No real surprises here this morning. I am not even sure if the cross shareholdings were addressed at the company's respective analyst briefings - I guess I will have to read tomorrow's AFR to see if there was any discussion on this front.
One thing I did notice, was that Brickworks was increasingly transparent with respect to its extensive property holdings, and the potential values on offer upon successful rezoning of its land bank. It was almost as if the company was at pains to say "Here, look! Here is the hidden value on our balance sheet. Please take note of this. Please!!"
I don't have a lot of time at the moment, however on the weekend I do plan to put together some updated valuations of both companies and will post them on my blog.
In the meantime I am actually looking forward to tomorrow (now today). I have a very small ASX 200 put option position in play which looks like it is about to turn sharply in my favour. I am not going to tell you how small the position is, because it is embarrassing - suffice to say that the premium paid will not bankrupt me should the option expire worthless a month from now.
I went in to the trade feeling as though there was about a 90-95% chance of losing my money. Volatility was not particularly low at the time either, so downside protection was not cheap and further skewed the odds against me. With that in mind, surely you must be asking, what the hell are you smoking man? Why make the trade? Well, there are were in fact a few reasons I thought I was an outside chance of making some money.
Here is a brief summary of my thinking behind the position, rightly or wrongly. Time will tell.
1. The Eurozone is a complete and unmitigated disaster. I could not see any short-term resolution to the problems in Greece that could potentially provide a boost to markets.
2. Global growth has been deteriorating for a few months now. I believed the recent market turmoil would cause further deterioration in the growth outlook and that economic data may continue to surprise to the downside.
3. In the outside chance that the Bernank disappointed yesterday, I felt commodities would take an absolute beating. This looks to be the case, with sharp falls in commodities accelerated by weaker than expected data out of China (on which I am already bearish). As I write oil, copper, silver and gold are all getting obliterated.
In summary, we have a dearth of political and economic leadership to take necessary steps to address the very real problems we face (however revolutionary those steps need be), a global banking system that is largely insolvent and under enormous stress with interbank spreads rising steadily day by day, and the commodities complex being trashed as people belatedly realise China too is in this mess up to their eyeballs.
Now could someone please remind me what the two most prominent sectors in the ASX 200 happen to be? Hmm, do materials and financial ring a bell? They should - and the fact that the resources and financials alone make up roughly 60% of the index is precisely where I see the potential for a large payoff, given the issues markets are presently facing.
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