CWN

Given how the news flow unfolded, from that big red highlighted news item at 9.20am this morning, it was something of a disappointment.

We actually owned CWN, a while back, as a reopening play, which was a successful trade. We sold out on the back of the first takeover proposal, and noted at the time that the long running ESG issues were only getting worse with each passing week, leading us to revise upwards our probability of a subsequent, much more punitive, outcome.

The example is illustrative. Had the outcome gone against them, the stock reaction would have been, in our view, extreme, because the market (perhaps unlike the regulator) has a manic side, and if there’s one thing this manic nature hates, it’s uncertainty. And there would have been loads of it.

The upside has been, at least based on today’s trading, a little under 10%. From an institutional perspective (with our fund manager hat on) it is a trade that simply didn’t seem worth it. From an advice perspective, we think it an even more unappealing trade, with the optics of “this readily foreseeable, highly impactful outcome was a risk you didn’t need to take” very much front of mind.

As we often note, there are simply easier way to make money, than in these binary sorts of bets.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.