The ‘three minute noodle’ investment selection approach
Investors are backing investments which will offer only short-term gains, according to Prime Value, rather than taking a long-term forecast.
Likening it to an appetite for three-minute noodles, Shih Thin Wong, chief investment officer at Prime Value Asset Management, said this had been observed in the resurgence of interest in travel stocks.
“Three-minute noodles are convenient, they do the job to satisfy your hunger temporarily, but they lack the nutritional make-up to sustain you long-term” he said.
“The Australian stockmarket is after any next thing, not even a ‘next big thing’. Just any next thing to fulfil a short-term craving.”
Instead, they should be looking at those companies which would have sustainable growth over the long term or had used the pandemic to strengthen their financial position.
“Investors are assuming REA will be a COVID-19 loser, but this is a short-term view. Real estate prices globally remain buoyant and interest rates low – a longer term view suggests REA has a superior real estate listing portal that has become indispensable for property buyers and sellers alike,” Wong said.
“More importantly, REA is well positioned to continue to improve its incremental returns on capital through higher prices.
“IDP Education, which recently acquired the British Council’s Indian English language testing business for a great price, improving its position for long-term growth.”
Shares in REA had risen 44% while IDP Education had risen 73% over the past 12 months to 16 September, 2021, versus returns of 30% by the ASX 200.
AUTHOR
Laura Dew
Recommended for you
Evidentia Group has announced the appointment of a chief risk and operating officer, rounding out its executive leadership team after a slew of hires last month.
Family office Lederer Group has progressed its takeover bid for the Elanor Commercial Property Fund, lodging a bidder’s statement with ASIC as it says the fund has been “unable to agree” on negotiation terms.
Magellan Financial Group is keen to enact further strategic expansions with income from strategic partnerships tripling to $31.1 million from the addition of Vinva during FY25.
Outflows have doubled in the property and infrastructure space to $1.3 billion with advisers instead favouring private markets as Morningstar data finds active property funds are struggling to outperform.
