14 December 2020

Remuneration Report Analysis and Commentary: PortfolioDirect scores annual remuneration reports from ASX listed companies against a consistent analytical framework designed to help assess which reports are most worthy of shareholder support. 
Contents

Where are we in the Cycle?
Of the five PortfolioDirect cyclical guideposts, two are ‘red’, two are ‘amber’ and one is green.  ‘Trough Entry’ has been retained as the description of the cyclical positioning with ongoing downside risk to global growth expectations and a metal price term structure signaling adequate supplies. China’s growth momentum is past its strongest phase, leaving the economy to rely increasingly on recovery in other countries to narrow the output gap and maintain growth momentum.  Recent US dollar weakness is helpful but remains subject to reduced COVID-19 infections around the world. Unprecedented support from global monetary conditions is the single positive cyclical signal.    More...

Market Directions
A weakening US dollar and unprecedentedly expansionary monetary conditions have underpinned recent industrial metal price strength as well as a broader array of asset price gains, including for gold.  Strong speculative capital flows connected to retail investors are supporting sector prices.   Even with production losses resulting from COVID-19 mine operating restrictions, market balances are tilting into surplus.  Energy storage changes as a source of rising metal demand remain too far in the future to have an effect now.  1990s style investment performance - when modest sector equity price gains occurred in the midst of sometimes highly disruptive macro conditions - remains the underlying theme.  More...

Portfolio Performance and Positioning
Strong gains were made across all three development categories with uranium sector stocks benefitting from US policy developments. Phase I and Phase II companies benefit the most from greater optimism about the world economy and improved market liquidity. Phase I also offers uncorrelated returns from discovery opportunities. On the downside, Phase II companies are highly sensitive to project execution risk as they are in the early stages of production, with the greatest working capital uncertainties, and among the most indebted firms in the sector.  The choice between the growth and value themes driving institutional fund allocations is reflected in the Phase III category performance which has been unusually strong.   Portfolio models are biased to the Phase I stock category.  Exposure to the uranium segment was lifted in both the Phase I and Phase II categories.  Cash positions remain elevated.    More...

Stock Reviews and Rating Analysis 
PortfolioDirect rating reports analyse the quality and risk attributes of proposed mineral developments.  Rating criteria apply to mining and oil and gas stocks at any stage of development.  PortfolioDirect uses a five point rating scale to measure the risk adjusted quality of proposed mineral developments or companies.    
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The 'Steak or Sizzle' blog provides summary judgements on the top performing ASX-listed resources stocks. More...

Although the statements of fact in this report have been added from and are based upon sources the authors of the report believe to be reliable, their accuracy is not guaranteed and any such information may be incomplete or condensed.  To the extent permitted by law, the authors of the report are not liable for any loss or damage arising as a result of reliance placed on the contents of this report.  

All opinions and estimates in this communication constitute judgments by the authors at the report date and are subject to change without notice.  The report publisher is under no obligation to make public any change in view about any matter referred to in this document.    

No references to past investment performance should be taken to indicate anything about future performance.

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