Founder Evidente. Top rated quantitative analyst, Evidente

Sam Ferraro

Founder Evidente. Top rated quantitative analyst

Evidente

Evidente is an independent financial education firm that delivers innovative financial advice to wholesale investors, including active long only funds, hedge funds, pension funds, and sovereign wealth funds, in Australia and globally.  Drawing on academic research in asset pricing, behavioural finance and portfolio construction, Evidente provides wholesale investors with commercial solutions to stock selection and asset allocation decisions across equities and other asset classes.

Equity Bottom-Up

Murray Goulburn, Australia's largest dairy foods company,&nbsp;listed on the ASX on July 3rd(ticker MGC), raising $500m to fund capital investments as part of its growth and value creation strategy.&nbsp;&nbsp;Following the take-over last year of Warrnambool Cheese by Canadian dairy foods company Suputo, MGC joins&nbsp;Bega Cheese (BGA) as the only two large dairy foods companies listed on the ASX.A number of features of the new listing are unattractive: MGC's capital structure is complicated, it offers no take-over premium, unit-holders of the trust have cash flow rights but no voting rights, and the company is exposed to volatile global dairy prices (which have dropped 40% in the past year alone).But I believe that the company's vertically integrated business model - including strong brands - offers some protection to fluctuations in global dairy prices.&nbsp; Management's commitment to a dividend payout ratio of 100% over the next three years helps to address&nbsp; corporate governance concerns, and official forecasts for global demand for dairy products are conservative, particularly for China.&nbsp;The trust's prospective&nbsp;dividend yield of 7% plus is too high; a yield of 6% more closely reflects its strong dividend sustainability.&nbsp; Consequently,&nbsp;I recommend that investors buy MGC up to $2.80, representing&nbsp;over 25%&nbsp;upside from the current price.&nbsp;

Murray Goulburn, Australia's largest dairy foods company,&nbsp;listed on the ASX on July 3rd(ticker MGC), raising $500m to fund capital investments as part of its growth and value creation strategy.&nbsp;&nbsp;Following the take-over last year of Warrnambool Cheese by Canadian dairy foods company Suputo, MGC joins&nbsp;Bega Cheese (BGA) as the only two large dairy foods companies listed on the ASX.A number of features of the new listing are unattractive: MGC's capital structure is complicated, it offers no take-over premium, unit-holders of the trust have cash flow rights but no voting rights, and the company is exposed to volatile global dairy prices (which have dropped 40% in the past year alone).But I believe that the company's vertically integrated business model - including strong brands - offers some protection to fluctuations in global dairy prices.&nbsp; Management's commitment to a dividend payout ratio of 100% over the next three years helps to address&nbsp; corporate governance concerns, and official forecasts for global demand for dairy products are conservative, particularly for China.&nbsp;The trust's prospective&nbsp;dividend yield of 7% plus is too high; a yield of 6% more closely reflects its strong dividend sustainability.&nbsp; Consequently,&nbsp;I recommend that investors buy MGC up to $2.80, representing&nbsp;over 25%&nbsp;upside from the current price.&nbsp;

Murray Goulburn - Virtues of Vertical Integration

MG Unit Trust

Murray Goulburn - Virtues of Vertical Integration