Should You Buy Australian Ethical Investment Ltd at This Share Price?

What happened to the AEF share price?
Australian Ethical Investment Ltd [ASX:AEF] was up by 3.03% in early afternoon trading. The stock was trading at $55.75 a share. At last, the Aussie market broke away from consecutive days of losses. We can all agree that the last six to seven days was a correction. Today, a surprise fall in unemployment added to the buying momentum.
A fall in unemployment is good, because it shows some recovery in the economy. We are in a period of slow recovery and low interest rates. Enjoy it while you can!

The retail investor’s dilemma
I can’t begin to tell you how poorly-equipped retail investors are in this market. I am the emerging market analyst at Port Philip Publishing. I provide services to retail investors through New Frontier Investors on a daily basis and through the feedback I receive I often get a sense of frustration and confusion. These mixed feelings of theirs stem from a deep powerlessness within.

Often I have found that retail investors lack the professional knowledge in fundamental analysis, synthetic positions, and portfolio optimisation. This lack of skill dramatically reduces their chances to win in the market.

What retail investors need is a superb advisory service. Making money in the market is not as simple as retail investors think and this is where our service comes in. Every day, I think hard about how to best help retail investors. Not only do I have to suggest the right investment ideas, I need to provide an ongoing service on investment management.

How do I do it? I employ the same techniques the institutional investors use, but simplify them to a level all retail investors can understand. Of course, it is not only me who does that. My colleagues at Port Philip Publishing are phenomenal investment advisors in their own right.

What should you do with AEF shares now?
Australian Ethical Investment, AEF is a fundamentally healthy company. All of the company’s fundamental metrics are positive. That means it is a financially healthy company, and it is a good long term investment.
It has enjoyed some momentum in the last 13 weeks, gaining over 28% in value. It is a growth stock right now.
For active investors and traders of AEF, synthetic positions are recommended. A clear quantifiable hard stop is recommended. A maximum leverage of three times is recommended. Of course, the company would best sit in a portfolio of stocks rather than on its own.

Ken Wangdong
Emerging Market Analyst, New Frontier Investor

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