Stock stories

Every dollar entrusted with us must be a dollar well invested. Our stock stories will give you an insight into how we manage your investments.

Spotlight on: QBE Insurance Group

QBE is one of Australia's largest general insurance & reinsurance groups and one of the top 25 insurers and reinsurers worldwide.

The company can trace its origins back to 1896 when James Burns, a young Scotsman, formed the North Queensland Insurance Company Limited. Within four years the company had established over 36 agencies with offices in New Zealand, Hong Kong, Singapore, many Pacific Islands and London. Today the QBE group has offices in 41 countries and employs more than 8,000 people worldwide.

QBE has been one of the larger active positions for the Capital team in recent years and has been a positive contributor to the Australian share portfolio’s performance. We saw the investment in QBE as particularly attractive because the company is well positioned to benefit from favourable dynamics in the general insurance industry in the medium term. Margins in the industry have been rising due to steady premium rates and claims trends. This has allowed reserves to build up which will help with longer term conditions if industry trends become less favourable.

QBE has achieved the highest (or near highest) level of return on equity among the leading insurance stocks on the ASX. The ability for a company to lift returns is the fundamental requirement for the Capital team to rate a stock highly.

This stock is available via the AMP Capital Equity Fund.

Spotlight on: Godfrey Group

In Australia, the name Godfreys is usually associated with the humble vacuum cleaner. But did you know the Godfreys group is the largest cleaning appliance retailer of its kind globally, operating 151 stores across Australia and New Zealand? Not only that, the company’s ‘vertical’ structure focuses on product design, wholesaling, retailing and after sales service. Their products include cleaning appliances, janitorial supplies, vacuum cleaner bags and spare parts.

We originated the investment in Godfreys to part fund its acquisition by Pacific Equity Partners, a leading Australasian private equity firm. This deal cements the existing strong relationship Pacific Equity has with AMP Capital’s Structured and High Yield Debt team.

We believe the Godfreys investment will provide excellent returns for our investors, based on the company’s historically strong and successful way of doing business. Their ability to hold a leading market share position and maintain a strong brand name in the cleaning appliances market is a testament to Godfrey’s effective management approach.

This stock is available via the AMP Capital Structured High Yield Fund, the AMP Capital Enhanced Yield Fund and our diversified funds.

Spotlight on: Lend Lease

Lend Lease Limited (Lend Lease) is a major property group specialising in property development and construction. The company also has a significant investment management business.

The Lend Lease retail operation has a 30 year track record in developing, building, operating and owning shopping centres. The main focus is on the high quality regional centres, ideally with some potential to extend and redevelop the centres, creating opportunities for incremental income streams.

The residential activities of the company are focused within the Lend Lease Communities division. These operations are usually of large scale and long term in nature, where the barriers to entry are higher. The business operates in Australia, the UK and also the US (in the US the focus is mainly on military housing).

The group’s construction management activities are carried out within the Bovis Lend Lease division with operations centred in the UK, Australia and the US. A broad range of property sectors are targeted together with specialist areas such as health, education and defence estates.

Lend Lease’s investment management business frequently holds assets that have been developed and/or managed by the rest of the group, with over A$12 billion in assets managed for clients or on the Lend Lease account.

The attractiveness of Lend Lease from the perspective of the Value Plus team is the group’s strong free cash flow yield, strong balance sheet and our assessment that the company will be able to drive healthy growth in that cash flow from targeted areas of the business. The diversity and long term nature of many of their developments should also enhance the stability of future cash flows.

This stock is available via the AMP Capital Value Plus Australian Share Fund and our diversified funds.