The following list of ASX shares reveals the five best-performing Australian public companies of 2016 (so far), according to the following characteristics:
- Must have a market capitalisation of more than $500 million
- Must have been listed prior to 2016, and
- The company is still listed
- Fortescue Metals Group Ltd (ASX: FMG) – up 229%
The Fortescue Metals Group share price rallied strongly in 2016 as the iron ore price defied gravity to rally 75% (in U.S. dollars), according to Indexmundi.com. Not only that, but Fortescue has used its larger cash flows to drive operating efficiencies and rapidly pay down debt.
- Whitehaven Coal Ltd (ASX: WHC) – up 278%
Last year, few commentators were tipping Whitehaven Coal to emerge as one of the market's best performers of 2016. Similar to Fortescue Metals, the $2.7 billion coal miner powered higher against a backdrop of surging coal prices. Adding to Whitehaven's sharp share price rise was a regulatory change in China which saw a reduction in the number of days over which local factories were able to work.
- Resolute Mining Limited (ASX: RSG) – up 303%
Resolute Mining is a $750 million gold mining business with key assets in Australia and Africa. From this time 12 months ago, shares of Resolute Mining have – like those of its peers – chalked up impressive returns. However, if you bought shares in Resolute Mining just three months ago you would be sitting on a paper loss of 53% today. Ouch!
- Galaxy Resources Limited (ASX: GXY) – up 321%
The Galaxy Resources share price went nuts in 2016 as the lithium craze swept across the globe. In late May, Galaxy Resources announced its merger with General Mining Corp Ltd (ASX: GMM) in a move to create a diversified lithium powerhouse with a large portfolio of assets. With a market capitalisation of $888 million, Galaxy Resources is now larger than rival Orocobre Limited (ASX: ORE) to make it the largest pure play lithium miner on the ASX.
- Bradken Limited (ASX: BKN) – up 557%
The top performer of 2016 goes to the $650 million mining services business Bradken. In October, Bradken announced that it was the subject of a $3.25 per share cash takeover offer. Tokyo stock exchange listed Hitachi Construction Machinery agreed to buy all Bradken shares, which just six months earlier traded for 60 cents.
Foolish Takeaway
Studying yesterday's winners is a good way to reassess your expectations. Personally, if you asked me one year ago I would have said these five businesses would be terrible investments in 2016!
Recency bias is the tendency for us to take what has happened in the recent past and forecast the same trend to continue into the future.
Using that logic, while these five businesses have performed very well in 2016, it may be time consider taking profits and looking at other investment ideas leading into 2017. That's what the best investors do.
