Virgin IPO: Another Sign for the Bulls | Australian Markets

Three issues I’m fascinated with at present…

1) All week we’ve been chatting about bullish alerts from the markets.

Every day I see more. Today is no completely different.

One manner you and I can get a learn on all of it is by way of Initial Public Offerings (IPOs).

This is new corporations coming (“floating” in the financial lingo) on to the share market. It doesn’t take Einstein to see why.

An IPO is house owners promoting a chunck of their company, or all of it, to public traders.

An investment bank will make this occur. They put collectively a good little pitch in a doc that features projections, financials and dangers.

Then they flog the factor to anybody with a pulse. They receives a commission from the money raised. The complete course of is a good earner when issues are pumping.

However…

Investors solely hand over their money once they really feel assured, and it’s taking place with a strong backdrop.

The investment bankers received’t try to float a company when sentiment is dire. Better to carry off till issues look rosier. You get more money that manner.

One of the factors I made in 2023 and 2024 was that the IPO market had dropped like a stone – a signal to go the different manner.

That’s why the news at present stands proud like the proverbial.

The Virgin Australia IPO is now on. It’s been brewing for 2.5 years!

Virgin’s house owners are coming to the market with their hand out for $685 million, in accordance with the Fin Review.

I can’t let you know the deserves, or in any other case, of shopping for into Virgin. But it’s one other signal the market restoration is ongoing.

2) Just a little bit more on the IPO market comes from a former investment banker.

The Street Talk column at present quotes a man known as Declan Sherman, who now runs a recycling company that simply listed. They raised $40 million.

The column quotes him as saying…

““I’d say the IPO window is definitely open….

“If you have something people want to invest in, the market is there. We had bids from the type of small-cap fund managers you really want on your register.”

The phrase “IPO window” jogs my memory of a speech I did to our Alliance members back in 2023. I talked about the “premiership window” opening up for small caps.

I stole that line from AFL coach Mick Malthouse.

The thought is there’s a window of alternative when all of it comes collectively.

If 2023 was 9 o’clock for small caps, 2025 is between 10 and 11. 12 can be increase instances.

Get on it, I reckon.

3) Granted, one sparrow doesn’t make a spring.

This week we’ve additionally chatted about buybacks and particular dividends taking place in a few stocks. Again, these are likely to occur in “healthy” markets.

Here’s one other bullish signal. This time it’s from the property market.

Two massive builders are teaming up to assemble a new house tower up there on the Gold Coast.

The penthouse alone might be a cool $20 million. The Fin Review says completion is due in late 2027 or the first quarter of 2028.

Again, I don’t know whether or not shopping for one of these flats is a good thought.

It’s the considering behind the construct that we care about.

Clearly, the groups behind this project assume that construction and finance prices are both steady, or going down, they usually can get this away at a revenue. Demand might be there to fulfill it.

This just isn’t an remoted case.

Lower rates of interest make real estate more engaging, and also will show up as larger earnings on the stock market once they feed by way of to the listed property corporations.

The credit cycle is increasing. Bullish certainly!

Best needs,

Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator

After such wild swings in the market just lately, it has been robust studying the tea leaves as a result of varied indicators have been sending conflicting alerts.

In that state of affairs you possibly can fall into the entice of affirmation bias.

Technical evaluation is beneficial as a result of after you have set up a technique to analyse what’s occurring, there are moments when your intestine really feel meets the concrete actuality of the chart. And you need to trust the chart.

Small cap stocks have been by way of a robust time over the previous few years. They have underperformed their bigger cousins massively and the microcap stocks have been even worse.

The S&P/ASX Small Ordinaries stays 9% beneath the high reached in 2022.

But once I contemplate the month-to-month chart there’s a lot to love.

The long-term pattern turned up February 2024. We have seen some wild swings since then, however they’ve all taken place with the long-term uptrend remaining constructive.

After the critical scare in April, the rebound has been spectacular and final month noticed the affirmation of a month-to-month buy pivot.

We are seeing comply with on shopping for this month and a new high in the present uptrend has simply been hit.

In the small cap space, there’s actually no excuse to be bearish based mostly purely on a studying of the charts.

Of course which will all change rapidly if the promoting returns and a month-to-month promote pivot is confirmed in the subsequent few months.

But there’s no need to foretell issues. You have to take a look at what’s there and settle for it.

Until confirmed in any other case the smaller finish of the market appears to be like prefer it may rally additional and will even begin outperforming giant stocks.

Regards,

Murray Dawes,
Editor, Retirement Trader and Fat Tail Microcaps

All advice is common advice and has not taken under consideration your personal circumstances.

Please search unbiased financial advice concerning your own state of affairs, or if doubtful about the suitability of an investment.