With so much economic uncertainty still ahead of us, many ASX small caps are still suffering.
Eleven interest rate rises in the space of a year has forced consumers to close their wallets. This means that the larger businesses with more pricing power and economies of scale have an advantage.
But this year the market has seen some green shoots from the small cap garden bed.
The Celeste Australian Small Companies Fund is a specialist in that field.
The team there noticed three particular ASX shares that had an excellent April, which it is holding onto for further returns:
Political anxiety dissipating
MA Financial Group Ltd (ASX: MAF) shares rallied a whopping 16.7% last month, and have pushed up another 4.8% so far in May.
The finance stock had suffered in the past year due to concerns that Canberra would clamp down on Significant Investors Visa (SIV) entries into Australia.
The Celeste team noted those worries seem to be passing after a government review.
“Investors’ concerns regarding the future of Significant Investment Visa inflows eased,” read its memo to clients.
“The review noted the relative strength of outcomes of the SIV program relative to the broader Business Innovation and Investment Program.”
MA Financial also pulled off a major takeover deal.
“MAF also announced the acquisition of the dâAlbora marina portfolio for $225 million as part of the launch of their new MA Marina Fund,” read the memo.
“The sellers, Balmain Corp, chose to remain invested via the new fund, underwriting the attractiveness of the proposal.”
Cyberattack wasn’t as bad as first thought
Shares for intellectual property services provider IPH Ltd (ASX: IPH) enjoyed a 9.7% climb in April.
A cybersecurity incident had understandably struck fear into investors in March, but the company has since provided “better-than-expected updates” about the intrusion.
“IPH’s investigation found downloaded data was limited to a small number of Spruson & Ferguson clients with most IPH member firms unaffected,” read the Celeste memo.
“Further to this, IPH was able to quickly return to normal operations with key system functionality restored on new network infrastructure.”
Management quantified the financial impact of the security breach at $4.4 million for March and $2 to $2.5 million one-off costs for the current financial year.
A past acquisition has also borne fruit.
“IPH also confirmed Smart & Biggar achieved the full earn-out payment of C$66 million, reflecting strong performance post-acquisition.”
New business is great for the stock price and country
Private health insurer ââNIB Holdings Limited (ASX: NHF) saw its shares rise 9.5% in April then another 5.7% this month.
Investors are bullish about its recent foray into the National Disability Insurance Scheme (NDIS) industry.
“NIB Holdings purchased Brisbane-based Connect Plan Management and entered into an agreement to purchase All Disability Plan Management,” the Celeste team stated.
“The company expects to be the plan manager of approximately 50,000 participants by FY25 under their nib Thrive banner.”
NDIS has been under fire in recent months due to media reports of rorting by service providers.
The Celeste analysts believe entry into the industry by a well-established business like NIB is beneficial for disabled Australians.
“Given the increased scrutiny of the NDIS, NIB’s entry into the space should provide a welcome improvement in oversight, controls, and the overall quality of outcomes for participants.”
