Latest / ausbiz a.m / 29.09.26 Heath Moss HLM Investments
Transcript
- nadine: Well, good morning to you and welcome to Ozbiz AM. It's the 29th of September 2026. We just teased you with Andrew Gagan yesterday. I'm Nadine Blaney here with you just for a couple of mornings. And yeah, what a morning it's expected to be here. So yesterday we had some pretty solid gains, relatively speaking, on the local market, the SP ASX 200. Well, today shares are expected to open higher. Despite a really sort of flat to lackluster finish on Wall Street. And that's because we've seen the US 10-year bond yield rising to 5.27%. That's a multi-decade high. There's plenty of uncertainty still about the war between US and Iran. And we've got only about half of capacity running through that Saudi pipeline. We've still got the Strait of Hermose. Closed. ⁓ Look, before, as I've said before, I get too down on what's going on out there, maybe we should bring in somebody who I always regard as a bit of an optimist, and that is Heath Moss, joining us from HLM Investments at a very early time of the day in Adelaide. Good morning, Heath. Heath Moss: Good morning, Nadine. How are we? nadine: I'm pretty well. we're good. Crude oil, if you're invested in energy looking good up around a hundred and five dollars a barrel, where does it end? Heath Moss: ⁓ yeah, that's a good question. If we we there had the answer, we'd be very, very rich, I think. But ⁓ yeah, things are not you know, not not much has changed really over in over there in the Middle East. It has it. ⁓ there's still although I think the sentiment has changed a little bit in terms of ⁓ Iran are now coming to the a US for for negotiations and for deals, rather the other way around. I think some some of the economic squeezing that we're seeing and I've seen reports that Iran can't get any oil out at the moment. is really starting to to to hurt them and I think sentiment has changed there. But in terms of the h overall situation, a little bit of oil's coming out through the stray, the the the the as you said, the East West Pipeline's back online, but only at half capacity. ⁓ and pressure really is on those ⁓ those oil prices and ⁓ 'cause it looks like China is back in the market as well. So ⁓ yeah, yeah, things haven't really changed at all there, which I think, you know, has upset the market ⁓ over the last week or so. nadine: Yeah. So, ⁓ what do you make of the performance? ⁓ rel y you know, taking everything into consideration, the S P five hundred still looking pretty resilient. Do you think it could still continue to go higher from here alongside the NASDAQ? Heath Moss: Yeah, look, it's been like you said, it has been resilient. It's ⁓ been an orderly sell-off. I mean, we're only a couple of percent off of the highs on the S P five hundred. ⁓ every time it gets smacked down a little bit, there is decent ⁓ buying support there. And I think that's mainly because of s the the the earnings outlook and the earnings picture is just so strong. I mean, we've had over thirty percent earnings growth in the first two quarters and expected to be around the same in Q three. And Q4 and those Q3 earnings ⁓ kick off in a in a couple of weeks. ⁓ and even next year is supposed to be 15% earnings growth, which is quite strong. So I think that earnings backdrop as well, giving people confidence to dip back into the US market and support it whenever we do some see some weakness. Cause generally it is ⁓ during a midterm election year, it's quite negative and bearish around this time of sentiment and the performance of the market. So seeing this strength is ⁓ quite surprising. ⁓ 'cause normally also in a midterm year the Q four is very, very strong once we get all ⁓ the midterms out the way. So if this is how well supported the market is now, then I'd expect a very good Q four ⁓ moving forward. nadine: Yeah, and and you know, at risk of making people feel nauseous by repeating the same thing. It's earnings, yes, but it's the AI trade. And last night we had NVIDIA with a what some are calling a historic 150 billion, that's with the B, billion dollar share buyback. So what does that mean? Heath Moss: ⁓ just confidence in its balance sheet and I suppose that, you know, because obviously there's been concerns about, you know, the circular nation and ⁓ you know, likeness of this ⁓ AI trade and how Nvidia and other companies are funding other companies who are just buying back their products, etcetera, with that cash. So for them to reinvest back into themselves must ⁓ excuse me, ⁓ must say, ⁓ you know, they're confident in where everything stands at the moment and and have great confidence in their balance sheet. 'Cause they haven't got much debt on on their balance sheet at the moment, Nvidia, the unlike some other the other ⁓ hyperscalers. So, ⁓ yeah, it's just really good for the market and really good for earnings 'cause ⁓ I mean, com when compared to many of the other AI tech stocks out there, Nvidia does look, you know, quite cheap on a Ford PE basis. nadine: Well, got a bit of competition. So NVIDIA Challenger, I'm just reading this. AMD agreeing to buy World Labs last night. Also, Meta launching a business selling AI tools to companies. ⁓ Mark Zuckerberg calling it the next major pillar of its business. Are you invested in Facebook, Heath? Heath Moss: Mm-hmm. ⁓ yeah, I started ⁓ last week ⁓ after the the muse the muse ⁓ news that came out. it really is a game changer for for meta. It's a whole old ⁓ a whole new revenue stream for them. ⁓ even though it's only a free subscription at the moment. They're very good at monetizing free services as we saw with Facebook and WhatsApp and Instagram over the years. ⁓ but this gets AI into the hands of ⁓ regular people, mums and dads, and can do very, very useful nadine: Really? Heath Moss: things with it like plan holidays and schedule, you know, set up their schedules and set up grocery lists, et cetera. All the things that we hate doing, eventually, you know, we'll get used to using something like an ⁓ Meta's Muse to do it for us. ⁓ and unlike Anthropic and ⁓ OpenAI who have to go and acquire customers, these guys have got three point six billion people just sitting there waiting to use it. So I think over the years this is really going to accelerate earnings. earnings and add alpha to their earnings and see them outperform. And I think there is a chance. This is the first real threat to Google search business because at the moment when people go to buy a product, they're still using Google search to to search for those products and then click those links to buy them. This AI Muse matches AI Muse bypasses that whole step in the chain. It it has its own browser, its own VM servers, etc. So it just goes direct to the source. So if they start to gain momentum and users and can penetrate that market, we could see Google search business slow down, which it's been doing very, very well over the last eighteen months to two years. nadine: Hmm, interesting. I'm gonna have to change my ways, or we're all going to evolve. ⁓ just to aside a you know, a little anecdote. ⁓ because I still use Google search. I think a lot of people still do, but I was ⁓ on holidays with a bunch of friends, and even if they were looking for directions or anything to look up, they never went to Google. They always went straight to chat. And that's just not how my brain works yet, I guess. Heath Moss: Me either. Me either. nadine: So, yeah, but you do sound like a big believer in the Hillary story. So I thought I would ask. We've got news that the Lane Cove, so it's a suburb of Sydney, there was a Goodman Group data center planned there, and it's actually been knocked back. ⁓ does this throw a little bit of cold water on how you can access the AI trade here locally? So, yes, you're invested in Meta, but there's still a whole lot of people listening to this podcast that are looking at the sort of picks and shovels here locally. They're looking at the data center play. ⁓ does this concern you that we're seeing this concrete pushback? Heath Moss: ⁓ not really. I mean, I think the data, or although it's I think it's old data in the US is that ⁓ forty percent of all data center applications get rejected. ⁓ so it's not surprising to see strong pushback here. I mean, here in Adelaide out at Murray Bridge, we've got Iron building a ⁓ quite a large data center that's seeing some pushback. It's still going ahead, but ⁓ it is seeing some community ⁓ pushback. So it's not uncommon ⁓ because there is a lot of misinformation out about there about data centers and how much water they're using and ⁓ just overall what they do to the ⁓ you know the community, et cetera. But ⁓ no, I don't think it really impacts all that much because it is hard enough to get a data center up and going at the moment in terms of ⁓ sourcing materials and ⁓ people to build it, et cetera, et cetera. So it may impact it ⁓ you know, in two or three years down the line when ⁓ these data centers were supposed to be going up, but at the moment I don't think it it does at all, but ⁓ they'll find somewhere else to build it. I if the demand is strong enough, which it is at the moment, given, you know, the way token usage is going, ⁓ they will just find another another site to to to build it on. nadine: All right. ⁓ look, maybe I buried the lead, ⁓ but I did it on purpose because I think we all know that we're expecting the Reserve Bank to lift rates to a 14-year high today. We'll be covering it on Osbiz, of course, osbiz.com.au. We'll have the media conference being held by the governor Michelle Bullock afterwards. So looking forward to that. Heath, interest rates. I mean, if you've got a mortgage Of course it's gonna impact you personally, but does it change the way that you invest at all in Australia? Heath Moss: Yeah, yeah, it has done over the last few months. because obviously the Australian consumer and households are are hurting. ⁓ these ⁓ rate rises obviously dip into their ⁓ pockets a little bit more, force people to ⁓ spend more on their their mortgages. ⁓ so they got less discretionary money to be spending out there, you know, doing all the fun things they want to do. So I have been avoiding ⁓ you know, buying at the moment. be ⁓ so sort of companies like ⁓ JB Hi Fi or Harvey Norman or Nick Scarly, even though I do really, really like them as companies, simply because it's been shown in the data that Australians are avoiding the big ticket items at the moment when it comes to spending spending their money. They don't have the confidence in it. ⁓ so I have been using, you know, sort of a a strategy to to move into companies that have ⁓ less exposure to the Australian consumer. So those companies like a an Orica or Brambles or even Osle, you know, who generate most of their money overseas and away from Australia. Where, you know, over over in the US and the rest of the globe is actually the economy is extremely healthy and there is an earnings boom going on. So I want to be able to participate in that. And those companies here in Australia ⁓ quite don't quite have ⁓ the exposure to that 'cause their economy is No, struggling at the moment where the GDP is slowing, you know, built to tightening, household spending is gonna come down. ⁓ so yeah, that's the the strategy I've been using. nadine: Okay, I'm gonna introduce something new to this podcast, only 'cause we're running out of time and I know you've got kids, as do I. So ⁓ Goldfield's potential acquisition of Northern Star. Do you think we'll see ⁓ another bite at the cherry? Heath Moss: Yeah. I think so. I mean it was very opportunistic, as Northern Star said, ⁓ because Northern Star have underperformed the rest of the goalies, but simply because of have management issues and a bit of production issues. ⁓ you know, it came out of left field a little bit, the especially ⁓ you know, going after Australia's largest gold producer. I thought we'd see more ⁓ MA in the the sort of mid tier section, which we may still do, which I think we actually think we will do, especially if gold comes off a little bit more. ⁓ but yeah, I expect I think to watch this space, I think they'll come back. ⁓ I think there'll have to be more cash involved rather than it just being ⁓ fully shares 'cause ⁓ you know, goldfields, like many other goalies, their balance sheets are very, very good at the moment, high free cash flow, low debt. ⁓ and the easiest way for them to ⁓ gain you know increase production and gain the answers is to buy someone else rather than go look at it for them for themselves. nadine: And ⁓ just another one because I was speaking with a technical investor yesterday who is really bullish on Santos and Woodside, and I just thought we'd bring the podcast back to where we started, which is energy. Are you bullish the local energy names? Heath Moss: ⁓ I'm just holding of what what I've got and managing ⁓ positions, weights within client portfolios at the moment. I'm not buying extra because I I'm a believer of you know, without the Iran risk premium, which we don't know how long will stay in there, oil there is plenty of oil out there. and there's more coming online with ⁓ places like UAE, you know, removing themselves from OPEC. When once all this conflict is over, they'll be able to produce a lot more oil than they previously had. And then of course Trump wants to get ⁓ Venezuela, et cetera, online, producing, you know, quite heavily as well. So I think there is more than enough oil out there once this Iran premium comes out. But I'm happy to hold what I have ⁓ at the moment. nadine: All right. ⁓ look, I would love to continue the conversation, but at a later date, so we can let you go and get on with your day. I really hope, Heath, you have great day's trade. ⁓ looking forward to seeing, I guess, a lot of the commentary coming from Michelle Bullock. ⁓ you know, more than more than the actual rates decision. Today though, we also have monthly household spending, we have the BoE's Taylor speaking, we have ⁓ the US Jolts data. Heath Moss: D T. nadine: We have Canadian GDP, we've got FedSpeak with Goolsby and Williams, so never a dull mo moment in markets, is there? Heath Moss: No, no, no, very re not very often we get a quiet quiet moment. nadine: All right, Heath, have a great day and a good day to all of you out there. We'll see you tomorrow. Thank you. Heath Moss: Thanks for thanks for that.