As speculative pockets of the market boomed during the pandemic, Atlas’ Hugh Dive reminded himself of the lessons learnt from the dotcom crash.
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“Banks are very fast to pass through rate increases which we’ve seen, but very slow to raise deposit rates, so we’ll see a bit of a margin expansion opportunity there,” he says.“This is in an environment of pretty close to full unemployment. Rising rates will cause pain in the economy because it will cost people more to service their mortgage, but while they’ve still got jobs, they’re still going to pay that mortgage.
This is highlighted by the fact that every stock in Atlas’ Australian equity portfolio paid a dividend over the past 12 months, with 22 out of 24 increasing their distributions. “What I look for is stable earnings and low gearing which is quite attractive to PE because it allows them to gear it up and buy it,” he says.
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