Equitable Investors

Castrol always told us that " oils ain't oils " and Big Un has now confirmed that cash flows ain't cash flows. The failed online video review business finally released its accounts for the six months ended December 31 and they showed operating cash flows were sharply negative to the tune of $9.4m (Figure 1, below). That's completely at odds with the positive $16.8m operating cashflow reported for the same period ("Year to date" column in Figure 2, below) when Big Un announced them six months ago. Figure 1: Big Un's net cash used in operating activities as reported on its newly released half year accounts. Figure 2: Big Un's net cash used in operating activities as reported in its quarterly cash flow statemnet released in January 2018. What's the difference? In the newly released half year accounts, Big Un's accountants have adopted an accounting standard under which "no  revenue  is  recognised  on  receipt  of  moni

Large cap Australian stocks appear at first glance to have held up better than global benchmarks in the latter half of the financial year. While the S&P/ASX 200 has risen to its highest levels since the GFC, globally the Wall Street Journal recently published a chart illustrating that there had been a nearly $US10 trillion decline in world exchange market capitalisation since a peak in January 2018. The Russell 3000, a broad index of US stocks, peaked on January 31 and has pulled back ~4.5% since then. But once you consider exchange rate movements, you can argue that Australian equities haven’t performed so well. Figure 1 shows that from a US dollar perspective, Australian large cap equities have declined since late January. Note the AUD peaked at $US0.81 in Jan and is now ~ $US0.74. Figure 1: iShares’ US-listed MSCI Australia ETF (USD, orange) v iShares’ ASX-listed S&P/ASX 200 ETF (AUD, purple) Source: Thomson Reuters MSCI itself reported that its Australia