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

September 27, 2024October 4th, 2024

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1. Blow torch on Australian Supermarkets

The ACCC is taking Woolworths and Coles to court over misleading promotions. The supermarkets have been increasing prices. Holding those prices for a few weeks, and then cut them with a ticketed promotion.

Take Woolworths pricing of “Oreo family pack original” below:

$3.50 / pack flat for almost 2 years
Price ratchets up to $5 / packet for around 2 months
Then put on promotion at $4.50 (almost 30% higher than the original price)

Firetrail investigations suggest the Oreo family pack is out of stock at Woolies online (at time of publication). Any publicity is good publicity?!!!

Source: ACCC, Woolworths Online (September 2024)

2. Electricity demand – higher in the future but also, higher now!

AI is data intensive and will provide a longer term addition to power demand.

Surprisingly, demand for electricity is already rising. Monthly demand is showing 4% higher demand for electricity in the US. The higher demand experience is being mirrored for AGL / Origin in Australia. Feedback from companies is that efficiency efforts such as LED lighting have largely run their course and now there are more devices (iPads, smart devices etc) in the home leading to more demand for electricity. Industrial electricity demand is also creeping up slowly as companies seek to decarbonise away from direct coal and gas burning towards electricity.

Source: Factset, Firetrail (September 2024)

3. Food – back to normal

Inflation data prints are coming down, giving central banks the breathing room to begin an easing cycle. One reason for reducing inflation is falling food prices. Despite uncertainty around Russia / Ukraine supply that saw prices spike to 70% higher than pre-COVID levels, key food prices like corn and soy have steadily reverted to close to 10 year average levels. Let’s eat!

Source: OCP (September 2024)

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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