Three things that got the team talking this week - Firetrail Investments

Weekly insights from the Trail

Three things that got the team talking this week

October 8, 2021January 5th, 2022

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1. Back on the job…

SEEK job ads have bounced back in Sydney as we prepare for ‘freedom day’ and Statewide reopening. The number of new job ads posted on SEEK’s Australian website rose 6% m/m in September, including a 10% m/m rebound in New South Wales. Roy Morgan’s Australian household survey for September also revealed a rise in employment (and decline in unemployment). Meanwhile US small businesses cannot fill their vacant positions!

2. Cap rate slide…

Demand for Industrial property assets is hot. Over the last fortnight alone we’ve had Centuria buy $351mn of industrial assets (4.23% cap rate) and Dexus acquiring A$1.5bn of industrial assets and development land (4.7% cap rate). Most transactions are now neutral to dilutive. As such, this doesn’t look to be a good environment to be chasing assets – especially with Central Banks turning more hawkish.

Source: Jarden

3. Shipping costs surge…

As warehouses get harder to find, we seem to also have entered ‘Containergeddon’, as shipping costs continue to skyrocket. As shown in the chart below, giant capesize vessels are now earning more than $80,000 a day, the highest since 2009, as a rush for ships outstrips supply. With demand for energy set to continue climbing this Northern Hemisphere winter, the outlook for the entire dry bulk shipping market is strong.

Retailers such as Walmart, US Target, Home Depot and Costco have taken measures into their own hands by chartering proprietary vessels to make sure Holiday deliveries arrive on time. Recent updates suggest 60 container ships carrying clothing, furniture and electronics are stuck off LA, the number 1 US port complex. Pre-Covid it was unusual for more than one ship to be waiting. Black Friday kicks off holiday season shopping on November 26.

Source: Baltic Exchange, Bloomberg

Disclaimer

This article is prepared by Firetrail Investments Pty Limited (‘Firetrail’) (ABN 98 622 377 913, AFSL 516821) as the investment manager of the Firetrail Australian High Conviction Fund (ARSN 624 136 045), the Firetrail Absolute Return Fund (ARSN 624 135 879), the Firetrail Australian Small Companies Fund (ARSN 638 792 113) and the Firetrail S3 Global Opportunities Fund (ARSN 653 717 625) (‘the Funds’). Pinnacle Fund Services Limited ('PFSL') (ABN 29 082 494 362, AFSL 238371) is the product issuer of the Fund. PFSL is not licensed to provide financial product advice. PFSL is a wholly-owned subsidiary of the Pinnacle Investment Management Group Limited (‘Pinnacle’) (ABN 22 100 325 184). The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the relevant Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.

Links to the Product Disclosure Statement: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

Links to the Target Market Determination: WHT3810AU, WHT5134AU, WHT3093AU, WHT7794AU

For historic TMD’s please contact Pinnacle client service Phone 1300 010 311 or Email service@pinnacleinvestment.com

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