Argo Investments, known for its low portfolio turnover, revealed its FY25 investment decisions, notably its choice to exclude Sigma Healthcare despite its significant growth. Argo typically turns over only about 5 per cent of its $8 billion portfolio annually. In the past financial year, Argo added Dexus and Xero to its list of 85 stocks, while divesting completely from MAC Copper and Diversified United Investment Ltd. The company also adjusted its holdings in several other positions, increasing some and decreasing others, including Commonwealth Bank of Australia, primarily due to valuation considerations.
Sigma Healthcare, which recently acquired Chemist Warehouse, experienced a meteoric rise into the S&P/ASX200, transforming from an unloved small cap into a $33 billion company. Chemist Warehouse is a major player in its industry, with a strong earnings profile. Argo Investments managing director and chief investment officer Jason Beddow expressed caution regarding Sigma’s offshore ventures. Argo Investments is an Australian institutional equities mainstay that has been around for nearly 80 years. The company buys, holds, and sells primarily Australian equities.
Beddow noted concerns about insiders selling shares following Chemist Warehouse’s reverse takeover, which created substantial wealth. Argo is also taking a cautious approach as offshore acquisitions and expansions can be risky for Australian companies. Despite Sigma’s impressive 134 per cent share price increase, Argo remains comfortable with its existing core positions, including Macquarie Group, Santos, Origin Energy, QBE Insurance, and Computershare.
Beddow described the market as “squeezy”, noting that while the S&P/ASX200 has returned nearly 15 per cent annually, aggregate earnings have remained flat or declined over the past three financial years. He anticipates potential volatility in share prices during the upcoming reporting season, as most stocks are “priced pretty pointy”.
