NEWS
Performance Report: Bennelong Long Short Equity Fund
14 Jun 2018 - Australian Fund Monitors
The Bennelong Long Short Equity Fund rose +4.75% in May, outperforming the ASX200 Accumulation Index by +3.66%. The Fund has returned +16.58% p.a. since inception in February 2002.
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14 Jun 2018 - Performance Report: Bennelong Long Short Equity Fund
By: Australian Fund Monitors
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| Fund Overview | In a typical environment the Fund will hold around 70 stocks comprising 35 pairs. Each pair contains one long and one short position each of which will have been thoroughly researched and are selected from the same market sector. Whilst in an ideal environment each stock's position will make a positive return, it is the relative performance of the pair that is important. As a result the Fund can make positive returns when each stock moves in the same direction provided the long position outperforms the short one in relative terms. However, if neither side of the trade is profitable, strict controls are required to ensure losses are limited. The Fund uses no derivatives and has no currency exposure. The Fund has no hard stop loss limits, instead relying on the small average position size per stock (1.5%) and per pair (3%) to limit exposure. Where practical pairs are always held within the same sector to limit cross sector risk, and positions can be held for months or years. The Bennelong Market Neutral Fund, with same strategy and liquidity is available for retail investors as a Listed Investment Company (LIC) on the ASX. |
| Manager Comments | Both the long and short portfolios contributed positively in May, with the majority of pairs positive. Bennelong noted company profit results and earnings guidance during the month's news flow affected the Fund; the portfolio experienced a positive skew of fundamental news with an even spread of upgrades to the long portfolio and downgrades to the short portfolio. The strongest pairs for the month were long Woolworths / short Metcash and long Aristocrat / short Tabcorp. The weakest pair was long Link / short ASX with Link affected by the Federal Budget proposal to close inactive and low balance superannuation accounts. |
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Performance Report: Paragon Australian Long Short Fund
13 Jun 2018 - Australian Fund Monitors
The Paragon Australian Long Short Fund returned -1.2% in May. The Fund has returned +32.67% over the past 12 months, outperforming the ASX200 Accumulation Index by +23.04%.
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13 Jun 2018 - Performance Report: Paragon Australian Long Short Fund
By: Australian Fund Monitors
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| Fund Overview | Paragon's unique investment style, comprising thematic led idea generation followed with an in depth research effort, results in a concentrated portfolio of high conviction stocks. Conviction in bottom up analysis drives the investment case and ultimate position sizing: * Both quantitative analysis - probability weighted high/low/base case valuations - and qualitative analysis - company meetings, assessing management, the business model, balance sheet strength and likely direction of returns - collectively form Paragon's overall view for each investment case. * Paragon will then allocate weighting to each investment opportunity based on a risk/reward profile, capped to defined investment parameters by market cap, which are continually monitored as part of Paragon's overall risk management framework. The objective of the Paragon Fund is to produce absolute returns in excess of 10% p.a. over a 3-5 year time horizon with a low correlation to the Australian equities market. |
| Manager Comments | Positive contributions in May came from Global Geoscience (Phase 1 primary feasibility study upgrade), Seven Group (profit guidance upgrade), Aristocrat (profit guidance upgrade), Kidman (binding offtake with Tesla), Sino Gas (takeover offer) and Paragon's Telstra short (profit guidance downgrade). These were offset by declines in Jupiter Mines, Wattle Heath, Cann Group, Global Energy and the Fund's Nanosonics short. At the end of May the portfolio had 29 long positions, 10 short positions and 22.3% cash. Paragon noted the Fund continues to be impacted by short-term volatility, however the long-term outlook of the Fund's key stock positions remains strong. Read Paragon's latest report for their updates on some of the key stock catalysts that occurred in May, supporting the Fund's overall outlook. These include Aristocrat (long), Global Geoscience (long), Kidman (long) and Telstra (short). |
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Weathering the storm clouds around bank stocks
12 Jun 2018 - David Rosenbloom - Senior Investment Analyst, ARCO Investment Management
As investors, there's always plenty to worry about. In our view the reasons to be anxious just got bigger. You'd have to be living under a rock not to have heard or read excerpts from the Banking Royal Commission. Much of this has been...
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12 Jun 2018 - Weathering the storm clouds around bank stocks
By: David Rosenbloom - Senior Investment Analyst, ARCO Investment Management
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Hedge Clippings, 8 June, 2018
8 Jun 2018 - Australian Fund Monitors
This week Hedge Clippings is feeling a sense of deja vu as once again malpractice and poor governance keeps the banks and finance sector front and centre for all the wrong reasons
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8 Jun 2018 - Hedge Clippings, 8 June, 2018
By: Australian Fund Monitors
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Towards the end of each week we seek inspiration (that's probably a slight exaggeration - maybe "ponder" describes it better) for the subject matter of the weekly Hedge Clippings email. It is a sad reflection on the current state of financial markets that for the past couple of months we have become somewhat predictable, as the antics of bankers and other sectors of the financial services industry have dominated the commentary.
The list has been extensive, headlined by AMP, plus NAB, CBA in multiple guises, and the overall vertical integration structure of product distribution and sales masquerading as independent advice. The boardroom ranks of AMP in particular have been thinned out significantly as reputations have fallen by the wayside, and the damage has either been reputational, or borne by shareholders.
This week has seen the significant extra bite of criminal charges being laid against senior banking executives, including one chairman, at the top end of town amongst Citi, Deutsche, and ANZ over an underwriting shortfall. The problem with financial penalties, even those as large as the $700 million levied on CBA by AUSTRAC's for breaching AML regulations, is that generally speaking it is the shareholders who pay the price. Even then, unless the dividend is cut as a result, there is little pain in investors' hip pockets at the end of the day. That's all changed and the message will have been sent loud and clear not only in this case but to all boardrooms.
Some readers may have noticed that Hedge Clippings has joined none other than the Treasurer, Scott Morrison, in previously suggesting that the potential for an enforced "holiday" would be the ultimate deterrent for serious corporate wrongdoing in the banking sector. Without wishing to prejudice the outcome of this particular case, it will be a serious wake-up call to all executives and directors who elect to sail close to the wind based on "normal practice".
Passing on a hefty fine to shareholders is one thing. Taking the risk of getting one's reputation pinged by the regulator even - but the thought of packing one's toothbrush and being introduced to a new diet (and room-mate) will undoubtedly sharpen some directors' sense of priority - and self-perseveration.
In 1756 at the start of the seven years' war the British executed Admiral Byng for "failure to do his utmost" to avoid defeat at the hands of the French fleet in the Mediterranean. When a French Admiral was asked why, and if this was not a little harsh, he responded it was "pour encourager les autres" - to encourage the others.
Whatever the outcome of the upcoming court case over ANZ Bank's underwriting shortfall, there's no doubt the message has been sent to "discourager les autres".
Fund Review: Insync Global Titans Fund April 2018
8 Jun 2018 - Australian Fund Monitors
Latest Fund Review on Insync Global Titans Fund is now available. The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and...
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8 Jun 2018 - Fund Review: Insync Global Titans Fund April 2018
By: Australian Fund Monitors
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INSYNC GLOBAL TITANS FUND
Attached is our most recently updated Fund Review on the Insync Global Titans Fund.
We would like to highlight the following:
- The Global Titans Fund invests in a concentrated portfolio of 15-30 stocks, targeting exceptional, large cap global companies with a strong focus on dividend growth and downside protection.
- Portfolio selection is driven by a core strategy of investing in companies with sustainable growth in dividends, high returns on capital, positive free cash flows and strong balance sheets.
- Emphasis on limiting downside risk is through extensive company research, the ability to hold cash and long protective index put options.
For further details on the Fund, please do not hesitate to contact us.
AFM Fund Review - April 2018 (pdf format)
What do we mean by a Technology Stock?
7 Jun 2018 - Robert Swift, API Capital
Our view of a technology stock looks beyond the traditional sector classifications in equity markets. Large companies that are typically regarded as technology stocks like Facebook and Google have earnings that are driven by advertising...
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7 Jun 2018 - What do we mean by a Technology Stock?
By: Robert Swift, API Capital
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Performance Report: Touchstone Index Unaware Fund
6 Jun 2018 - Australian Fund Monitors
The Touchstone Index Unaware Fund rose +2.70% in April, taking annualised performance since inception in April 2016 to +13.23%.
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6 Jun 2018 - Performance Report: Touchstone Index Unaware Fund
By: Australian Fund Monitors
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| Fund Overview | The portfolio is constructed using Touchstone's Quality-At-a-Reasonable-Price ('QARP') investment process. QARP is a fundamental bottom-up process, however, it also incorporates a top-down risk management framework designed to successfully manage the portfolio during varying market conditions and economic cycles. The Touchstone Fund is concentrated, typically holding between 15-20 stocks. No individual stock will ever make up more than 10% of the portfolio at any one time. The Investment Manager may temporarily exceed the exposure limits of the Fund occasionally, particularly during periods of market volatility, to allow for holdings in excess of this 10% limit where the increase in value of the underlying security is due to market movement. The Fund may also hold between 0-50% of the portfolio in cash. The Fund has a high level of associated risk, therefore, the minimum suggested investment time-frame is 5 years. |
| Manager Comments | The Touchstone Index Unaware Fund primarily selects stocks from the S&P/ASX 300 Index and typically holds 10-30 stocks. It seeks to invest in reasonably priced, good quality companies with a significant share of expected returns coming from sustainable dividends. At the end of the month the Fund held 22 stocks with an median position size of 4.1%. Overall, the portfolio's holdings had an average price/earnings of 14.6, EPS growth of 15.8%, tangible ROE of 23.7% and dividend yield of 5.1%. |
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Performance Report: Insync Global Titans Fund
5 Jun 2018 - Australian Fund Monitors
The Insync Global Titans Fund rose +2.06% in April after the cost of fees and protection. Since inception in October 2009, the Fund has returned +10.04% per annum with a volatility of 8.81%.
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5 Jun 2018 - Performance Report: Insync Global Titans Fund
By: Australian Fund Monitors
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| Fund Overview | Insync employs four simple screens to narrow the universe of over 40,000 listed companies globally to a focus group of high quality companies that it believes have the potential to consistently grow their profits and dividends. These screens are size of the company, balance sheet performance, valuation and dividend quality. Companies that pass this due diligence process are then valued using dividend discount models, free cash flow yield and proprietary implied growth and expected return models. The end result is a high conviction portfolio of typically 15-30 stocks. The principal investments will be in shares of companies listed on international stock exchanges (including the US, Europe and Asia). The Fund may also hold cash, derivatives (for example futures, options and swaps), currency contracts, American Depository Receipts and Global Depository Receipts. The Fund may also invest in various types of international pooled investment vehicles. At times, Insync may consider holding higher levels of cash if valuations are full and it is difficult to find attractive investment opportunities. When Insync believes markets to be overvalued, it may hold part of its resources in cash, or use derivatives as a way of reducing its equity exposure. Insync may use options, futures and other derivatives to reduce risk or gain exposure to underlying physical investments. The Fund may purchase put options on market indices or specific stocks to hedge against losses caused by declines in the prices of stocks in its portfolio. |
| Manager Comments | Insync has added new stocks to the portfolio within the Demographic Megatrend cluster of the 'global travel explosion'. Within the same cluster, Insync exited the profitable 'consumer goods' trend as fundamental conditions impacting this had changed. Both of these moves added positively to the Fund's April returns. Key positive contributors in April included Visa, Booking Holdings and Stryker, whilst the main negative contributors were TE Connectivity, eBay and Charter Communications. The Fund continues to have no foreign currency hedging in place as Insync believe the main risks to the Australian dollar to be on the downside. Utilisation of index put options to buffer sharp falls in equity markets remains. |
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Performance Report: Bennelong Concentrated Australian Equities Fund
4 Jun 2018 - Australian Fund Monitors
The Bennelong Concentrated Australian Equities Fund rose +3.66% in April, taking annualised performance since inception in January 2009 to +18.14%.
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4 Jun 2018 - Performance Report: Bennelong Concentrated Australian Equities Fund
By: Australian Fund Monitors
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| Fund Overview | The overriding objective of the Concentrated Australian Equities Fund is to seek investment opportunities which are under-appreciated and have the potential to deliver positive earnings, while satisfying our stringent quality criteria. Bennelong's investment process combines bottom-up fundamental analysis together with proprietary investment tools which are used to build and maintain high quality portfolios that are risk aware. The portfolio typically consists of 20-35 high-conviction stocks from the S&P/ASX 300 Index. The Fund may invest in securities listed on other exchanges where such securities relate to ASX-listed securities. Derivative instruments are mainly used to replicate underlying positions and hedge market and company specific risks. |
| Manager Comments | As at the end of April, the Fund's weightings had been increased in the Consumer Staples, Health Care, Materials and Financials sectors, and decreased in the Discretionary and Industrials sectors. The Fund aims to invest in a concentrated portfolio of high quality companies with strong growth outlooks and underestimated earnings momentum and prospects. By comparison with the Fund's benchmark (ASX300 Accumulation Index), the portfolio's characteristics show that its holdings, on average, have a higher Return on Equity and lower debt/equity (Premium Quality), higher sales growth and higher EPS growth (Superior Growth), as well as higher price/earnings and lower dividend yield (Reasonable Valuation). |
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Our Owner's Manual, Aoris International Fund
1 Jun 2018 - Stephen Arnold, Aoris Investment Management
Our Owner's Manual will help you understand in some detail how we are structured as a business and our reasoning behind key choices we have made. It also explains how we analyse companies, make investment decisions and construct...
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1 Jun 2018 - Our Owner's Manual, Aoris International Fund
By: Stephen Arnold, Aoris Investment Management
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