London based Hedge Fund Portfolio Manager David Pain has spent the last six months in Australia looking for value down under. He has collaborated with VFS Group Investment Manager James Whelan and he provides his assessment of the big end of the Australian Banking system.
The Big 4 banks have been the foundation of Australian investor’s portfolios for as long as can be remembered, but lately they’ve shown sub-par returns. Why is this?
Investors buying any of the Big 4 banks a year ago would be showing a loss right now, despite some offering fully franked yields above 10%.
Rising capital costs, shrinking margins, scandals and regulatory pressure are just some of the concerns front of mind for institutional investors.
Have the numerous headwinds faced by today’s banks been overblown? Perhaps. Perhaps not.
The real question is why hedge funds are shorting our banks? What do they know that we don’t?
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This Communication has been prepared by Vertical Capital Markets Pty Ltd (ABN 11 147 186 114 AFS Licence No. 418418) trading as VFS Group (VFS Group).
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