‘Nothing secret about this’
17 April, 2018, 12:00 am
AN investment chief has questioned the importance of a giant funds management business buying more than 5 per cent of ASX and NZX-listed Fletcher Building, warning that people should not get excited about that.
“My concern is if someone sees that, thinks Fletcher is in play and goes out and buys shares,” said the Auckland-based chief, who spoke to the Herald under the condition of anonymity.
After speculation late last week that ASX-listed Wesfarmers had bought a 3-4 per cent Fletcher stake, the price rocketed from Thursday’s $5.84 to $6.35 on Friday — providing a strong indication of the current hype on Fletcher.
The chief was responding to a Herald article yesterday reporting that Ellerston Capital of Elizabeth St, Sydney wrote to the ASX on Friday, saying it has become a substantial Fletcher shareholder.
Ellerston, with more than $A5 billion ($F7.9b) under management, now controls 5.13 per cent of the shares of the Penrose-headquartered builder, materials manufacturer, supplier and distributor on behalf of an unnamed party.
Clients of the Sydney-headquartered business “include Government, industry and corporate superannuation funds, international funds as well as individual investors via leading investment administration platforms,” Ellerston said.
The Auckland-based investment specialist said this morning that although that was not untrue, he questioned the importance of the share purchase and whether any significance should be read into it.
“There’s nothing secret about this.
“Funds managers buy on behalf of their clients all the time.
“That’s the way it works. Every single fund manager in New Zealand does this all the time.
“Ellerston is not hiding anything. They’re just doing that funds managers do,” he said.
“Ellerston is looking for value, if you look at Fletcher verses its peers,” he said.
The Penrose-headquartered business was trading at a price-earnings multiple well below Australasian counterparts, he said.
That meant it was good value.