What Alan Joyce's early exit means for the sharemarket


Alan Joyce, now ex-Qantas CEO, has been a constant in the news in the last few weeks with the ACCC taking action against Qantas, but little has been said about the long-suffering shareholders and when the share price will rise.

You have to wonder why Alan Joyce sold most of his shares in June knowing that the Board was going to announce a very healthy profit of $1.7 billion after tax. He would have also known about the ACCC investigation. You can't help but raise an eyebrow and shake your head with a hint of scepticism.

Joyce was at Qantas for 20 years and became CEO in 2008 during the middle of the GFC.

what alan joyce's early exit from qantas means for the sharemarket

If you held Qantas shares since January 2008, your capital would have grown 111% more than 15 years or in rough figures around 8% per year.

If you bought just prior to the GFC, then over the last 16 years, your capital would have grown just over 2%. Right now, the stock is down over 12% with most of the fall occurring in the last month or so.

The question everyone should be asking is whether Australia's airline is better or worse off than it was 20 years ago, bearing in mind that it was run by the government before it was listed on the exchange in 1995. In my opinion, I dare say it is the latter.

Like so many large corporations, the reason it is worse off is because it is driven by the big shareholders, like the institutions, who focus on making a profit from trading the stock rather than protecting and growing a legacy.

This short-term thinking is about cost-cutting and making huge profits knowing that if they get into trouble, the government will bail them out like they did during the pandemic.

This American style of double-digit growth at all costs has filtered into our market over the past few decades, which does not inspire loyalty to a brand or show that a company is a good corporate citizen.

It also creates large swings in the share price, which is often to the detriment of the ordinary shareholders who generally invest in companies they believe in long term.

The best and worst performing sectors this week

The best-performing sectors include Energy, which is just in the green for the week followed by Healthcare, Real Estate and Consumer Staples, as they are all down more than 1%.

The worst-performing sectors include Utilities and Materials, which are both down more than 2% followed by Information Technology down just under 2%.

The best-performing stocks in the ASX top 100 include IGO up more than 5% followed by Brambles up more than 1% and Woodside Energy up just under 1%.

The worst-performing stocks include Orora down more than 21% followed by the Star Entertainment Group down more than 7% and Bendigo Adelaide Bank down more than 6%.

What's next for the Australian stock market

Even though the market had risen around 2.5% last week, I cautioned investors that it was best to have the mindset that the market could fall as we have seen so many times in the last three years.

As I have said many times, just when we think the market is bullish it does the opposite. Well, this occurred and so far this week the All Ordinaries Index is down 1.5%.

While I was expecting more volatility in the market, I was leaning to this being a fast rise rather than a sharp fall like we have seen over the past three days.

If we don't see the market turn to rise on Friday, I suspect we will see further falls into October and possibly back down to around the 7000-point support level I have mentioned several times in the past.

I will say it again, I strongly recommend you have a stop loss on every stock you own in case we see further downside.

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Dale Gillham is chief investment analyst at Wealth Within Limited (AFSL 226347). He also serves as the head trainer at the Wealth Within Institute (RTO 21917). He has more than three decades of experience in the investment industry, and is the author of How to Beat the Managed Funds by 20%, Dale's qualifications include an Advanced Diploma and a Diploma of Share Trading and Investment. He co-hosts the Talking Wealth Podcast, and his work has appeared in The Australian Financial Review, New York Business Journal, Wall Street Select and more.
Chris O'Malley
September 9, 2023 9.07am

Great story on Alan Joyce and Qantas. Dale Gillham is spot on with his comment that American style double digit growth at all costs has filtered into Australian business practices. Having worked for over 35 years for an American multi-national company who had market share of over 95% the never-ending push for greater sales was in fact sickening. Their greed knew no boundaries. Additionally, suspicion has to be raised as to why Alan Joyce sold the majority of his shares in Qantas in June. Not quite insider trading however his knowledge of the company's financial state would have been quite detailed.