Argo Investments, an Australian listed investment company with $5.6 billion in assets, has reported 6.2 per cent growth in half-year profit to $110.5 million, thanks to improved dividends from a number of companies in its portfolio which included BHP Billiton and Rio Tinto.
By contrast, last year the companies from the resources sector reduced their dividends. However, the rebound in the commodity prices helped reverse the trend.
Argo said it bought $99 million of long-term investments and received proceeds of $49 million from long-term investment sales.
At the same time, with the Australian equity market’s continued growth, the company said it selectively increased the positions in a number of smaller companies such as Monash IVF Group, iSelect, Tassal Group, Speedcast, Managed Accounts and Steadfast Group.
Argo’s investment (NTA) performance returned 6.8 per cent after all costs and tax over the half-year to 31 December 2017, underperforming the ASX200 Accumulation Index which returned 8.4 per cent.
The short-term underperformance was primarily due to the strong run of resources stocks, while Argo had lower market weightings in these companies due to the relatively or no dividends policy they had in place, the company said.
As far as future outlook was concerned, Argo expected global share markets to continue their growth, led by the US and fuel provided to corporates via the Trump administration’s tax cuts, while Australian economy was expected to remain “in reasonable shape.”
“Argo is a long-term investor and we maintain our valuation discipline by not chasing stocks which we believe to be overvalued,” the company said in a statement released to the Australian Securities Exchange (ASX).
“However, the upcoming corporate results reporting season may throw up some opportunities for further purchases of quality companies that do not meet the short-term earnings expectations of the market.”