The Harry Kane Portfolio

I have this theory, one that I have put to some of my fellow Englishmen, that Harry Kane is a hoax. Now I know that Harry Kane, the captain of the English football team, is now the highest scorer of goals for England, surpassing Jimmy Greaves and Bobby Charlton. So, on that basis, he is massively successful and a massively talented footballer. My gripe with Harry Kane, is that a lot of those goals come from tap ins, and a lot of those goals come from penalties. He missed the most important penalty! What's important is that Harry Kane has been remarkably successful, he is the highest goal scorer ever for England and yet he takes tap ins and penalties and makes them count. 

You are asking what that has got to do with investing? Has he lost it completely. Maybe.

If we look at the investing world, we could probably learn a lot from Harry Kane, in that we need to take the tap ins, we need to take the penalties, to become the biggest and the best goal scorers. In order to become the Harry Kane of the investment world, we need to look at the easy money, the easy goals, the penalties against Serbia or the penalties against Italy, dare I say it, that are just easy, no pressure.  The ones he gets in a friendly perhaps. 

In that vein, it pays to look at stocks and situations that offer the investor a tap in or an easy penalty chance, ones that have the appropriate risk reward working in their favour. They may not be spectacular bicycle kicks (I tried that once in my fifties, fair to say I looked a goose), they may not be spectacular freekicks from 40 metres out, that speed miraculously into the top corner.  They may not be headers, where Harry Kane elevates almost mysteriously and miraculously, 3 feet above any defender to head low and hard through the goalkeeper's legs. They may not be any of those, but what they are; they are goals and a goal is a goal. It doesn't matter whether it's a good goal or a bad goal, I will take any goal. 

As a former striker myself, I was always very keen to take any goal I could, and I was very happy to take a tap in, of course I was more than happy to do something spectacular, a quick turn and a wallop into the bottom right-hand corner but at the end of the day a goal, is a goal, is a goal and the same applies to investing. 

I am a simple soul, It is very hard to beat the market, many people try, many people fail. That is why ETFs have become popular.  Many money managers become billionaires on a run of luck and outperformance.  But one easier way to tilt the table in your direction, is to look at takeover situations. These are trades where there is a bid on the table, could be there is a private equity company with a non-binding indicative offer (NBIO), or maybe a company out there that is under takeover and just needs FIRB approval or other regulatory approvals to ensure that goes through. 

It may just be a question of timing, as to how long you have to wait for your money, but sometimes waiting for a 7% return perhaps, in three or four months, is better than playing the vagaries of the market. In light of this, I have created the HARRY KANE (Arbitrage) PORTFOLIO. The point was to try and benefit from the arbitrage and the takeovers of these stocks that are under threat or actually under schemes of arrangement etc. They do not always succeed and sometimes, Private Equity walks away. That is part of the risk evaluation process.

For instance, of course we have Oz Minerals (OZL) at the moment under takeover threat and that will come to pass from BHP in April/May. That deal will go through and there is nothing in it.  But there are plenty of others out there at the moment, private equity has been very busy, as to have been corporates around the world, which are obviously using the lower Aussie dollar as a big, big factor in buying up our companies. We are on sale!

The latest of course last week was Liontown (LTR) which received a bid from Albemarle at $2.50. That was the third bid that LTR had received from Albemarle. the first one that they actually made public, of course, but it was the third bid.  The market thinking is that they will come back and pay more too, in order to get the board and the major shareholder, Tim Goyder, onside with the bid. Of course, that is always a risk they may just walk away, then may also look at another company instead. They only have around 4.3% according to the latest filing. 

So here is the Harry Kane Portfolio.

All these companies are under some sort of M&A approach. Some will fail. Some will succeed. All will take time. But they are the stock market equivalent of the Harry Kane tap in. Some are gimmes, some have risk that the bidder will walk away.

• Invocare (IVC) – Unsolicited NBIO for 1265 cash from TPG. Cu
• United Malt Group (UMG) – Under takeover from the French at 500c. 
• Allogio (ALO) – Agreed SoA for 30c cash. 
• Origin Energy (ORG) – Agreed SoA with Brookfield at 891c. FIRB will be an issue.
• Alliance Aviation (AQZ) – Agreed by both parties to a 475c bid from QAN in shares. ACCC issues. 
• Liontown (LTR) – Bid from Albemarle at 250c. 
• Mincor (MCR) – Wyloo bid complicated by BHP and guidance issues. Current bid price 140c.
• Pushpay (PPH) Done deal at 133c currently a small return in the deal. Should complete soon.

There is also the Newcrest (NCM) bid by Newmont but given it is a share-based deal, that increases the risk and makes it more complicated. Same applies to Healius (HLS).

There may be more out there as I have yet to find a definitive list from the ASX of stocks that are under takeover.

Now buying into Arbitrage situations may not be for everyone. But the important thing is the Harry Kane principal. Try and be in the right place, at the right time to take the easy chances. A goal is a goal. Taking easy wins, can be far more lucrative than swimming against the tide or trying to time a turn around. That can be really tough to do.

It is a big market. There are always opportunities. Some are tough calls. They may be spectacular when you get them right (TikTok stuff). But the easy tap ins from 6 yards out, are still goals. Hunt for those. Be in the right place, at the right time. Be like Harry. You want to be a ‘hoax’ just like him. Not a bad thing to be with your investments.

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Analysis as at 31 March 2023. This information has been provided by Marcus Today (AFSL is 473383), for WealthHub Securities Ltd ABN 83 089 718 249 AFSL No. 230704 (WealthHub Securities, we), a Market Participant under the ASIC Market Integrity Rules and a wholly owned subsidiary of National Australia Bank Limited ABN 12 004 044 937 AFSL 230686 (NAB). Whilst all reasonable care has been taken by WealthHub Securities in reviewing this material, this content does not represent the view or opinions of WealthHub Securities. Any statements as to past performance do not represent future performance. Any advice contained in the Information has been prepared by WealthHub Securities without taking into account your objectives, financial situation or needs. Before acting on any such advice, we recommend that you consider whether it is appropriate for your circumstances.