger negotiations with a Melbourne-based property agency delayed the roadshow.
In a deal that will deliver the enlarged entity an 8 per cent share of the market, The Australian revealed the proposed union with the Barry Plant real estate agency last year, however it’s understood the two companies have yet to finalise discussions.
The company accounts for 6.7 per cent of the national volume of real estate shares residential while Barry Plant accounts for 1.9 per cent.
LJ Hooker has its advisers to the float as Citi and Morgans, who are likely to emphasise the business’s reliance on a franchise model.
LJ Hooker has already secure $22m in a pre-ipo funding round which enabled it to partially pay down a loan owed to Macquarie Group.
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LJ Hooker IPO roadshow set for May

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Chinese real-estate portal Juwai has completed a $10 million pre-initial public offering raising, as it heads to an ASX float late this year.
The latest raising was supported by local and Hong Kong-based institutional investors and high net worth individuals.
Juwai connects Chinese property buyers with sellers in other parts of the world.
The Australian Financial Review says it is aiming to raise about $30 million for its run at the ASX.  
Brokers Baillieu Holst and Evans &amp; Partners managed the pre-IPO raising of convertible notes to investors<a href="https://www.afr.com/street-talk/baillieu-evans-prepare-juwai-raising-20160608-gpexr4#ixzz4DyyoCuAQ">. </a> 
The notes will convert into shares on listing.
The South China Morning Post reported today that Charles Pittar, the CEO of Juwai.com said Brexit helped push a 100 per cent, week-on-week increase in consumer enquiries for UK property during the week of the vote.
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Juwai ASX list nearing as Brexit lifts search activity

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The Simonds home building family, founders of the listed Simonds Group, are preparing to buy out the company with outside assistance from the Roche family.
Simonds are set to leave the ASX boards after an unhappy experience as a listed company since late 2014.
An email was sent to staff on Tuesday flagged a potential change. 
Its shares were placed in a trading halt. 
Simonds' family vehicle and Roche Holdings settled on a 40¢-a-share deal under which a company owned 51 per cent by the Simonds family and 49 per cent by the Roche family would buy all outstanding shares of Simonds Group.
The price represents a 38 per cent premium to the 29¢ price at which the shares last traded before going into a trading halt on Tuesday afternoon.
It gives the company a value of about $57.5 million. 
Gary Simonds retained a 37 per cent stake after listing the company he founded in 1949.
Simonds has seen its share price fall as low as 27¢ from the $1.72 price initial float.
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Simonds home building privatisation on the agenda

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National online property agency iBuyNew (IBN) is now trading on the Australian Securities Exchange (ASX) after its listed parent company Disruptive Investment Group Limited changed its name to iBuyNew Group Limited (ASX-IBN).   The name change was formalised at the Company’s annual general meeting.   The company also announced it has settled its share sale agreement to acquire 100 percent of Melbourne-based property research advisers Nyko Property Pty Ltd (Nyko).
It has delivered new property sales worth $18.1 million in the 2016 September quarter.   IBN, which specialises in off-the-plan property sales, recently launched a new house and land division, but is more active at the moment in apartment sales. IBN’s chief Mark Mendel informed shareholders that while the market for new apartments was well below its peak from the 2015-16 financial year, there has been no rise in buyer defaults. “(This) leads us to believe that the negative sentiment is mostly perception rather than reality at present,” Mr Mendel said.   “Whilst we believe the negative media reporting about the sector has likely contributed significantly to reduced sales, it is our assessment that buyers are mostly taking a wait-and-see approach until the uncertainty passes rather than leaving the market altogether.
"The fundamentals of Australian demographics have not changed in the last nine months.   “IBN is realistic about the current market dynamics.
"Our focus is ensuring that we have a robust business that continues delivering sales, and is well positioned to take advantage when the negative perception passes and stronger demand returns to the market."
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j.ballantyne1990-6AQqhLzZaK

iBuyNew now trading on ASX

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National online property agency iBuyNew (IBN) has been named on a list of Australia’s top 100 fastest growing start-up businesses.
It comes just weeks after listing on the Australian Securities Exchange.
Companies listed on BRW Magazine’s Fast Starters have operated for less than four years.
It has also made a turnover of at least A$500,000 in the last fiscal year with higher revenue than the previous year, have less than 200 full-time employees and more than one main customer.
IBN CEO Mark Mendel said the company, which specialises in off-the-plan sales, was delighted to be recognised by BRW’s annual Fast Starters list.
IBN ranked 54th place.
“This is a great acknowledgement for IBN and the hard work of our sales and marketing team who provide a service that people need to guide them through the complexities of buying off the plan,” he said.
“Demand for our service is increasing with record website traffic. We are now really focused on what needs to be done to deliver the results we are looking to achieve in 2017 and beyond.”
IBN this year launched a house and land division, but is currently more active in apartment sales.
The company also recently acquired 100 per cent of Melbourne-based property research advisers Nyko Property Pty Ltd.
IBN delivered new property sales worth $18.1 million in the 2016 September quarter.
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iBuyNew on BRW Fast Starters list

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The first McGrath annual general meeting as a listed company takes place this afternoon.
The company has yet to provide any guidance for 1HFY17 or FY17.
Stockbrokers Bell Potter advised the well publicise lower auction volumes in Sydney was likely to be significant.
<a href="/images/2016/11/23/image002.png" target="_blank">Click to enlarge</a>
<img src="/images/2016/11/23/image002.png" alt="">
"We expect the 1HFY17 result to be well below 1HFY16.
"We also expect volumes to remain subdued next Autumn (the next key auction period) but similar to those this year so at this stage we forecast the 2HFY17 result to be similar to 2HFY16. 
"The combination of a weak 1HFY17 result and a flat 2HFY17 result means overall we forecast the FY17 result to be below FY16."
Bell Potter issued its revenue, EBITDA and NPAT forecasts for both 1HFY17 and FY17.
"The 1HFY16 and FY16 results are shown on a pro forma basis so that a like-for-like comparison can be made," Bell Potter analyst Chris Savage noted.
 
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Fewer auctions to impact 2017 McGrath revenue: Bell Potter forecast

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The Drummoyne-based activist investor Matthew Donnellan emerged yesterday as lining up to potentially acquire a 15 percent stake in McGrath this Friday.
The shares are being mostly offered to the market by former McGrath agents and senior executives.
The stock has been offered through Wilson, seemingly volunteering Donnellan as the likely raider.
The press advised the 47-year old Donnellan had once acquired a similar stake in then struggling pub owner, Lantern Hotel Group, "before forcing out the management and instigating a turnaround in its strategy that delivered strong returns to investors through an asset sell down."
The 14.66 percent stake would make the former Allphones CEO sit as the second biggest shareholder behind founder John McGrath.
The press were tipped off that Donnellan was "an admirer of the McGrath business and brand, but not the performance of its board."
"I don't own any shares in McGrath so I have nothing to say at this stage," Donnellan oddly told the press.
The 14.66 per cent combined stake in McGrath was created by the shares of former McGrath director of sales Matt Lahood, Geoff Lucas the former McGrath chief operating officer who has since moved to artisan bakery group Sonoma, and former agents Ben Collier, Stephen Chen, the Leichhardt agent Shad Hassen and Brad Gillespie, along with a remaining McGrath agent Bethwyn Richards.
The shares floated at $2.10 in the initial public offering in late 2015.
The block trade, which is being handled by stockbroker Wilsons, will be available for purchase from Friday when 46.3 per cent of shares in the company come out of escrow.
A document filed to the Australian Stock Exchange said each of the parties intended to act in a "co-ordinated manner in relation to any sale of their shares in McGrath Limited".
What they hold
Geoff Lucas 6.7 million shares
Bethwyn Richards 2.78 million
Shad Hassen 2.78 million
Steven Chen 2.78 million
Matt Lahood 2.78 million
Ben Collier 2.78 million
Brad Gillespie 760,000 shares
The rival real estate agents - now at The Agency - hope selling the shares as a block could achieve a premium price.
McGrath CEO Cameron Judson advised McGrath remained a "a long-term holder of stock" but didn't advise further on any future purchasing or privatisation plans.
McGrath shares closed down 2 percent at 77 cents on Wednesday, and this morning was trading at 78 cents.
In 2016 Donnelley paid $8.05 million through Ward Partners for his Drummoyne harbour front house which had been marketed with $6.5 million hopes.
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McGrath rebels join forces to sell 14 percent stake

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Centuria Metropolitan REIT, Australia’s largest metropolitan office REIT, announced its inclusion on the S&amp;P/ASX 300 Index from the start of trade on September 18.  
The S&amp;P/ASX 300 Index includes up to 300 of ASX-listed entities by float-adjusted market capitalisation and provides a widely-used benchmark for many general equities and real estate specific institutional investors.
“We have previously indicated it was our goal to be included in the Index. We’re delighted to have achieved this milestone, thanks to the support of our securityholders,” said Nicholas Blake, trust manager of the REIT.
“Inclusion in the index will enhance CMA’s relevance within the Australian equity market and generate increased institutional investor interest.”
The ASX inclusion caps an eventful year for the real estate investment trust. It  merged with Centuria Urban REIT (CUA), posted a statutory net profit of $37.7 million in the financial year 2017, and also completed a $90 million capital raising, increasing CMA’s market capitalisation to over $500 million.
Recently, the REIT <a href="https://www.urban.com.au/expert-insights/investing/73048-centuria-reit-buys-three-office-assets-in-perth-and-melbourne-for-150-million" target="_blank">bought three commercial properties</a> in Perth, one of them being the Hatch building (below) and Melbourne for a total of $150 million. 
Centuria Group entity Centuria Industrial REIT (ASX: CIP) is included in the S&amp;P/ASX 300 Index, while Centuria Capital (ASX: CNI) is a potential candidate for inclusion at a future rebalance.
“The inclusion of the REIT in the ASX/S&amp;P 300 Index is an important milestone for CMA, which was launched in December 2014. Combined with our $1.6 billion unlisted property syndication business, we now have three distinct property investment platforms that can grow independently. This enhances the group’s overall growth prospects,” said Group CEO John McBain. 
 
 
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