☕️Widowmaker Conundrum

Good morning.

Active fund managers are nursing a widowmaker conundrum: those who have sold or not bought Commonwealth Bank shares have missed a stock which has all but doubled since October '23. It’s a big issue for active investors as the rise is driven by passive models and institutions, Capital Brief reports.

“We fully acknowledge the likes of CBA, JB Hi-Fi and Wesfarmers are high quality businesses, but they are now trading on valuations that look stretched on almost all measures,” says SG Hiscock and Co portfolio manager Hamish Tadgell.

But for Hiscock, value investors, that’s no reason to abandon the firm’s long standing value model.

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Market movers

Shares in The Lottery Corporation fell Friday after Citi downgraded its outlook, forecasting a 13% drop in annual earnings and further weakness in Powerball performance.

The quick sync

• Marco Lamantia writes that a ban on debit card surcharges risks harming small businesses, stifling competition and giving big banks more power at the expense of consumers. (Capital Brief)

• Betashares pays $8.5m for Equity Mates, a major move in Australia’s podcast sector as the founders remain to drive future growth. (Capital Brief)

• A rate cut from the RBA on Tuesday is almost certain as markets brace for Trump’s tariff deadline and fresh global volatility. (Capital Brief)

• Clive Mayhew writes Australia’s global AI edge lies in investing in sector-specific innovation, not generic solutions. (Capital Brief)

Trading floor

M&A

• Barings has acquired a majority stake in Swift Storage with a $200m investment, tapping into Australia’s $2b self-storage sector. (AFR)

• FleetPartners eyed for M&A after share rebound. (The Australian)

• US real estate giant CoStar’s acquisition of key web domains like homes.com.au and now apartments.com.au signals a major shake-up in Australia’s property listings market. (AFR)

• TikTok building new US app before September sale deadline. (Capital Brief)

• NIB begins travel unit sale, with Zurich seen as a likely bidder. (The Australian)

• Anacacia takes majority stake in $100m dairy business Procal. (AFR)

• RACQ considers bank sale after $855m insurance exit. (The Australian)

• Start-ups NextOre and MRead merge into $150m MagnaTerra Technologies. (AFR)

• UnitingCare joins Healthscope sale race as hospital bids heat up. (The Australian)

Capital Markets

• Azoria delays Tesla ETF over Musk’s political party plans. (Capital Brief)

• Two Svge seeks growth partner after hitting $11m in annual earnings. (AFR)

• James Hardie rebounds after $14b Azek deal despite investor doubts. (AFR)

• SG Hiscock and Co portfolio manager Hamish avoids CBA despite surge, citing overvaluation. (Capital Brief)

• Arc Infrastructure seeks $300m loan as WA government eyes rail network control. (AFR)

• MoleMap weighs future after years of private equity ownership. (AFR)

• Bally’s aims to keep running Star’s Queen’s Wharf amid partner dispute. (AFR)

VC

• None

People moves

• Tim Miles, a leading mid-market M&A advisor and founder of Miles Advisory, has died in a Sydney road accident at age 58. (AFR)

• Ex-SkyCity execs sued over $67m Austrac penalty. (AFR)

The watercooler