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 13, 2023October 20th, 2023

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1. Home is where the stress is…

Aussie borrowers with living expenses exceeding income hit 13% in July 2023, up from just 3% in April 2022 for those on variable rates. The RBA estimates 18% of fixed mortgage rate holders have seen their essential expenses and mortgage payments exceed their income. Around one third of variable rate mortgage holders have sufficient buffers in their offset account to cover minimum mortgage repayments and essentials for at least one year.

Source: UBS (October 2023)

2. Sandals slide…

Birkenstock, yes those shoes, listed this week. Unsurprisingly to some, after pricing the IPO at the high end of the indicated range for a $10 billion valuation, the shares struggled in their trading debut.

The German sandal maker’s debut was the worst opening for a listing of $1 billion or more in New York in over 2 years according to Bloomberg. Out of more than 300 US IPOs of that size in the past century, only 9 have fared worse, the last being AppLovin, which opened 12.5% below its IPO price in April 2021.

Despite a fairly even split of fans across age groups and income buckets, the sandals couldn’t attract fans on the stockmarket.

Source: Birkenstock, HolgerZ, Bloomberg (October 2023)

3. One tequila, two tequila…

Tequila is shaping up as the new spirit of choice as we head into the Aussie summer. Effective marketing, shifting demographics, and changing consumer trends have driven strong demand for tequila and mezcal in the US. Consumers’ increasing willingness to spend more on higher-quality products across wine, spirits and beer has also benefited the spirit. It comes as Kendall Jenner (of Kardashian heritage) launched her tequila brand into Australia this month. Despite the $100 price tag for 818 Tequila, consumer demand is expected to be strong.

Source: Distilled Spirits Council of the United States (October 2023)

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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