Continuous Disclosure is a market news column, including analysis and opinion. Edited by Duncan Bridgeman, Tamsyn Parker and Jamie Gray. In today's edition:
• Gone cruisin'? Where has former ANZ boss David Hisco gone?
• Analysts look for no surprises reporting season
• Devon doubles down on profits
ACC dumps Aussie stock as manager exits
ACC is to reduce how much it invests in Australian shares as it puts more focus on its New Zealand holdings.
The change to the $40 billion fund comes as it sees the departure of one of its longest standing fund managers.
Blair Tallott will retire in October after 17 years in the ACC's investment team.
Jason Familton, who has been part of the team for six years, will take over from Tallott.
An ACC spokesman said Tallott was a highly valued member of the ACC investment team and had made a significant contribution to its investment performance.
"Blair has long signalled he will be retiring from ACC in October and Jason Familton will be taking over management of the portfolio.
"Jason has been closely involved in the management of the equities portfolio for the last six years."
The spokesman said ACC did not comment on future investment intentions but it had made a decision to change its investment strategy.
"ACC has made the strategic decision to reduce the proportion of the portfolio that Blair Tallott and Jason Familton manage that is invested in Australia, to allow them to place greater focus on New Zealand holdings."
ACC has a strong track record for its investment management. It claims to have beaten its benchmark for 25 of the past 26 years.
"To the best of our knowledge, no other investment fund anywhere in the world has ever outperformed market-based benchmarks on such a consistent basis."
The investment team aims to return after cost returns which are 0.3 per cent above the benchmark for its investment portfolio.
ACC says it is only reducing the Australian component for the portfolio that Tallott had been managing, which represents slightly over 2% of ACC's total investments.
Until recently, about 9% of that portfolio had been invested in Australia and it was benchmarked against a composite index that was 10 per cent weighted to Australian stocks.
"The reason for taking Australian stocks out of the benchmark is to allow the portfolio manager to focus more on New Zealand stocks," the spokesman said.
"It's important to note that the reprioritisation of this portfolio represents a very small change to ACC's continued investment in Australian equities at a total fund level. Overall, almost 5 per cent of ACC's Investment Fund is invested in Australian equities, and this percentage will be changing by less than 0.2 per cent."
Former ANZ boss gone cruising?
One missing piece in the expenses scandal involving former ANZ New Zealand bank boss David Hisco has been where the man himself is.
A source close to the banking sector is adamant that Hisco was on a cruise somewhere in the Northern Hemisphere when the bank announced his departure.
ANZ has declined to confirm whether this was the case.
"Mr Hisco was out of the country at the time of the announcement of his departure from ANZ Bank. We don't know his travel details as he is no longer an ANZ employee," said a spokeswoman for the bank.
The question remains when he will come back to New Zealand (if he hasn't already) and if he will continue to live here.
An Australian by birth Hisco and his wife Deborah Walsh became New Zealand citizens in 2016.
Hisco's personal use of chauffeur-driven cars and wine storage costs using the bank's money cost him his $3 million-a-year job following an internal investigation.
He had been on extended leave for health reasons.
Pressure on reporting season
The June financial reporting season has kicked off and analysts will be closely watching whether companies live up to their promises given how hot the share market has been running of late.
Shane Solly, fund manager at Harbour Asset Management, said the market was being driven by lower interest rates with investors pouring into bond-like utility, infrastructure and real estate stocks in a bid to boost income yields.
But he said it was important to remember why rates were down.
"The reason interest rates are falling is because central banks, including the RBNZ, are cutting and potentially continuing to cut official rates as insurance against the impacts of slowing global trade on economic growth."
Solly said not all stocks would do well in that environment with cyclical businesses most exposed.
"We are seeing this in recent US company results with companies like rail operator CSX and home builder Pulte missing expectations and seeing their stock prices fall."
So far there haven't been any pre-season confessions of lower than promised profits but Solly said that was largely down to the type of companies reporting in this round
"This result season is dominated by the gentailers (Mercury, Meridian, Contact Energy, Genesis), Auckland Airport, retirement/aged care (Summerset, Metlifecare, Oceania) and real estate (Precinct, Property for Industry and Vital Healthcare)."
He said given the mix of companies there was limited ability to gain insights into the health of New Zealand Inc although the retirement village stocks could give some signs of the impact of the slower Auckland housing market.
"Nonetheless outlook statements will be key to influencing the direction of the market – the market will be looking for a no surprises result period with steady as she goes type outlook statements."
Mainfreight and A2 Milk have had very strong runs this week with both stocks reaching record highs.
Mainfreight shares have risen nearly $2 a share in a week from a closing price of $40.18 last Thursday (July 18) to Wednesday's market close of $42.14.
That was despite no news coming out of the company.
Market sources said it wasn't fundamentals driving the stock but pointed to the spike coinciding with an issue of warrants by listed investment company Kingfish which is managed by Fisher Funds.
Earlier this month Kingfish warrant holders had the option to convert their warrants into ordinary shares given the warrants had a price of $1.25 a piece and Kingfish shares were trading at $1.45 most holders took up the option.
That gave Kingfish an injection of capital of around $50 million which it promptly invested into the companies already held in the portfolio.
Its largest holdings include A2 Milk, Fisher and Paykel Healthcare and Mainfreight.
A2 shares hit a new high of $17.45 on Tuesday while F&P shares spiked up to $16.40 - it's highest point since May.
One analyst said while a little bit of A2's rise was down to the warrant conversion it was also linked to some good data out of Lyttelton Port - the main port in the South Island which is owned by Christchurch City Council.
The analyst said it was typically a lower point in the year for dairy exports but the numbers were well up which implies the numbers would be good for Synlait and in turn A2.
But A2 remains a divisive stock with some analysts very optimistic about its fortunes and others, particularly Australian fund managers, choosing to short the stock.
Devon doubles profit
Fund manager Devon has more than doubled its profits in the last year after slashing its admin expenses.
Companies office filings show it made a net profit of $3.33 million in the year to March 31, up from $1.55 million in the 15 months to March 31, 2018.
While the different timeframes don't allow for easy direct comparison its performance fees were up substantially from the prior period rising from just over $322k to $1.11 million while admin costs fell from $10.5m to $6.3m.
The fall in admin costs appears to be largely related to lower management expenses and expenses paid on behalf of the funds its manages.
Salary and wages paid out doubled between the timeframes.
The company manages six investment funds.