Thoughts on markets, investing, and equity research.
Transurban, Telstra, and APA are executing flawlessly. But with the 10-year bond yield at 4.86%, their yield spreads have collapsed to zero or negative. Quality infrastructure at the wrong price.
Spodumene crashed 87% from US$5,000 to US$672 per tonne. Three ASX lithium companies were fully exposed. Their fates diverged based on one factor: where they sat on the cost curve.
Gold is at record highs above A$6,000/oz. Regis Resources made A$323 million profit. St Barbara made A$1.3 million. The difference is hedge book positioning, balance sheet strength, and jurisdiction.
Five Australian REITs in the same rate environment with valuations spanning a 26% NTA discount to a 171% premium. The market is shifting capital from passive landlords to property platforms, and the gap is widening.
Bendigo Bank trades at a 38% premium to fair value with sub-cost-of-equity returns, an AUSTRAC fine of A$250M-A$800M pending, and credit normalisation about to compress earnings 12-15%. The market assigns 80% transformation probability; we assign 40%.
JB Hi-Fi posted record half-year sales of A$6.09 billion, then January comps dropped to +2-3% from +5-7%. The two-speed consumer and late-cycle policy lag signal broader retail weakness through H2 2026.
Cochlear and Pro Medicus are two of the highest-quality businesses on the ASX, both overvalued by 60%+, and both just reported disappointing H1 results. The comparison isolates the quality premium trap from two different angles.
GQG Partners generates 77% operating margins and is run by a founder who owns 70% and has co-invested US$1B+ alongside clients. The market prices a cyclical trough as structural decline, creating a 47% discount.
Across 31 companies, the highest quality scores correlate with the widest overvaluations. PME at 8.4/10 is 61% overvalued. VVA at 5.9/10 offers 107% upside. Quality deserves a premium, but the market has lost track of how much.
AGL is undervalued while Origin is overvalued. The market discounts AGL's energy transition as value-destroying while pricing Origin's peak cyclical earnings as permanent. Both assessments appear wrong.
Evolution Mining and Northern Star are both competent gold miners trading at extreme premiums. The entire valuation gap comes down to a single disagreement: gold price regime.
CBA trades 55% above fair value at A$171. ANZ trades 46% above at A$40. The best and cheapest Big 4 banks are both overvalued, driven by structural flows rather than fundamentals.