ASX:S32
South32 Ltd
Investment Summary
The fund managers believe that South32 Ltd (S32) has demonstrated strong growth potential, particularly with a significant 19.7% share price increase in April, making it a leading contributor to their Growth Equities Portfolio. In their opinion, the company's better-than-expected net debt position is promising, especially in light of anticipated updates on GEMCO's wharf operations and shipping alternatives. The following month saw further positive momentum, with a 10.6% rise amid a rally in key commodities, potentially boosting S32's EBITDA to around $1 billion. However, by June, the outlook shifted as operational challenges and declining commodity prices led to an 8% decline in share price, prompting the fund managers to exit their position in S32. They concluded that the opportunity cost of retaining S32 outweighed the potential benefits, advocating instead for reallocating capital to more attractive investments.
Commentary From The Managers
Endeavor Asset Management
30 June 2024
$3.71
- Endeavor Asset Management noted an 8% decline in South32 (S32) due to operational challenges and lower commodity prices.
- They decided to exit their position in S32 to reallocate capital to more promising opportunities.
- The exit from South32 was influenced by anticipated further operational challenges.
- Endeavor Asset Management assessed that the opportunity cost of holding S32 outweighed the benefits of redeploying capital into attractive risk-reward opportunities.
Endeavor Asset Management
31 May 2024
$3.97
- Endeavor Asset Management sees South32 as a strong performer, noted by a 10.6% increase in share price.
- The market's positive reaction is attributed to a rally in key commodities.
- This rally could boost South32's EBITDA in the second half close to $1 billion.
- Projected net debt may reduce to $800-900 million by June.
- Endeavor Asset Management continues to hold its position in South32 due to these favorable market conditions.
Endeavor Asset Management
30 Apr 2024
$3.59
- Endeavor Asset Management reports that South32 (S32) share price increased by 19.7% in April.
- This rise made South32 the largest contributor to the Growth Equities Portfolio.
- South32 is now a top ten position in the Portfolio.
- The better than expected net debt position during the March quarter was positively received.
- Endeavor Asset Management is awaiting further updates on GEMCO regarding the recommencement of its wharf operations.
- They are also looking for alternative shipping options available to the company.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.