Each of the businesses listed (except SCG), has a detailed...

Each of the businesses listed (except SCG), has a detailed article outlining my investment thesis, so I won't go into detail on an individual level.

So to answer the specific points above:

These investments are not strongly contrarian or deep value, which is what investors normally associate with value traps. All four of the businesses have been able to grow profits at an above market rate, over an extended time period. To me this indicates that these are above average businesses. The past financial performance of a business is a strong marker of future performance.

Now obviously business dynamics can change performance and the quality of a business. In my view it is important to watch for empirical data indicating a business is struggling. The four businesses above do not indicate that from their most recent accounts/market updates.

Scentre Group released a tenancy update showing very low vacancies and good rental growth figures. All going well here, with enormous downside protection as it is trading well below NTA of very tangible assets. Only problem with SCG is the upside is not large, it is best to be thought of as a semi bond proxy.

Westpac's experienced strong revenue and profit growth for a number of years and their most recent HY report was stronger than it appeared due to increased spending on staffing. Housing over leverage and increasing competition are concerns, but the price accounts for these.

IOOF has had strong inflows for a few quarters and their most recent inflows released last week were decent and of good quality in terms of division weighting. The banking Inquiry is a small concern, but the price more than compensates for this.

Amcor's flexible division continues to show good growth, although their PET division is under some pressure. Moderate upside, but very defensive and one of the few unpopular companies listed on the ASX with predominantly overseas earnings.

In concluding, I am looking to arbitrage a poor narrative along with being mindful of business risk. Each of the businesses above are too boring, has a perceived threat or negative media coverage. The businesses of each are strong in a fundamental sense and cheap relative to a majority of the market.


Now to your suggestions:

SHL is a good quality company and is one I haven't looked at for a while. It doesn't look overly expensive at first glance. Something for the watch list, but it would take me a few hours of research to come to a conviction either way.

The Telco sector is something I have looked at in depth. Some value has potentially emerged, but the competitive dynamics are extremely challenging. Telstra is without a doubt over earning and has ridiculous levels mobile profitability, something like $80 ARPU. Most developed counties have mobile ARPU of around $30 AUD. TPG has potential and is a fierce competitor. The management at TPG is excellent, Teoh and Rob Millner are excellent long term wealth creators and eventually they are likely to disrupt the mobile industry. The question is how long will this take and at what cost? It will probably be a tougher battle than most investors think for both companies – just look at the capex being spent.

PS I would happily own AMP if it were cheap enough despite the extremely poor narrative. I have looked at AMP's accounts and they are very poor from a cash flow perspective which is why I have avoided.