HITS AND MISSES
The sharemarket has had its big hits ... and its misses
Which stocks hit the target?
The Australian sharemarket’s unwanted reputation as a tech-light, mining-heavy zone has been challenged this year when we look at the best performers over the past 12 months.
For once there are few miners. Rather, the list is chock full of innovative companies that have brought home the big returns despite the market slide over recent weeks.
With just a handful of trading days to go the numbers may move a little from here, but they are unlikely to change too much.
At the very top of the winners list is Nearmap, a mapping technology company that has managed powerful returns every year for the past four but in 2018 excelled itself with a return of about 169 per cent. The group is thriving off rising demand, especially from infrastructure projects.
Consumer finance star Afterpay is also at the top, bringing a gain of nearly 115 per cent this year after an incredible take-up of the “buy now, pay later” service, which has recently announced it is to expand offshore.
One of the market’s best known IT companies, electronics software group Altium, also makes it into the winner’s enclosure with a returns of 65 per cent.
With technology stocks the most popular choice for Australians buying stocks offshore, it is clear now there is also local support for strong IT companies when they emerge on the ASX (as opposed to listing offshore, which occurred in the case of superstar company Atlassian).
Gambling-related stocks feature among the best and worst stocks this year. In the top 10 performers is Jumbo interactive. The digital retailer of jackpot and charity lotteries is very much an online operation: it gained 145 per cent over the year.
In contrast, Cambodian casino group Donaco took its place among the worst performers with a decline of 84 per cent.
This contrast in fortunes within one sector suggests outperformance among shares comes from bottom-up details such as management and financial quality, as opposed to top-down issues such as industry opportunity.
Biotechnology, which has once again offered its fair share of losers this year, has one outright winner in Clinuvel — the skin specialist company has powered ahead by 105 per cent over the year.
Innovation can spark outperformance beyond the obvious spheres of IT and biotechnology: Freelancer, the online marketplace for freelance workers, has rocketed higher in the second half of the year after announcing “Freightlancer’’, an ambitious global service offering freelance services to the shipping and trucking industry. Freelancer is up 86 per cent over the year.
Also in the mix at the top this year is Hutchison Telecom (up 85 per cent) a thinly traded wing of the global group behind the recent merger with TPG and the Accent Group, the retailer behind The Athlete’s Food that at $1.38 this week gained 64 per cent over the year, though this is primarily a recovery story. The Accent group was worth more than $1.80 two years ago.
Despite the wider resources re- bound, with better prices for iron ore and coal this year, only one mining stock pops ups in the top 10: Aurelia Metals, a highly regarded gold miner that has managed a stunning 160 per cent lift over the period.
Looking at the 10 worst stocks of the year there is no obvious loser sector, rather the overarching theme is clearly “management trouble’’ across a spectrum of activity that includes food, franchising, social media, blockchain and biotechnology.
It is worth remembering that the list of the worst stocks has an element of what they call “survivorship bias” — these stocks have at least survived, rather than those that collapsed completely, as in RCR Tomlinson and others.
In a year when the wider market is looking at a flat return, among the worst is blockchain specialist Yojee, which has managed a downturn to rival the nosedive of bitcoin itself over the last 12 months with a drop of 77 per cent.
Biotech, which offered a string of shockers this year including Mesoblast, puts forward Impedimed as the clunker of the season, dropping 78 per cent for the year and demonstrating just how volatile biotechs can be.
Impedimed, which specialises in diagnostics in areas such as body fluids, lost almost half its value mid-year when it dropped from 53c to 27c, then recovered to 51c and since August has plunged again to 24c. All up, that’s a 78 per cent drop from January to December.
Also in the sin bin is the onetime media monitoring darling Isentia, which remains in the media intelligence business but has lost its social media sparkle while falling 78 per cent.
Among the surprise casualties this year is Silver Chef, a big favourite among small-cap investors for many years and one of the first small caps to manage a corporate bond.
Those days now seem distant for the struggling restaurant equipment leasing group, where the numbers have been going the wrong way for months — the stock is down 79 per cent this year.
Uranium miner Berkeley Energia might have been the first company to open a uranium mine in Europe, except the Spanish government never granted it a licence.
This piece of news hit Berkeley hard indeed — it is looking like the worst-performing miner of the year with a drop of 82 per cent.
Dominating the very worst stocks of the year are three scandal-plagued operators each with its own grisly story.
RFG, the food franchise group that includes Brumby’s Bakery, has fallen 85 per cent after a media investigation questioned the feasibility of the company structure and whether franchises could actually make money.
Get Swift, a “software as a service” stock, also fell in the wake of media examination of the group’s operations and disclosure — as a stock, Get Swift limps on after falling 88 per cent this year.
Third among this troubled trio is Blue Sky Alternative Investments — down 93 per cent.
When economic historians chronicle the arrival of industrialstrength shorting activity on the ASX, a milestone will be the attack by the US-based Glaucus group on Blue Sky, a hedge fund and property group that managed to attract mainstream investors until revelations of accounting discrepancies shattered its credibility.
All three companies — RFG, GetSwift and Blue Sky — are now facing class actions.
The worst stock of the year is a biotech AirXpanders Inc-CDI. For now, it takes the wooden spoon with a drop of 95 per cent.