Stuart McAuliffe, the managing director and chief investment officer at ASX-listed funds manager Henry Morgan, was one of the few to make money on the outcome of the first round of the French elections.
The Brisbane-based investment manager says this morning he booked “significant profits” in both currencies and equities.
He won’t reveal the exact size of the take, but says the company is looking at issuing a special dividend to shareholders.
France is now heading to a final run-off between centrist Emmanuel Macron and far-right National Front candidate Marine Le Pen. Macron is pro-Europe and on current polling would be expected to defeat Le Pen in the final vote on May 7.
A short time ago, Henry Morgan shares were up 6% to $1.74, about double the 12 month low of 88 cents.
In a Market Outlook issued in March, McAuliffe predicted: “Reformist Macron wins the French election and French stocks soar taking European banks and insurers with them. A 20% ‘up year’ in European stocks crushes bears.”
The tip was one of 10 McAuliffe made for the 12 months ahead.
“We have been long the Euro and the British Pound all year,” McAuliffe told the market today in an update.
“As we anticipated, the British Pound and the Euro have been the best performing major currencies this year. We have traded those markets successfully throughout the year, and the latest news on the French elections overnight has resulted in another substantial move in those markets.
“We booked significant profits when Chicago opened this morning both in currencies and equities.
“We believe markets may move further in our favour. However, we are looking for opportunities to book profits with a view to paying out another special dividend later in the year, similar in amount to the previous special dividend.”
McAuliffe told Business Insider Henry Morgan started getting ready for the French election in October 2016, bullish on both European stocks and the Euro.
“We called (the election of Donald) Trump, but our view in France was much more nuanced,” he says.
“That is, the French would go for a new party, but back away from the more radical choices.
“If Fillon had not had a corruption scandal then we would have invested based on Macron and Fillon into the second round.
“As it now stands, Le Pen will be crushed in the second round. Macron had it all — youth, the smarts, a new reformist party, lots of charisma– we thought he’d win since January, even before he released his policies.”
Here’s the full text of McAuliffe’s 10 predictions made in March for the year ahead:
1. Chinese stocks go on a mid to end year tear beating all developed markets, soaring over 20%.
2. The Mexican Peso continues as the best performing currency in the world doubling its returns so far this year (approximately 12% so far).
3. Reformist Macron wins the French election and French stocks soar taking European banks and insurers with them. A 20% ‘up year’ in European stocks crushes bears.
4. Bunds (German 10 year bonds) and other safe havens get truly mauled (they had it coming).
5. Commodities continue to rally into year-end after a dip right now, confounding critics.
6. The British Pound becomes the best performing developed world currency from here, closely followed by the Euro rallying 10%, again shocking forecasters.
7. The NASDAQ 100 is the best performing US stock index.
8. Trump economic policies fail to deliver for most of this year, but all come together by the end of 2017 and push markets higher into year-end and the bull continues throughout 2018. Bears tell us daily that this just cannot be — but we believe it is.
9. The ASX is an average performer – we think you should focus on global funds.
10. If you think you are long enough stocks, you probably are not. If you are worried you are too conservatively placed, well, don’t say we didn’t warn you.
When he issued the forecasts McAuliffe said: “We made some decisions last year that played out very well, resulting in an increase of over 100% on our trading accounts in six months. While anything can happen in the market, we expect to even better that achievement this year. As a result, many have asked us what we think will happens this year.
“While we cannot give you all of our proprietary models, we can tell you what we think will happen and where the action lies.”
In the latest half year results, Henry Morgan posted a net profit after tax of $1.38 million on revenue of $3.68 million.
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