What Worked Australia - 19 Aug 2016 - PBR is the new Aussie superstar

What Worked – While the momentum play in Australia was long considered a favorite, this week, like so many other this year, has been terrible for momentum investors. 12 month momentum, one of the mainstay factors in the market, has returned a quintile spread of -17.2% in the last 6 months. Unlike last week, 12 month momentum this week saw the 12 month winners being rather flat to market, while the laggards were the ones outperforming. Beach Energy (BPT, +7.1%), SAI Global (SAI, +8.1%) and Ainsworth Game Tech (AGI, +0.9%) all up after being some of the largest underperformers in the last year.

In a strange twist this year, PBR, a usually underwhelming signal in Australia to say the least, is a becoming a blockbuster. PBR has returned a quintile spread of +39.4% over the last 6 months. Some of the sub 1.0x PBR names coming through this week included News Corp (NWS, +1.3%), Santos Limited (STO, +3.2%) and Cleanaway Waste Management (CWY, +21.1%), while the more expensive end of the scale has seen Domino’s Pizza (DMP, -0.9%), Cochlear (COH, -0.8%) and CSL Limited (CSL, -7.3%) all come off this week.

Who Moved – 16 names moved on substantially higher than normal volumes this week. On the positive side, Ansell Limited (ANN, +16.5%), Orora (ORA, +10.9%) and Trade Me Group (TME, +5.9%) all finished up stronger, while G8 Education (GEM, -15.5%), AMP Limited (AMP, -5.9%) and IAG Limited (IAG, -5.1%) all finished the week lower.

Summary

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