Friday 23rd October 2009
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Salvus Strategic Investments, the listed company investor whose shares jumped 57% in the past six months, has its holdings of cash and sold down Abano Healthcare and Methven, betting the equity market rally may have run out of puff.
“New Zealand equities are now pricing in a sustained profits rebound and valuations are now at levels that we believe will not be sustained in the short term,” Salvus said in its third-quarter review.
Taken together with a high kiwi dollar and weak agricultural economy, “we have been selectively increasing our cash weighting by locking in the strong recent performance from some of our holdings,” the company said.
The NZX 50 Index has climbed 33% from its lows in March and touched a 13-month high this week, while the kiwi dollar reached a 15-month high. New Zealand's economy emerged from recession in the second quarter. Salvus increased its cash to 15% of its portfolio as at Oct. 16, from just 1.9% at June 30.
Among its top 10 holdings, New Zealand Oil & Gas slipped to 13.7% of its portfolio from 15.8%, Methven dropped to 10.4% from 15.1% and Abano fell to 10.7% from 14.9%. The investment company exited its stake in Wellington Drive Technologies.
Salvus added to its holding of Freightways, which rose to 11.2% from 7.6%, while children’s clothing chain Pumpkin Patch grew to 10.8% from 7.8%.
“In the event of any market weakness, we intend to add further to our cyclical exposures at valuations that better reflect our future growth expectations,” Salvus said.
Shares of Salvus were unchanged at 83 cents, valuing the company at $17.1 million.
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