Here’s what you need to know today

• Guzman y Gomez continues a stellar run as a newly-public company. In its first quarterly update since listing earlier this year, the Mexican chain reported quarterly revenue of $279 million (up 21% year-on-year) and confirmed it was on track to reach its prospectus forecast of 31 new restaurants in Australia. Shares are up 72% from the IPO price of $22 and last month, GYG was added to the ASX 200. (AFR)
  
  

• Rio Tinto has announced it will acquire Arcadium Lithium for $9.9 billion, in a deal that would make Rio the world’s third-largest lithium producer. It will control more than 5% of the world’s lithium supply across operations in Australia, Argentina, Canada and the US. Rio believes the lithium market will turn into a supply deficit by the end of the decade, with demand to grow at 10% a year to 2040. (Capital Brief)
  
  

• As Hurricane Milton makes landfall on the Gulf Coast of Florida, estimates are that it could result in losses of up to $100 billion. A loss of this size would be similar to 2005’s Hurricane Katrina. (Reuters)
  
  

• McDonald’s is going after the suppliers of one of its most important ingredients. The fast food giant has sued Tyson Foods, JBS, Cargill and the National Beef Supply, collectively known as the ‘Big Four’, who together control more than 80% of America’s beef. McDonald’s claim the Big Four have been colluding to limit supply and raise prices for nearly a decade. (Quartz)
  
  

• The US Department of Justice told a federal court is considering asking the court to force Google to break up to alleviate the harm caused by its monopolisation of online search. (BBC)
  
  

• Australian Federal Police and ASIC raided four properties as part of an investigation into alleged manipulation of a $14 billion bond sale by traders from ANZ. (AFR)
  
  

• Two of the world’s best convenience store operators may merge. Canada’s Alimentation Couche-Tard has increased its bid for Japan’s Seven & i Holdings, the owner of 7-Eleven, to A$69.85 billion. This is 20% up from its previous bid. (Bloomberg)

What the…?

Pizza Hut have come up with a novel way to drive pizza sales and maybe land your dream job as well. Called ResZAmes (get it?), Pizza Hut will print your resume on a pizza box and use it to deliver a piping hot pizza to your employer of choice.

That’s one way of standing out in a crowded job market. Unfortunately for us, it is currently only available in New York City. (Dexerto)

Investing is a lifelong journey

Here’s what you can learn today.

This is an excerpt from our conversation with James Abela and Maroun Younes, co-portfolio managers of Fidelity’s Global Future Leaders Fund. (Full episode)

Bryce: You believe the balance across these factors - quality, momentum, transition, and value - delivers consistent returns. Can you explain your thinking and research behind this?

James Abela: Absolutely. The four quadrants are quality, value, transition, and momentum. I've written a paper on this, focusing on investor psychology. Your perspective shifts based on where you place a company on this journey. Each quadrant represents different environments, illustrating why you may win or lose.

The quality quadrant, or "Love Quadrant," features beautiful compounding companies. Think of it as a long-term marriage; these companies can create empires. Examples include LVMH, Ferrari, and Australian successes like Cochlear and Domino's Pizza. These high-quality businesses have compounded returns over decades.

However, the downside is "blindness." Falling in love with a stock can lead you to overlook market dynamics and competition. Business is competitive, and factors like complacency and innovation can erode returns. This quadrant typically holds about 40-50 percent of the portfolio, giving it a substantial quality skew.

The value quadrant is the "land of neglect." Here, earnings exist, balance sheets are sound, and market structures are favourable, yet valuations remain attractive. While there are potential hidden gems, one must avoid companies with poor fundamentals, as they pose risks.

Next is the transition quadrant, referred to as the "land of hope." This area encompasses companies undergoing cultural changes or turnaround strategies. A good example is Qantas, which I bought at a dollar; the stock rose to $5, showcasing how transitions can yield significant returns.

Momentum is the "nightclub quadrant." It’s popular, lively, and alluring but carries inherent risks. While you may enjoy the excitement, be wary of complacency and overconfidence. If you get caught in the herd mentality, you might end up in trouble when trends shift. Buying momentum stocks during peak cycles can lead to losses as those stocks transition back to the land of neglect.

In contrast, structural winners often reside in the quality quadrant, aligned with long-term growth areas like industrials, healthcare, and technology. Over 20 years of experience have shaped this thinking, keeping our strategies focused and risk-aware. We often analyse stocks based on this framework, considering factors like management, market structure, and the sustainability of profits. This mindset helps us evaluate cyclical risks and sentiment, enabling us to make informed decisions in our investment approach.

Today’s sponsor is Pacific Equity Partners

Private equity has never been easy to get into or out of, until now. As Australia’s leading private markets investor, Pacific Equity Partners has launched the PEP Gateway Program to unlock global private equity for wholesale investors, with regular liquidity.

Top-tier global private equity funds have consistently outperformed public markets. The PEP Gateway Program facilitates investments with some of the world’s best global private equity funds and fund managers.

Visit www.pepgateway.com.au for more information.

 Please refer to the terms and conditions contained in the relevant PEP Gateway Program fund documentation. Liquidity and redemptions are subject to the limitations in each fund’s governing documents. Past performance is not a guarantee of future results. This information is for wholesale investors only and does not constitute an offer of securities or financial products. Always consult with your professional advisers.

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