Thanks to all of you who voted for us in last month’s finals. We didn’t win but had a great event. It was also good to meet up with Phil and snap a pic with us together.
Now with the upcoming footy grand finals, let’s dive into what’s been happening in the financial world.
Financial Market Overview
The ASX 200 has shown impressive resilience, up 10% year-to-date. The RBA has maintained the cash rate at 4.35% and S&P Global anticipates AU will follow the U.S. Federal Reserve’s lead in cutting interest rates. It seems we could be in for a gradual easing cycle, with potential rate cuts starting sometime in 2025.
Speaking of the U.S., their presidential race is heating up again. From our vantage point down under, it’s hard not to raise an eyebrow at the political circus unfolding.
And talking about the circus…
– the AFL Grand Final is just around the corner! The Sydney Swans will face off against the Brisbane Lions at the MCG. The big game kicks off at 2:30 pm AEST, so make sure you’ve got your afternoon cleared for what should be a cracking match.
Interestingly, “What time does the AFL Grand Final start?” is consistently one of the most Googled terms on game day. So, if you find yourself frantically searching online come Saturday, you’re welcome!
NRL Grand Final Preview
Next weekend’s NRL Grand Final is also on the horizon. The big game is scheduled for Accor Stadium in Sydney, kicking off at 7:30 pm AEDT. While we don’t know the teams that will be competing just yet, we do know it’ll be a full day of rugby league action with both the NRL and NRLW deciders held on the same day.
Finally, if you’re not interested in footy, well you’re in luck. As I’ve written an article on why I love short seller….
(….newsletters)!
Blue Orca: The Sarcastic Shorts Making Waves
You know, there’s something delightfully refreshing about reading short seller research. For contrast, long-only shops are soooooo bland in their reporting. There’s never any fraud, and then you go and read a report from a short guy and they are usually great! They’ve got a big story of intrigue, drama, a true hero’s journey. Then at the end, a way to totally make money betting against a silly management team who are clearly less smart than you. The savvy and clever reader of this report in front of you.
Ahhh, aaaannd enter Blue Orca Capital. One of my favourite activist investment firms, founded by Soren Aandahl, who seems to have a knack for combining financial analysis with a dash of sardonic humor. I’ve no idea if they can actually consistently produce returns on a risk-adjusted basis, but I do know they write reports that instantly make you feel smart, savvy, and cool.
Take their name, for instance. Blue Orca. It’s not just a random choice. Orcas are known for their intelligence, communication skills, and, let’s face it, their ability to take down much larger prey. Sound familiar? It’s like they’re telegraphing their strategy right in their name.
Now, let’s talk about their latest target: Sun Communities, a real estate investment trust (REIT) that Blue Orca has decided is ripe for a bit of short-selling scrutiny. Now, Sun Communities isn’t exactly a small fish – we’re talking about a company valued at approximately $17.5 billion. That’s a lot of zeros, folks. To put it in perspective, that’s about the same as the GDP of Mali. Yes, an entire country.
Blue Orca, in their inimitable style, has accused Sun Communities of some creative accounting. Specifically, they claim the company is under-reporting its recurring capital expenditure disclosures. Why? Oh, just to inflate their cash flow numbers. You know, the usual. It’s like when you “forget” to include that impulse buy in your monthly budget. Except, you know, on a multi-billion dollar scale.
But here’s where it gets interesting. Blue Orca isn’t just saying Sun Communities is a bit overvalued. No, they’re going full bore, suggesting the company’s shares could be overvalued by about 48%. That’s not a rounding error; that’s nearly half the company’s value. It’s like saying your house isn’t worth $500,000, it’s worth $260,000. Ouch.
The market, ever sensitive to these sorts of allegations, responded with a 2.7% drop in Sun Communities’ share price. It’s almost as if investors read Blue Orca’s report and collectively said, “Huh, maybe there’s something to this.” That 2.7% drop, by the way, wiped out about $472.5 million in market value. That’s more than the entire budget of NASA’s Mars Exploration Program. All from one report.
Now, let’s talk about Blue Orca’s style for a moment. Their reports aren’t just dry financial analyses. No, they’re peppered with sarcasm and wit that would make a stand-up comedian proud. Take their disclosure statement, for instance: “We are short, and thus biased in this report. You are probably biased as well.” It’s like they’re saying, “Hey, we’re all human here. Let’s just admit our biases and move on.” It’s refreshingly honest in a world where everyone claims to be objective.
It’s worth noting that Blue Orca has a track record of making waves. Remember their short on Seek back in 2020? They claimed Seek’s Chinese subsidiary, Zhaopin, was significantly overvalued and propped up by “zombie” businesses and fake resumes. That report sent Seek’s shares tumbling 5.9% on the day it was released. But here’s the kicker: Seek’s CEO Andrew Bassat called the report “littered with inaccuracies” and the company’s shares rebounded. It’s like a financial soap opera, isn’t it?
Of course, it’s important to remember that short sellers like Blue Orca have a vested interest in seeing share prices fall. They’re not exactly unbiased observers. But then again, who is in the world of finance? It’s a bit like asking a barber if you need a haircut.
In the end, whether you view Blue Orca as crusaders for transparency or opportunistic predators probably depends on which side of their shorts you find yourself. But one thing’s for certain: when Blue Orca surfaces with a new report, the market pays attention. And if nothing else, at least we get some entertainment along with our financial analysis.
As Blue Orca might say, “You’re reading a short-biased opinion piece. But then again, aren’t we all biased about something?” And in a world of bland financial reports, maybe a little bias and a lot of sass is exactly what we need to keep things interesting.
As always, if you have any questions about your financial strategy, don’t hesitate to reach out. I’m here to help, even if I can’t help your team win the grand final.
P.S. there’s our usual podcast still going on: Can You Really Save by Retiring on a Cruise Ship?
Well, who knew that retirement could be as adventurous as living on a cruise ship? In our latest episode, Phil hit me with this shocking tidbit:
“If you’re comfortable living in an inside cabin on a lower deck, they reckon it was about two grand a month cheaper to live on the cruise ship with everything provided than to live in Sydney.”
Surprising, right? Here’s how the math breaks down:
- Cost of living on a cruise ship: Around $3,600 per month
- Cost of living in Sydney: 2 grand more!
- What’s included?: Meals, drinks, and even some entertainment!
But that’s not all. We also explored the FIRE movement—a growing trend helping people build better financial habits for early retirement or financial independence.
Bonus Tip:
In this episode, we also discussed a great tool called Banqer, designed to teach kids the value of money. With fun, interactive lessons about taxes, saving, and spending, it’s a brilliant way to get them financially savvy early on. After all, money habits start young!
Catch the full episode now on YouTube and Spotify!
