17 April 2024
Elston Quarterly Portfolio Update Q2 2024
In this video, Portfolio Manager David Seager provides his perspective on the key questions discussed in the recent quarterly asset allocation meeting. Read more
12th June 2017 - Asset Management, Private Wealth
ResMed (RMD) is a leading global developer and manufacturer of medical devices for sleep apnea and other respiratory-related disorders.
What is sleep apnea and why is treating it important?
There are three types of sleep apnea: obstructive, central and mixed. Of the three, obstructive sleep apnea (OSA) is by far the most common. Despite the difference in the cause of each type, in all instances people with untreated sleep apnea stop breathing repeatedly during sleep, sometimes hundreds of times during the night, and often for a minute or longer.
The interruption of air supply to the lungs is called an apnea. Each interruption reduces the supply of oxygen to vital organs such as the brain and heart, which, if left untreated, particularly in severe cases, can contribute to medical problems such as diabetes, high blood pressure, heart disease or strokes.
The prevalence of sleep apnea is increasing with age and obesity levels, with some estimates suggesting that as many as 80% of people suffering from it remain undiagnosed – this is a huge untapped pool of potential patients.
As awareness of sleep apnea and the potential negative health effects increases, we believe demand for the devices available to treat the condition will grow strongly, not only due to quality of life benefits for sufferers, but also potential overall healthcare system cost savings, as expensive-to-treat medical problems are reduced. Importantly, not only will demand increase for the machines, but also for the higher margin accessories like masks, nasal pillows, filters and tubes, which require more regular replacing.
While we appreciate that the constructive industry dynamics do not guarantee individual company success, ResMed has a proven track record. It already sells its award-winning products in around 100 countries, and is a global leader in connected care with more than 3 million patients remotely monitored every day.
In a competitive industry, ResMed invests heavily in research and development, which it can do given its strong cash flow generation and conservative balance sheet that includes cash in excess of $800m. Since 2008, the company’s return on equity has more than doubled from 10.5% to 22.4% at the most recent full year result. This means that for every $1 of shareholder capital invested, ResMed now generates around 22 cents of profit each year that can be returned to shareholders or used to invest for future growth. Importantly, this has been achieved with minimal use of debt, which can inflate the return on equity figure when companies borrow funds to grow, instead of using retained earnings.
So, while ResMed’s shares may seem expensive compared to the broader market, it would be wise to remember one of Warren Buffett’s most famous quotes: “Price is what you pay. Value is what you get.”
If you would like more information please call 1300 ELSTON or email info@elston.com.au and an adviser will be in touch.
17 April 2024
In this video, Portfolio Manager David Seager provides his perspective on the key questions discussed in the recent quarterly asset allocation meeting. Read more
10 April 2024
Elston Portfolio Manager Gary Merkel has picked three constituents of the ASX Small Ordinaries Index in the latest Livewire article. Read more
25 March 2024
Just before Easter, Livewire asked four fundies to pick which businesses they thought had the hop on some of the others in their investment universe. Read more
18 March 2024
Following on from the reporting season, Co-Founder and Portfolio Manager Bruce Williams has provided a brief overview of the recent results and what that indicates for the portfolio positioning. Read more
31 January 2024
The Australian Financial Review has recently named Elston Australian Emerging Leaders in their top performers 2023. Read the article to find out more. Read more
18 January 2024
In this video, Portfolio Manager Leon de Wet provides his perspective on the key questions discussed in the recent quarterly asset allocation meeting. Read more
1 December 2023
HUB24 announced the launch of a new whitepaper, ‘Directing the matrix: meeting the advice needs of high net worth clients’. Read now to get insights from Elston Head of Philanthropic Services Susan Chenoweth and many other experienced advisers. Read more
8 November 2023
Investing in what you are passionate about, or even what you consume everyday, can give you an edge. Find out what local stock Elston Co-Founder Bruce Williams has in mind. Read more
13 October 2023
What should advisers think about as they move to managed portfolios? Elston Head of Adviser Services Mark Smith shared his views on how to successfully make the transition. Read more
4 October 2023
We all know Australia is the lucky country, but could it soon be the luckiest? Elston Co-founder Andrew McKie believes it may be possible, and advisers need to take heed. Read more
21 September 2023
Andrew McKie joined 5 other industry leaders at LiveWire Live 2023 as they presented their shocking prediction for the future. What did he predict? And is it good news or bad news? Read more
14 September 2023
Portfolio Manager Leon de Wet has provided a brief overview of the recent reporting season results and what that indicates for future earnings and the portfolio positioning. Read more
25 August 2023
Are our two big supermarkets worth checking out? Read the latest Livewire Markets article to see what Elston Co-Founder and Portfolio Manager Bruce Williams thinks. Read more
12 August 2023
Should investors buy AMP or bypass it? See what Elston co-founder and portfolio manager Andrew McKie thinks and find out how he’s feeling about the ASX100 in general. Read more
1 August 2023
In this video, Portfolio Manager Leon de Wet provides his perspective on the key questions discussed in the recent quarterly asset allocation meeting. Read more
31 July 2023
What makes Carsales such an attractive stock? Elston Portfolio Manager Bruce Williams examines the key drivers that are working for this digital marketplace both here and overseas. Read more
26 July 2023
Last year, some bond indices fell into a black hole. Are good returns from fixed income investing still a galaxy far, far away? Or are there brighter days on the horizon? Read more
23 July 2023
In the latest Livewire's edition of Buy Hold Sell, Andrew McKie talked about which ASX-listed stocks he would want to own (or not own) in a Goldilocks scenario. Read more
20 July 2023
Elston Co-Founder Andrew McKie sat down with Han Lee from Livewire and Rob Crookston from WILSONS to discuss how they find “quality” companies on the ASX. Read more
15 July 2023
Andrew McKie was asked to analyse three stocks that are widely perceived to have those rock-solid qualities and assess whether they have become overcrowded, and name one quality company in the recent Livewire interview. Read more
12 July 2023
If you had a spare $10,000, how would you invest it? It's an interesting hypothetical and one that Elston Portfolio Manager Leon De Wet was happy to answer for Livewrire. Read the article to see his picks. Read more