Djerriwarrh lifts options income

admin | 上海按摩服务
16 Jan 2019

Listed investment company Djerriwarrh has achieved a 17 per cent rise in half-year profit to $19 million, boosted by strong gains in income from its options writing activities in a volatile market.

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And Djerriwarrh managing director Ross Barker says he will continue to seek options earnings as a difficult earnings environment for Australian companies makes attractive share investments thin on the ground.

The Australian equities-focused Djerriwarrh posted an operating result of $22.8 million for the six months to December 31, 2013.

Djerriwarrh said $1.6 million in demerger dividends from Amcor and Brambles had offset a fall in investment income due to call options being exercised on major bank stocks as share prices rose.

“We thought it was a good outcome,” Mr Barker said.

“When you have a strong rising market, when you are selling call options you are going to have some of your capital gains cut off, but that’s been reflected in a good improvement in the income from our options activities.”

Mr Barker said recent gains on the market were driven by revaluations rather than actual improved earnings and Australian companies still faced a challenge to lift revenue.

“We will continue to utilise any strength in the market to further increase option coverage,” he said.

Djerriwarrh lifted its options trading income to $7.2 million for the half year, up from $3.3 million previously while basic earnings per share rose to 10.15 cents from 8.7 per cent previously.

Mr Barker said market volatility – sparked by events such as the repeated plunges anticipating an end to the US fiscal stimulus program – had benefited the company’s returns.

“All those things help. When markets are volatile people are prepared to pay more for options.

“The other thing is our general view is the market’s been reasonably fully priced. If you have those sorts of setbacks they actually provide you with some buying opportunities.”

Djerriwarrh seeks to generate additional income by writing call options over stocks in its portfolio, with call option coverage ranging from 20 to 45 per cent of a holding.

The company said a number of options were exercised on its holdings in Commonwealth Bank, ANZ, National Australia Bank and Westpac, resulting in about $60 million worth of sales and $64 million in subsequent purchases to rebuild its holdings.

Among its other major purchases was $7.5 million on shares in Twenty-First Century Fox.

“We quite like the assets that they’ve got – the movie studios and TV networks. We thought they were attractively priced from a medium to long-term perspective, being a provider of content,” Mr Barker said.

He indicated, however, that the mooted delisting of the stock in Australia would force a reconsideration of the locally oriented fund’s investment.

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