AMP 3Q Update – Deterioration in Contemporary Wealth Protection.

Posted on | by Leon Hinde | Leave a Comment on AMP 3Q Update – Deterioration in Contemporary Wealth Protection.

AMP 3Q16 update produced further losses and write downs in life insurance with significant deterioration in Contemporary Wealth Protection.

Going forward, the market is likely to place a greater focus on AMP’s more  important wealth management business. AMP is trading on 13x FY17 earnings and now offers a 6% dividend yield.

FY17 net profit should be around $920m on EPS of $0.34 and DPS of $0.28

We’ve been cautious of AMP despite the bullish analyst forecasts over recent time. In last month’s strategy piece we highlighted the relative underperformance to other financial names. This was enough of a warning sign for us not to allocate funds, however, following the sell-off on Friday, we now think value exists in the range of $4.20 to $4.50.

Due to the elevated volatility, we prefer using a spread option strategy to capture the upside whilst quantifying or protecting our downside risk.

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Chart – AMP

Buying Opportunities – add these to your watch list

Posted on | by Leon Hinde | Leave a Comment on Buying Opportunities – add these to your watch list

Today’s report is a summary of what I’m watching following some of the recent price action in the market. On the 30th of August I wrote a blog post under the heading “Property Trusts” and the commentary there still remains relevant. If the Fed Reserve doesn’t raise rates in 2016, we’ll see the yield names rally 5% to 10%. With this in mind, WFD, GPT, SCG are worth keeping on your watch list. AGL, TCL, BXB, IAG, SUN and BLD have also been triggered by the algorithm engine as buying opportunities that should be tracked for an appropriate entry point.

Other names that we’re waiting for a buy signal on include JHX, SGR, QUB, RMD, TWE, SHL, CWN, AMP and NVT. Out of this group, QUB and CWN are the closest to the entry condition being triggered.