Veteran stock picker Ben Griffiths, with 35 years of experience, believes the Australian sharemarket is building steam. Griffiths co-founded Eley Griffiths, a firm that manages the ASX-listed Australian fund for Future Generation. Eley Griffiths is an Australian-based investment management firm specialising in small and mid-cap equities. The company aims to provide investors with superior long-term returns through active stock selection and a focus on undervalued companies.
Griffiths says the opportune moment for investors was October 23 of last year, when markets shifted from concerns about rising interest rates to anticipating rate cuts. His firm ensured they were well-invested from that point onward, going against the trend of losing faith during rate hikes. He notes that the absence of hysteria in the market, reflected in a low ebb in initial public offerings, suggests further potential. The S&P/ASX Index reaching 9000 for the first time with little fanfare further supports his optimism.
Griffiths is encouraged by his firm’s recent performance, with the small-cap fund up 28 per cent, the mid-cap fund returning 25 per cent, and the emerging companies strategy 26 per cent. He highlights that small caps are an easy bet on the interest rate cycle, outperforming large-cap rivals globally as interest rates potentially decrease. Griffiths points out that the ASX’s top 100 stocks trade at a higher multiple compared to the Small Ordinaries, making smaller companies a relatively cheaper entry point with double-digit earnings growth forecasts.
Griffiths advises embracing the bull market, noting that professional managers don’t sell stocks at all-time highs, as underlying trends tend to last longer than expected. He notes that the final crucial element of a full bull market that is still missing is a boom in initial public offerings. Griffiths adds that the conditions for Australian stocks to run have been falling into place throughout the year, and investor sentiment is currently measured but aroused, suggesting the market is marching into euphoria but is not quite there yet.
