, a fraction off its record high. “And yet, we’ve got 396,000 jobs available.”
Inflation does not affect all companies equally: some will be beneficiaries and show their quality. Others, the consumers of capital, will find it more difficult. “A good business isn’t a popular business, it’s not a business that’s getting a lot more users,” Carleton says. “A business to its owner is only valuable to the extent that it produces cashflow that the owner can take out of the business.”Auscap’s strategy emphasises the benefits of compounding, the so-called eighth wonder of the world – “it’s extraordinary” – but also with the discipline of distancing itself from tired narratives, and taking a patient approach.
“So if you get an opportunity to buy them at a market multiple, you’re buying something that’s probably going to deliver returns well in excess of the market.”Auscap detects some opportunities arising from the prevailing narratives of COVID-19 winners and losers, and the assumption these trends reverse. “I think you’re seeing that at the moment with some of the retail stocks,” Carleton speculates., and rally further on subsequent broker upgrades, represented “a very, very strong result”.