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How far will we go to gain conviction?

“In periods such as the Global Financial Crisis (GFC), when it comes to stock selection it is all about the balance sheet” says Paul Taylor, Fidelity’s Head of Australian Equities.

Sydney Airport is a stock that demonstrates the true depth of research Fidelity will undertake to understand the variables driving a company’s financial viability. Throughout the GFC, markets were concerned that Sydney Airport were over-leveraged and unable to sustain their borrowings through this period of dislocation.  The stock price was falling and markets were nervous.

Fidelity’s proprietary research showed that for Sydney Airport to default, the following four conditions would have to occur concurrently: 

  1. Passenger traffic had to decline by 35% year on year
  2. Retail sales per passenger had to decline by 25%
  3. Property rents had to decline by 25%
  4. Car park sales per passenger had to decline by 30%


No single database worldwide had this intelligence.

In this short video, Paul Taylor & Jason Billings talk through their theory behind the stock and the team’s analysis of data from the world’s 57 international airports to determine whether they could hold their position in the stock during this uncertain period.

The outcome? Not only did we retain our position in the company, but we built our holdings during the period which significantly benefited investors in the fund.

This video is an excellent demonstration of the Fidelity research process that we are so proud of, and is a great example to show to clients invested in our funds.

Sydney Airport is currently a holding in the Fidelity Australian Equities Fund.*

 

*As at 30 April 2017.

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).  Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.

This document is intended for use by advisers and wholesale investors. Retail investors should not rely on any information in this document without first seeking advice from their financial adviser.  You should consider these matters before acting on the information.  You should also consider the relevant Product Disclosure Statements (“PDS”) for any Fidelity Australia product mentioned in this document before making any decision about whether to acquire the product. The PDS can be obtained by contacting Fidelity Australia on 1800 119 270 or by downloading it from our website at www.fidelity.com.au. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. This document is intended as general information only. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity’s managed investment schemes is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. Reference to ($) are in Australian dollars unless stated otherwise. 

© 2017 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited. 

This website is intended to provide general information only and has been prepared without taking into account your objectives, financial situation or needs. You should consider these matters before acting on the information and consider the relevant Product Disclosure Statement for any product named on this website before making an investment decision.

© 2017 FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340.
Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL limited.

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 ("Fidelity Australia"). Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International. Prior to making an investment decision retail investors should seek advice from their financial adviser. Please remember past performance is not a guide to the future. Investors should also obtain and consider the Product Disclosure Statements ("PDS") for the fund mentioned in this document. The PDS is available on www.fidelity.com.au or can be obtained by contacting Fidelity Australia on 1800 119 270. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider such matters before acting on the information contained in this document. This document may include general commentary on market activity, industry or sector trends or other broad based economic or political conditions which should not be construed as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be construed as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care no responsibility or liability is accepted for any errors or omissions or misstatements however caused. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity funds is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. References to ($) are in Australian dollars unless stated otherwise. © 2017 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International, and the Fidelity International logo and F symbol are trademarks of FIL Limited.