I hope you did better in the Melbourne Cup than I did. In fact, is my horse still running?
Suffice it to say, that’s probably the outcome I deserve for doing no more due diligence than going off the name.
A way better outcome yesterday was the near 8% rise in Lifestyle Communities [ASX:LIC] shares.
That’s a relatively recent recommendation of mine over at Australian Small-Cap Investigator.
I saw the stock jump up…but didn’t have the foggiest idea why. It was a flat day across the market in general.
We know the answer now. Capital markets mover and shaker David Di Pilla joined the shareholder register via one of his funds at HMC Capital.
Here’s the background so you can see the significance…
You may’ve noticed that LIC has been a total train wreck this year.
Its market value shed a billion dollars from its highs.
See the chart here…
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| Source: Market Index |
What does LIC do?
LIC operates ‘land lease’ retirement communities in Victoria, having done this for around 20 years.
It listed about a decade ago…and was something of a market darling before 2024 came and sent their apple cart flying.
However…
I love nothing more than picking over the bones of a case like this and seeing whether I should be going the other way.
Here’s what I told my readers, in part, back in August…
‘Some people say, “demographics are destiny”. They’re certainly a powerful force.
‘Here’s the facts. Australian baby boomers (born 1946-1963) number approximately 5.6 million.
‘The majority are between 60 and 78 years old. By 2028 (under 4 years away!) all the baby boomers will be over 65.
‘The average age of an existing LIC homeowner is 74.
‘The aging boomer demographics are clearly driving more people into their ideal catchment period…
‘It’s hard to gauge the distributional profile of wealth across the baby boomer generation.
‘However, it seems to me that…
‘…By 2030, many Australians will buy into a land lease community whether they want to or not for financial reasons.’
Now here’s the Australian Financial Review quoting one of HMC’s team yesterday:
‘While Lifestyle Communities is facing some near-term challenges, we have high conviction in the attractive demographic tailwinds and growth opportunities for the land lease community sector over the medium to longer term.’
Now, I’m not telling you to rush out and buy LIC. There are risks, rewards and timelines only available in the full report I did on the stock.
I also expect LIC to be something of a slow burner – it’s the type of business that needs time.
I’m bringing LIC to your attention because it’s a classic case of the Resurrection potential across the small cap sector right now. I told you about this last week.
Men like David Di Pilla are not fools.
They also have large amounts of capital they need to deploy. The Australian small-cap sector is ripe for this type of active buying…because it’s trailed the blue chip sector for years.
You also need to see something else. Look at these recent revenue figures from the Big Tech stocks in America over the last 12 months…
- Google +15%
- Microsoft +16%
- Meta +19%
- Amazon +11%
This is excellent growth considering the staggering size of these firms already.
Now here’s Westpac’s 12-month revenue growth to the end of September, released yesterday…
- 0%
Hello…!
Meanwhile, the US share market keeps barnstorming its way up because it has some of the greatest businesses of all time. Most of Big Tech has never been more profitable.
Australia’s market is nothing like this. The big stocks are richly valued with nothing like the revenue growth or addressable markets in the USA.
In other words, the Aussie blue chips will likely stall out now.
I believe small- and mid-caps are where the action is going to go.
As they inflate, the gains could be juicy.
If I’ve piqued your interest, I have three ideas you should consider. To find out more, click here.
Best,
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Callum Newman,
Editor, Small-Cap Systems and Australian Small-Cap Investigator
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