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Good afternoon,

The ASX 200 closed down 0.96% today, pretty much at day lows.  As pulled the data during the day, it flatters the actual 4.10pm close by about 10bps.  ASX 200 was +1.71% for the week (I've got a bit on outside of work this weekend, sorry to those who prefer the Sat notes.)

Resources (6.2%) and Energy the real winners (+5.2%) with tech and real estate also doing well. 
Seneca Australian Shares Portfolio

Has had a nice little start to life (still early doors) +4.13% vs the ASX200 Accumulation Index benchmark of 2.70% (not bad for 14 trading days.) (Obviously unaudited and past performance is not a future predictor of returns and all that jazz...)

Discounted fees for the first $10m in is still on the table, but I've already got over half way there so drop me an email if you're intending to put some money in and want the discount. 

Portfolio has 20-40 ASX200 stocks (limited to that universe) with a max position size of 15% and a minimum position size of 1%.  By design, its not supposed to shoot the lights out, just be a steady performer.

Biggest contributors to returns so far are ANN, BHP, BRG, JHX, NEA and TPM. Detractors ANZ, CBA & CSL. 
Spotify (SPOT on the NASDAQ)

Spotify Technologies shares jumped almost 21% this week, and the stock is up 50% since the start of the year, after the leader in audio streaming announced it was acquiring the exclusive rights to the Joe Rogan Experience (JRE) Podcast.

For my non-podcast-listener readers, 190 MILLION people (about the population of Mexico) download the JRE every MONTH.  Take that in for a second.   SPOT reportedly paid about c.$100m (or 1% of their projected 2020 gross profits)
 
Wells Fargo analyst Steven Cahall said “This is undoubtedly a coup for SPOT to get such a big show on an exclusive basis, and is a big stamp on the size of the platform and potentially its emerging ad tech,” the analyst said. 

I'm a long term user, advocate, investor and fan of Spotify and this acquisition only further highlights the company's likely future strategy around building out a dominant tech leader.  

Like Netfix, licensed, exclusive content is the key to user growth once you've got a trusted and liked product.  As Morgan Stanley found in a recent survey 43% of people select the service for its content.

I expect Spotify to gain users from JRE, but more importantly, its a signpost to other podcast content producers that Spotify is THE platform where you listen to podcasts and its THE platform where you attract podcast advertising dollars.  

Like advertising agencies of old, SPOT has recently turned themselves into a "media buyer" offering brands the opportunity to advertise on podcasts.  With this acquisition, they've deepened that advantage by become both a broker to both the buyers of podcast ad opportunities and the media-business who sells the space. They've got a clip on both sides of the ticket.  Smart business.

Add this to the fact that Google announced plans to shut down its long-suffering Play Music App to focus on YouTube Music, which is also struggling.  

And Spotify is testing a video podcasting feature...

Spotify only trades on under 4x Price to Sales. 
Netflix trades on over 7x, Roku 9x...
Movers & Shakers

Mining services had a nice week, with a solid report from NRW Holdings (NWH) dragging the likes of Perenti (PRN) and Imdex (IMD) higher.  I like the certain corners (generally the less cyclical, more technology focused) of the mining services sector.  Imdex (IMD) & ALS (ALQ) in particular, with the latter reporting next week.  I expect a decent result in the Commodities division to be offset by COVID19 induced weakness in the Life Sciences division. 

James Hardie (JHX) also reported this week, decent, steady result with a few questions around North American demand impacts still to be answered. 
Austal (ASB) continues to divide fund managers, Service Stream (SSM) missed expectations with its result, as did Fletcher Building (FBU) who see a material deterioration in the Australian construction market on the horizon. 
Elders (ELD) ex-div today, Amcor (AMC) ex-div next week. 
Shorts in EML increased dramatically into their moderately disappointing result.  Boral's balance sheet, and increased prices in NEA, WOR attracted some short attention.   On the postiive side, a few staples and financials names. 
Have a good weekend, 
LL
Luke Laretive
CEO & Investment Adviser

T  +61 3 8639 1601  |   M  0451 122 656 | lukel@senecafs.com.au
Level 2 Professional Chambers
120 Collins Street Melbourne VIC 3000 
AFSL No. 492686
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