Short sellers: 1. Overpriced billionaires: 0
That thud you heard last week was the sound of some of the most shorted ASX stocks dropping like a stone.
In yet another win for the much vilified short sellers, WiseTech and Corporate Travel Management both unveiled horrific earnings updates, both unsuccessfully blaming coronavirus for their failures.
WiseTech, which was exposed by Hong Kong-based J Capital last year, has seen its share price decimated from $38.80 in September to $19.28. Given that WiseTech’s earnings appear to be shrinking and it is still is trading on an eye-watering PE multiple of 67, there could be a long way to go before this one bottoms out (Morningstar, which has a price target of $8, seems to agree).
Fellow rich-lister Jamie Pherous is having an equally difficult time with his corporate travel roll up. After goosing earnings for years with acquisitions, short sellers, led by VGI Partners, have shown the Queenslander is seriously lacking clothes, with its share price down from a peak of $32.68 in September 2018 to only $15.96 now.
Pherous’ attempts to explain a difficult December half on coronavirus didn’t go down too well either, given that unlike Corporate Travel Management investor relations department, investors seem to be aware that the virus was first reported on December 31.
We wonder how Corporate Travel Management mooted lawsuit, led by corporate ambo chasers ABL, against VGI is coming along.
Cheers for that
If it isn’t bad enough that young people are living through the greatest inter-generational theft in history, through a period of obscenely low interest rates and global budget deficits and money printing, they now have to put up with articles like this in The Sydney Morning Herald.
One suspects a 25-year-old entering the workforce with $50,000 in student debt and an average property price of more than nine times annual income would be extremely grateful to “learn from the generation before them that has already done it”.
A highlight was a 58-year-old secondary teacher who advised that he had been “been taking advantage of the benefits of salary sacrificing these contributions. My contributions have been at least 10% of my annual salary.”
Noting that superannuation earnings are taxed at close to zero is probably unhelpful to someone who can’t access their super for 40 years. (Although by then, the young will probably have no super left, with the government probably raising balances to pay the medical bills of baby boomers).
Money for nothing
It’s not enough that their ham-fisted policies have re-inflated the two decade old property bubble, and forced savers into ever riskier speculations: now the RBA thinks it deserves some new digs.
According to The West Australian the central bank wants to spend “$259.7 million [to] fix leaky sewer risers, replace lifts, reconfigure workspaces, install insulation and replace glass windows to bring the ageing building up to modern standards”.
The use of taxpayer dollars reinforces the notion that we’d be far better off simply shuttering the RBA and letting the market set interest rates at their correct level, rather than have them set by Philip Lowe, who at the age of 58, has never worked outside the public sector.
Say it ain’t so Joe
While he’s probably Australia’s best business journalist, even the greats sometimes miss their target. On Sunday, Joe Aston’s acerbic Rear Window column took aim (again) at billionaire Atlassian founder, Mike Cannon-Brookes, noting that, “Atlassian pays zero company tax to Canberra on greater than $1 billion of revenue booked here, thanks in no small part to its (welcome) use of the Research and Development Tax Incentive” and dubbing him “Australia’s most incessant poseur”.
Joe even compared Cannon-Brookes to Australia’s wealthiest heiress, Gina Rinehart — whose initially inherited fortune was wildly grown through extracting community resources out of the ground and flogging them off to China — who allegedly earned her soapbox (as if the soapboxes can be acquired).
Back to Cannon-Brookes, the reason Atlassian hasn’t paid corporate tax is pretty simple — it doesn’t currently generate net profit. Its most recent filing indicates gross profit of US$202 million and costs of US$204 million.
Not to mention (as Aston himself has pointed out) Cannon-Brookes has been regularly selling hundreds of millions of dollars’ worth of Atlassian stock, upon which, he presumably pays capital gains tax — as unlike many other billionaires, he remains domiciled in Australia (as does Atlassian itself, so Atlassian’s hundreds of Australian employees are also paying income tax).
Adam Schwab is a company director, angle investor and the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed.