Let's take a look.

Slater & Gordon Limited (ASX: SGH)

The Slater & Gordon share price is up 9.57% to 63 cents today. This follows the law firm releasing its full-year FY22 results and a business update this morning.

The company said its results proved it had turned things around in the second half of FY22 after COVID-19 lockdowns caused problems in 1H FY22.

It reported a net profit after tax (NPAT) of $2.2 million for the full year. This was achieved from a net loss position of ($7.5 million) after 1H FY22. But the full-year result is well down on the $14.5 million of NPAT in the prior corresponding period (pcp).

The firm's net asset position improved to $184 million, up from $180.5 million pcp.

Slater & Gordon CEO John Somerville said:

When we reported our half year results in February, we said we had started to see signs of improvement following the lifting of lockdowns and we are pleased that the second half saw the continuation of that trend with the business returning to deliver an overall profit for the year.

Our firm continues to make good progress on its improvement and growth plans, but we recognise we still have more work to do.

360 Capital Group Ltd (ASX: TGP)

The 360 Capital Group Ltd share price is soaring 10.12% today to 93 cents. This is also on the back of full-year FY22 results released today.

The company reported operating revenue of $53.9 million, up 157% pcp. Its operating profit was $30.9 million, up 240% pcp. Operating earnings per share (EPS) came in at 14.1 cents per share, up 236% pcp.

The group also announced a special dividend of eight cents per share payable on 7 October. Shareholders will receive this on top of the six cents per share in total ordinary dividends paid this year.

The company says its principal investing continues to drive profits. It has also simplified the business to focus on its core strengths of real estate investing and funds management.

Part of that simplification process was selling its 19.9% stake in Irongate Group to Charter Hall Group (ASC: CHC). It also bought certain assets as part of the transaction.

This improved the balance sheet. After settlement on 15 July, the company had more than $160 million in cash, no bank debt, and $49.4 million in liquid assets.

This provides "the opportunity to capitalise on market volatility and dislocation given the Group's 16-year track record of real estate investing".

Close The Loop Inc (ASX: CLG)

Close The Loop Inc is a relatively new entrant to the ASX. It began trading in December 2021.

As my colleague Sebastian reported at the time, the Close the Loop share price skyrocketed 55% on its first day of trading to a high of 31 cents. That's well beyond its initial public offering (IPO) price of 20 cents.

The company describes itself as "an end-to-end solutions provider from design and manufacturing, through to collection and recycling of products".

It released its full-year FY22 statutory accounts, a trading update, and an investor presentation today.

ASX investors appear to be very happy with what Close the Loop told them today, with the share price up 9.52% to 46 cents this afternoon.

It reported revenue of $89.2 million, which was 20.7% above the prospectus forecast and up 32.3% pcp. Its earnings before interest, tax, depreciation and amortisation (EBITDA) was $14.3 million, 16.3% above prospectus forecast and up 8.3% pcp.

The company said: "Strong organic revenue growth across all divisions contributed to significant earnings uplift."

Close the Loop also made various acquisitions during the year. It increased its net tangible assets per share from 0.96 cents at 30 June 2021 to 7.31 cents at 30 June 2022.

Group CEO Joe Foster said:

Close the Loop Group's strong performance in our first full year reporting period as an ASX-listed company has ensured we have achieved or exceeded key prospectus metrics and delivered on our strategic pillars.

We acquired complementary and earnings accretive businesses in Oceanic Agencies and Crasti & Co. and, in July, added Alliance Paper. These three acquisitions add to the cumulative power Close the Loop has in its ability as the only ASX-listed company operating in all parts in the circular economy – from product design, manufacturing, collection and recycling and then eventually recovering it as new packaging or secondary products, or simply packaging to packaging.

The post 3 ASX shares rocketing 10% on positive earnings updates appeared first on The Motley Fool Australia.

• The Irongate share price has jumped today after another takeover offer
• Charter Hall and PGGM are interested in buying the Irongate business
• 360 Capital may end up buying some of Irongate's assets

The Irongate Group (ASX: IAP) share price has stormed higher by 17% after receiving another takeover offer, this time from Charter Hall Group (ASX: CHC).

The last takeover approach by 360 Capital Group Ltd (ASX: TGP) was rejected.

Charter Hall's bid for Irongate

In today's announcement, it was revealed that Charter Hall's managed partnership has lobbed a non-binding indicative proposal.

The bid is to buy all of the shares for an Irongate share price of $1.90 cash per stapled security. Under the terms of this bid, Irongate investors will be entitled to retain a distribution for the period ending 31 March 2022 of up to 4.67 cents per stapled security.

Charter Hall notes that this offer is a 21% premium to the Irongate last closing price of $1.57 per security on 28 January 2022.

The partnership between Charter Hall and the Dutch pension fund PGGM expects to fund this proposal from existing financial resources, including existing cash and new debt facilities. Charter Hall and PGGM have received approvals from their relevant board and investment committees to pursue the transaction.

Charter Hall said that it has spent considerable time and resources reviewing Irongate's portfolio from public sources in order to be in a position to put forward this proposal. PGGM and Charter Hall are "highly motivated" and able to complete due diligence and proceed to a formal offer in an "expeditious" manner.

How does 360 Capital factor into this?

Today's indicative proposal includes a memorandum of understanding with Irongate's largest securityholder, 360 Capital.

The memorandum of understanding includes a call option over 360 Capital's 19.9% securityholding of Irongate.

The memorandum also includes standstill and exclusivity provisions in favour of the partnership and describes a proposal where 360 Capital will acquire certain assets within Irongate's portfolio, Irongate's funds management business and its co-investment stake in the ITAP Fund if the partnership is successful at acquiring Irongate.

However, Charter Hall's bid is not conditional on 360 Capital completing the acquisitions.

The first response

The Irongate board is considering this new indicative proposal with the assistance of its advisors, Macquarie, JP Morgan, King & Wood and Cliffe Dekker Hofmeyr.

However, it was noted that the indicative proposal has a number of conditions including completing satisfactory due diligence, final approval of the partnership's boards and investment committees, regulatory approvals, unanimous recommendation by the Irongate board and so on.

Irongate share price snapshot

Over the last six months, Irongate shares are up around 25%.

The post Irongate (ASX:IAP) share price rallies 17% on Charter Hall takeover proposal appeared first on The Motley Fool Australia.

360 Capital Group Ltd (ASX: TGP) and 360 Capital REIT (ASX: TOT) – together, 360 Capital ­– posed its most recent takeover bid of $1.72 in cash per share in mid-December.

It previously posed bids of $1.65 and $1.70, discounting a 4.5 cent dividend paid to Irongate shareholders in early December.

The market appears disappointed by today's rejection. At the time of writing, the Irongate share price has dropped 1.46% to trade at $1.69.

Let's take a look at what's driving the real estate investment trust's (REIT) share price down today.

Irongate share price slips on another rejected takeover bid

The Irongate share price is slumping after the trust rejected yet another takeover bid, stating it didn't "reflect [its] underlying value".

It said the bid didn't appreciate its office and industrial real estate portfolio, its portfolio's value-add upside potential, and the potential of its third-party funds management business.

Finally, the REIT commented if it believed a proposal did reflect maximum value for its shareholders, it would consider it.

Assumedly, that statement lands the ball squarely back in 360 Capital's court.

Each bid so far has been rejected for the same reason. Additionally, according to Irongate, each bid didn't come with any changed conditions.

Irongate didn't announce it had received the second bid to the market as it was immediately rejected. The wannabe acquiree criticised that decision at the time. And perhaps investors are responding now, considering the direction of Irongate shares today. 

In response to its second rejection, 360 Capital commented:

360 Capital is disappointed the IAP board has again chosen not to engage with 360 Capital despite the Improved Indicative Proposal representing an attractive premium across a number of valuation metrics…

On top of that, the company's managing director Tony Pitt noted:

360 Capital remains committed to working with the board and management of Irongate Group for a period of time, but will remain disciplined in its investment approach to assets, particularly given current uncertainties in this rising interest rate environment.

Since 360 Capital pitched its first bid, the Irongate share price has gained 12%. It is also currently nearly 5% higher than it was this time last month.

The post Irongate (ASX:IAP) share price slides as takeover rejected again appeared first on The Motley Fool Australia.

This week, the theme of takeovers is likely to continue. In addition, there will be a series of AGMs, some of which may prove contentious. All times mentioned are eastern standard time. 

Major events planned for ASX shares

Monday

New listing:

Monday will see Dusk Group Limited (ASX: DSK) list for the first time. This company is the candle retailer you may have run into in the local malls. An omni-channel consumer discretionary company, it has reportedly completed a $70 million deal at $2 a share. The IPO will value Dusk at 10.1 times earnings for the year to 30 September. This is the equivalent of $124.5 million in terms of market capitalisation.

This comes on the heels of Adore Beauty Group Ltd (ASX: ABY) and, more successfully, Zebit Inc CDI (ASX: ZBT)'s recent listings.

Westpac annual report:

This morning, Westpac Banking Corp (ASX: WBC) released its annual report, posting a 66% decline in statutory net profit to $2,290 million, which was largely in line with expectations. Analysts at Goldman Sachs, for example, were expecting Westpac to deliver a 63% decline in cash earnings. The bank also included additional charges for AUSTRAC matters. Additionally, a write down associated with Westpac Life Insurance Services Ltd, and an increase in provisions for refunds and litigation. 

The Westpac share price slid by 4.9% across last week's trading, but is up by 0.34% so far this morning as the market digests the results.

Reports on the economy:

At 11.30 am the Australian Bureau of Statistics (ABS) will release the building approvals and the housing finance reports. At the same time Australia and New Zealand Banking GrpLtd (ASX: ANZ) will release the ANZ job ads report. These three reports will provide investors with a view into the domestic economy. In particular, there has been a lot of interest in the housing market since the lockdowns started. This is likely to impact ASX shares. 

Wednesday

At 9 am, small cap ASX share, Evans Dixon Ltd (ASX: ED1) will hold its AGM. While only a small company, it is likely to be a contentious event. Evans Dixon is currently being targeted for takeover by 360 Capital Group Ltd (ASX: TGP). 360 Capital managing director Tony Pitt recently manoeuvred the company to purchase 19.9% of Evans Dixon from company co-founder Alan Dixon. 

Tony was then elected with unanimous support to the board of Evans Dixon, subsequently dropping an unsolicited takeover bid into their laps on 22 October. As of last Friday, the board had withdrawn support for him. In addition, it has recommended shareholders do not support his election to the board, declaring in a statement: "The directors believe that his appointment would put him in a position of conflict between his obligations to 360 Capital Group and his obligations as a director to the company."

Thursday

At 9 am Ansell Limited (ASX: ANN) will hold its AGM, with detail behind Q1 performance and FY21 guidance. Last Friday, the personal protective equipment company company upgraded its FY21 guidance for earnings per share from $1.26–$1.38 to $1.35–$1.45. This is due largely to better than expected sales across all of its 5 strategic business units. The healthcare ASX share will also provide further detail on the progress of expansion capex spending, which it believes is proceeding to plan.

Friday

Macquarie Group Ltd (ASX: MQG) will present an interim result on Friday. In a recent presentation, Macquarie included its Q1 results, which showed that the profit contribution from the company's annuity-style businesses was slightly up versus the prior corresponding period (pcp). Its market-facing businesses were slightly down versus pcp.

The rise in  from the annuities businesses was largely due to the sale of the company's rail operating lease business. In the market-facing businesses, Macquarie Capital saw investment-related income reduce significantly.

Macquarie Group has also been making headlines due to its stake in Barrenjoey investment bank. The interim update may also include further information on this issue. 

The post 6 major events for ASX shares this week appeared first on The Motley Fool Australia.

This comes following this morning's announcement of a takeover offer from 360 Capital Group Ltd (ASX: TGP).

Today's rise will come as welcome news to Evans Dixon shareholders, who've watched the share price fall 37% year-to-date. That's despite a 20% share price gain since 17 March.

Meanwhile, 360 Capital Group's shares are trading flat in late afternoon trading, after posting gains of more than 1% earlier today. Year-to-date, 360 Capital Group's share price is down 25%.

What do Evans Dixon and 360 Capital do?

Evans Dixon is a financial adviser providing advice to private and institutional clients, as well as corporates. The company employs over 475 staff across Sydney, Melbourne, Canberra, Brisbane and New Jersey.

360 Capital Group is an investment and funds management group. The company is predominantly focused on the strategic and active investment management of alternative assets. It invests in real estate, credit strategies, and public and private equity in Australia and around the world.

Why is the Evans Dixon share price up on the takeover offer?

This morning's takeover announcement from 360 Capital Group – made via its wholly owned subsidiary, 360 Capital ED1 Pty Limited – stated its intent to acquire via off-market takeover all of the shares in Evans Dixon that it does not already own.

As of this morning, 360 Capital ED1 owned 19.55% of Evans Dixon's shares.

The takeover offer price amounts to 61 cents per share. That's just under the share price Evans Dixon is currently trading for. The current Evans Dixon share price represents a 7.83% gain from the opening bell.

360 Capital noted it has the available cash as well as the ability to issue its securities to finance the acquisition. It stated that its offer is not subject to a minimum number of acceptances.

360 Capital also highlighted that its 61 cent per share offer price represents a 54% premium to Evans Dixon's share price after it had disclosed ASIC was taking corporate action against one of its subsidiaries, Dixon Advisory.

The post Why the Evans Dixon (ASX:ED1) share price is up 7% as the All Ords slides appeared first on The Motley Fool Australia.

This morning NEXTDC announced that it has agreed terms with Asia Pacific Data Centre Group to acquire the remaining 70.8% of its shares it does not own via an unconditional all cash, on market takeover bid.

The REIT's major shareholder 360 Capital Group, which holds an interest of 67.3%, has stated that it intends to accept the offer in the absence of a superior proposal.

If 360 Capital does accept the other, it will mean NEXTDC would have an interest of 96.5%. This will allow the data centre operator to proceed to compulsory acquisition of the outstanding securities.

What offer has been made?

NEXTDC has offered a cash consideration of $2.00 per security and will allow two separate distributions to be made.

This includes a special distribution of $0.02 per security and a quarterly distribution of $0.02 per security which had already been declared.

With 115 million securities on issue, this offer values the REIT at approximately $230 million. This is well short of the independent valuation of $261 million given in June, but not surprising given that Asia Pacific Data Centre took the data centres off the market last month after failing to find a buyer this year.

It is also significantly less that the $300 million that 360 Capital and Asia Pacific Data Centre had offered to sell the centres to NEXTDC for at the start of the year.

Why is NEXTDC buying the data centres?

According to the release, NEXTDC believes there are benefits to owning the portfolio of data centres it currently leases given its expanded capital base.

Management estimates that the proposed acquisition of the REIT will provide NEXTDC with an additional $14 million of recurring annual cash flow savings and strengthen the balance sheet through the addition of further tangible assets.

What now?

I think this is a good price for NEXTDC to acquire the centres for and believe it strengthens its investment case.

Its shares may be expensive, but given the way the cloud computing market is exploding and the growing demand for data centre services, I believe it will deliver long-term earnings growth that justifies the premium.

Because of this, I see it as a great buy and hold option alongside industry peers Macquarie Telecom Group Ltd (ASX: MAQ) and Megaport Ltd (ASX: MP1).

The post Should you buy NEXTDC Ltd (ASX:NXT) shares after its takeover offer for Asia Pacific Data Centre Group (ASX:AJD)? appeared first on The Motley Fool Australia.

The stock is data centre operator Nextdc Ltd (ASX: NXT) which has fallen 2.2% to $5.84 on yesterday as the S&P/ASX 200 (Index:^AXJO) (ASX:XJO) hovered at around breakeven.

The stock was up nearly 60% over the year before the latest sell-off and it's still 25% in the black compared to a 7.5% gain by the top 200 index over the past 12 months – but I think there is further downside risk to its share price.

If you thought this was just a tech-based sell-off that is related to a similar trend in the US, you'd be wrong as shares in Appen Ltd (ASX: APX), WiseTech Global Ltd (ASX: WTC) and Altium Limited (ASX: ALU) are outperforming.

So, what went wrong?

It does appear that stocks with high price-earnings (P/E) multiples are taking the brunt of the latest market meltdown, just look at CSL Limited (ASX: CSL) and Afterpay Touch Group Ltd (ASX: APT), but the strong showing from the tech stars listed above shows this isn't necessarily true.

There are two probable reasons for NextDC's underperformance. The first is the company's failed court bid to prevent 360 Capital FM Limited, part of 360 Capital Group Ltd (ASX: TGP), from voting in the wind-up of Asia Pacific Data Centre Group (ASX: AJD).

It looks like NextDC won't be able to get wind-up AJD now, although the company is considering appealing the decision. AJD is the landlord to NextDC's data centres.

I had the opportunity to chat with NextDC's chief executive Craig Scroggie last week following the release of the company's results and asked him if he had a "Plan B" if he failed to block 360 Capital in the courts.

He said things will just go on as they were, and he wasn't concerned as NextDC had very long leases locked in and the ownership of AJD wouldn't impact on NextDC's ambitious growth plans.

I was less sanguine about Plan B. Having a very hostile landlord hanging over your head sounds like a lose-lose situation for everyone. AJD could make life challenging for NextDC in some shape or form and management doesn't need to be distracted by that – not when it's targeting revenue and earnings growth of up to 25%-30% in FY19.

This brings me to the second issue – growth. Sceptics point out that growth is slowing as the company only added one megawatt of contracted utilisation in the second half of FY18. NextDC doesn't need such doubts clouding its outlook when it is spending big to expand its data centre facilities around the country.

There's no doubt that Scroggie is a big bull when it comes to demand for data centres though. He believes we are only at the tip of the iceberg due to the explosion of data creation and the exponential growth that lies ahead.

I just wish I could tell you that the stock is looking good value after its big fall but the stock is still trading on a FY18 price-earnings (P/E) of well over 100 times (based on Reuters data) as many hot-to-trot tech stocks are.

My main issue is that high P/E stocks may struggle to outperform in a late stage bull market, and for this reason I am cautious on the nearer-term outlook for NextDC even though I think the stock is well placed in the long-term given its market leadership position in the industry.

Barring a new catalyst, there's just no need to buy the stock now – not till maybe closer to its next set of results when it can prove the naysayers wrong.

The post Why this hot tech stock has shed over 20% of its value in 2 weeks appeared first on The Motley Fool Australia.

NEXTDC will defend claims it denied Asia Pacific Data Centre (ADPC) access to its three property sites in Sydney, Melbourne and Perth, as APDC attempted to allow prospective purchasers to inspect the real estate.

The fresh legal action comes after a 2017 issue involving 360 Capital Group Ltd (ASX: TGP), after 360 made an overture for a controlling stake in ADPC, which NEXTDC tried to block.

Investors are obviously spooked by the drama within NEXTDC ranks and the company trades at a very high PE ratio of 167.8, increasing its risk profile substantially.

A new player has emerged in the space recently, with Data Exchange Network Ltd (ASX: DXN) grabbing the attention of Macquarie Group Ltd (ASX: MQG) who took up a 5.4% holding in the company.

Other tech stocks to watch today include software company Bravura Solutions Ltd (ASX: BVS) and Xero Limited (ASX: XRO), both of which are down today after flying to 52-week high territory earlier in the week.

The post Nextdc Ltd shares lower on legal spat appeared first on The Motley Fool Australia.

At the time of writing NEXTDC's shares are up 0.5% to $6.15.

Why did it reject the offer?

Today's announcement will come as little surprise to shareholders. Last week NEXTDC criticised the 360 Capital Group Ltd (ASX: TGP) appointed board of Asia Pacific Data Centre (APDC) for claiming that its three data centres were now worth $300 million.

According to NEXTDC, this claim was made based largely on the recent private sale of the Metronode business to Equinix.

However, NEXTDC rightly pointed out that APDC is merely a real estate investment trust that owns the base buildings and the land. It is not a data centre operator like Metronode or NEXTDC.

Chief Executive Officer Craig Scroggie stated that: "APDC's reference to Metronode's assumed 4.73% acquisition yield is akin to one suggesting that a property landlord should trade on the same capitalisation rate or multiple as its tenant be they BHP or Google. This has no logic and is simply incorrect".

APDC's properties were independently valued only a few months ago at $212.8 million.

What now?

APDC claims to have interest from a number of parties. However, I am reasonably sceptical that anyone would be willing to pay this premium and believe the offer was made opportunistically in the hope of making a quick profit.

But whatever does happen, NEXTDC would not have to contend with any increase in its rents for some time to come. NEXTDC has long term lease arrangements over the centres, with the next market rental review not due until 2021 for its Melbourne site and 2022 for the Sydney and Perth centres.

I continue to believe that NEXTDC is a great long-term buy and hold investment despite this noise.

The post Nextdc Ltd rejects chance to buy the Asia Pacific Data Centre Group portfolio appeared first on The Motley Fool Australia.

The move will likely bring to an end a bitter dispute between NEXTDC and listed fund manager 360 Capital Group Ltd (ASX: TGP) with both parties fighting for control of Asia Pacific Data Centre, the responsible entity of a trust that owns the data centres where NEXTDC is the sole tenant.

The market seems to like the news with shares in NEXTDC climbing 1.5% this morning to $6.16 before returning some of the gains to trade around $6.10.

Having a way to resolve the tug-of-war with 360 Capital will remove an unneeded distraction for management and shareholders but NEXTDC will have to pay a fairly big premium for the privilege of owning the data centres outright.

Asia Pacific Data Centre said this morning that it was putting its properties up for sale for $300 million or more and has appointed a real estate agent to field inquiries. It was so far received inquiries from 50 qualified buyers but has to give NEXTDC the first right of refusal on any offer.

360 Capital is supportive of NEXTDC paying $300 million for the properties. If a third party buys the data centres, it will have to pay at least that amount under the agreement between NEXTDC and Asia Pacific Data Centre.

The $300 million price tag represents around a 40% premium to the book value of the properties as reported in Asia Pacific Data Centre's FY17 accounts or a 35% premium to the target's market cap (prior to today's announcement).

The average takeover premium (if there is such a thing) is typically between 20%-30%.

NEXTDC will probably have to take on more debt to fund the acquisition. While the company has around $270 million in cash on its balance sheet, it cannot run down its savings account.

The issue is that NEXTDC's balance sheet already looks reasonably stretched as it has a gross debt to equity ratio of 58.4% as at the end of June this year. There is some room to take on more debt post transaction, but not that much.

NEXTDC will also need a higher working capital cash buffer to own and run the data centres. This will negatively impact on its cash flow.

After all, NEXTDC did spin out its data centres into a trust managed by Asia Pacific Data Centre in 2013 to optimise its capital structure.

There are clearly pros and cons to regaining ownership of the data centres but it doesn't change the bright outlook for the sector as the demand for cloud computing and data centres are tipped to outstrip supply over the next few years.

This is probably why Asia Pacific Data Centre is getting so much interest for the properties from other buyers and it is not a given that NEXTDC will ultimately end up with control of the data centres. The company may just be swapping one landlord for another.

I am bullish on the longer-term prospect for NEXTDC and I doubt the ultimate ownership of the data centres will change the outlook for the company.

There are other well-placed companies that are tipped to have a big impact on our market for 2018 and beyond. The experts at the Motley Fool have uncovered three that should be on your radar.

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The post Has NEXTDC Ltd dodged a bullet or are investors in for a rude shock in 2018? appeared first on The Motley Fool Australia.

Here's a quick recap of the Aussie market:

• S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) down 0.6%
• ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) down 0.6%
• AUD/USD at US 79.29 cents
• Gold at US$1,261 an ounce, up 0.7%
• Oil at US$45.77 a barrel, down 2.4%

Weighing on the market were shares of oil and gas businesses Origin Energy Ltd (ASX: ORG) and Woodside Petroleum Limited (ASX: WPL). Neither company released any material news to the market but appeared to be reacting to a selloff of oil prices.

Also amongst the worst-performing companies on Monday was Challenger Ltd (ASX: CGF) and Caltex Australia Limited (ASX: CTX).

Data centre owner Nextdc Ltd (ASX: NXT) fell more than 3% after it responded to claims from 360 Capital Group Ltd (ASX: TGP). Nextdc shares are down 12% this month.

At the other end of the market, gold miners Saracen Mineral Holdings Limited (ASX: SAR) and Newcrest Mining Limited (ASX: NCM).

Here are today's top stories:

• Are National Australia Bank Ltd. shares 20% overvalued?
• Could Vodafone bid for Vocus Group Ltd?
• The secret to boosting your portfolio returns

The post ALL ORDINARIES finishes lower Monday: 8 shares you missed appeared first on The Motley Fool Australia.

Asia Pacific Data Centre Group ('APDC') owns all of NextDC's data centres (at which NextDC is technically a tenant). APDC is currently facing an Extraordinary General Meeting next week, at which its largest security holder, 360 Capital Group Ltd (ASX: TGP), is seeking to remove the responsible entity of APDC and replace it with a 360 Capital nominee.

NextDC has purchased 14.1% of APDC's shares on-market at an average price of $1.78, and will vote its stake against 360 Capital's resolutions. It is effectively a blocking stake aiming to prevent a change of management at APDC. NextDC obviously benefits from a tight relationship with APDC as it is leasing its data centres from APDC over the long term.

Unwelcome news for NextDC shareholders?

While the acquisition of APDC shares may prove a sound strategic move for NextDC, it is uncertain whether it will be good news for NextDC shareholders. APDC most recently had Net Tangible Assets of $1.43 per share, which means NextDC has had to pay a 22% premium to the company's book value to secure its strategic stake.

Also, NextDC stated that its APDC purchase was funded through cash provided through its recent Notes III offering. One thing that jumped out at me was that Notes III pay a 6.25% annual interest rate, while Asia-Pacific Data Centre pays a 5.4% dividend.

So, in addition to paying above the odds for APDC units, NextDC is effectively paying 0.8% per annum to own APDC units. Fortunately, the transaction is quite small at just $29 million, and the price may be well worth paying if it secures APDC's current board and management. We'll keep you updated on the results of next week's Extraordinary General Meeting.

The post Here's why NextDC Ltd just bought a significant stake in Asia Pacific Data Centre Group appeared first on The Motley Fool Australia.

Here are four reasons why I believe it is a buy at current prices.

Reason 1

Despite Wednesday's jump in security price, the stapled securities of the Fund continue to trade at a 10.5% discount to its net tangible assets (NTA) of $1.33 (at the time of writing), leaving plenty of upside potential on the table for long-term security holders. This is just the first reason why I think the Fund is a buy.

Reason 2

The Fund is managed by listed investment manager 360 Capital Group Ltd (ASX: TGP) ("Manager"), whose mandate is to generate a total return of 12% per annum though selective investment in real estate assets and undervalued listed-REITs.

Since listing in April 2015 at an issue price of $1.25, the Manager has exceeded this performance benchmark, delivering a 15.8% total return at the fund level. That's my reason number two.

Reason 3

The Fund's asset performance and balance sheet strength is my third reason for selecting it as an investment candidate.

In the 2016 year, the Fund generated an operating profit of 8.9 cents per security and bought back 9 million securities (or 22.7% of issued capital) to organically increase earnings per share.

Additionally, the Fund recycled one of its largest assets (Frenchs Forest) at a profit and delivered an unrealised gain on its strategic investment in listed peer Industria REIT (ASX: IDR) of $2.2 million.

These initiatives and investments demonstrate the Manager's sound management capabilities, which is reflected in its higher than market price NTA backing, providing proof enough for reason number three.

Reason 4

Pleasingly, the spoils of these solid results and initiatives are being shared with security holders.

The Manger announced the Fund will distribute a forecast 7.6 cents per security based on cash flow from normal operations in the 2017 financial year.

At the current price of $1.19, this places the Fund on a robust trailing yield of 6.4%, with potential upside through a special dividend as a result of ongoing capital management activities.

With interest rates so low, the reliable income stream provided by the Fund is my reason number four.

Foolish takeaway

For every reason to buy shares in the Fund, naysayers will be able to provide 10 reasons for not buying. However, investing is not about following the masses, but instead, taking calculated risks.

Although the Fund's security price under performed both the S&P/ASX 200 Index (ASX: XJO) and S&P/ASX 200 A-REIT Index (ASX: XPJ) since listing, the Manager's track record, future management strategy and distribution guidance should provide enough compensation for investors to take the plunge and buy a security which trades at a discount to its NTA.

The post 4 reasons I think the 360 Capital Total Return Fund is a buy appeared first on The Motley Fool Australia.

Whilst the usual suspects of Commonwealth Bank of Australia (ASX: CBA), Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES) continue to churn out dividends every six months, it is likely these stalwarts of the Australian market will not experience stellar capital growth in the years ahead.

Furthermore, the downside risk for these companies increases as payout ratios outgrow earnings, meaning many 'reliable dividend stocks' could follow Australian and New Zealand Banking Group's (ASX: ANZ) example and cut dividends.

Accordingly, income-seeking investors may need to venture outside of conventional blue chip shares and look to small cap stocks which offer substantial yield and growth potential.

360 Capital Total Return Fund (ASX: TOT) ("Total Return Fund") and Countplus Ltd (ASX: CUP) are two stocks which I think fit the bill. Here's why.

Total Return Fund

The Total Return Fund listed in April 2015 at an issue price of $1.25 per stapled unit. It is managed by listed investment manager 360 Capital Group Ltd (ASX: TGP). Its mandate is to generate a total return of 12% per annum though selective investment in real estate assets and undervalued REITs.

Fundamentals

For the half year ended 31 December 2015, the Total Return Fund delivered an annualised 14.4% return through distributions totalling 8.32 cents per security and a 4 cents per security gain to its net tangible assets (NTA).

The Total Return Fund continued its solid performance in the second half, announcing an on-market buyback to lift its share price closer to its NTA value of $1.29 (as at 31 December 2015), paying two more quarterly tax-deferred distributions of 1.5 cents per stapled security along the way.

The fund currently forecasts FY16 distributions to be about 8.51 cents per security, placing it on a respectable trailing yield of 7.2% at current prices.

With Australian property prices also growing steadily, the fund has long-term tailwinds.

Countplus

Countplus is an accounting and financial services aggregator with a 5.04% stake (or 5,882,540 shares as at 31 December 2015) in listed cloud based SMSF administration software provider Class Limited (ASX: CL1).

The equity stake in Class provides Countplus' shares with the impetus to grow in value, as the underlying investment in Class swells day-by-day. Accordingly, investors in Countplus benefit from both companies' growth.

The yield

Countplus pays (and has paid since listing) a quarterly dividend of 2 cents per share, providing it with a robust trailing yield of 9.1% before tax at current prices. Importantly, this dividend is fully-franked, meaning the yield surges to almost 13% after tax.

Foolish takeaway

Small cap stocks are inherently risky given their lack of a proven track record. Nonetheless, small cap shares are a great hunting ground for high yielding investments as management generally compensates investors for a company's perceived risk.

Whilst this means the Total Return Fund and Countplus are not as safe as conventional blue chip shares, both companies look poised to provide a reliable income stream to investors with the prospect of capital growth.

The post 2 under-the-radar small caps for income-seeking investors appeared first on The Motley Fool Australia.

A 25 basis point cut by the Reserve Bank of Australia (RBA) would take the official cash rate to a record low 1.75%.

Banks would likely follow suit in such an event, reducing interest rates on savings accounts (and home loans) by a similar amount. This means depositors should brace for more pain as cash returns drop. Accordingly, a good alternative to traditional cash deposits might be the 360 Capital Total Return Fund (ASX: TOT)("the Fund").

What is it?

The Fund is a real estate investment trust (REIT) comprising the Total Return Active Fund and The Total Return Passive Fund. Unlike listed peers Shopping Centres Australasia Property Group, Federation Centres Ltd and Scentre Group (which focus on ownership of shopping centre assets), the Fund invests in real estate across various asset classes and sectors.

The Fund is managed by 360 Capital Investment Management Limited ("the Manager"), which is wholly-owned by 360 Capital Group Ltd (ASX: TGP). The Manager's mandate is to generate a total return of 12% per annum through investment in high-yielding real estate assets and undervalued REITs.

Why should you buy?

The Total Return Fund listed on the ASX in April 2015, at an issue price of $1.25 per stapled unit. In its product disclosure statement, the Total Return Fund forecast a dividend yield of 9% per annum, implying quarterly distributions of 2.81 cents. It anticipates most distributions will be tax-deferred, meaning no income tax should be payable by the recipient.

So far the Fund has maintained guidance, paying two distributions in-line with forecasts and a special dividend of 1.2 cents in the September quarter so unit holders could fund tax liabilities associated with its 2015 distributions (tell me if your bank account does that!).

What are its fundamentals like?

The Fund has performed poorly since listing, dropping almost 18% to date. At 30 June 2015, the Fund's net tangible assets (NTA) per stapled unit was $1.22, implying a 17% discount to current prices.

Cash on hand sat at $12 million, with a further $26 million to be received post-settlement of its two Frenchs Forest assets. This cash balance equates to underlying cash of 96 cents per stapled unit, indicating it trades close to the value of its cash balance.

What are its prospects?

Management is using the Fund's strong balance sheet and substantial discount to NTA as an opportunity to buy-back units in the Fund. This initiative should limit downside risks and benefit unitholders by increasing earnings per share.

The Manager is also pursuing growth through strategic acquisitions, such as the recent 8.3% stake in ASX listed Industria REIT (ASX: IDR). Although such acquisitions foreshadow an expectation of continued increases to property prices, which may or may not occur, 360 Capital Group's solid track-record of disciplined execution and asset picking should alleviate risks associated with a property market crash.

Importantly, management has reiterated that forecast distributions for the 2016 financial year should be approximately 11.2 cents per security. Given the decline in security price, the Fund now trades on an implied yield of 11%, making it a better prospect than cash in the bank.

Foolish takeaway

The 360 Capital Total Return Fund is not as safe as cash deposits. That's a fact. It is inextricably linked to the property market, meaning it's risky if retail, commercial and industrial property prices fall. However, with its forecast dividend yield of 11%, the on-going buy-back and potential for the RBA to cut rates next week, I believe this is one income stock that is worth the risk at current prices.

The post Is 360 Capital Total Return Fund the best income stock on the ASX? appeared first on The Motley Fool Australia.