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| Fund Overview | Paragon believes that markets are not always efficient, exhibiting a common tendency to price securities well outside of their intrinsic value over the medium term. This market characteristic provides the opportunity for Paragon, an active manager with a flexible mandate, to generate superior investment returns over the longer term. Paragon believes that it is critical to understand both the companies and the industries in which they operate, in order to fully comprehend each investment opportunity. Accordingly, a fundamental approach to company research is taken. Assessing the potential downside is also paramount in framing the risk/reward trade-off for potential investments. |
| Manager Comments | Main contributors for the month were gains in Kidman, Updater, Global GeoScience, Smartgroup, FastBrick Robotics, Wattle Heath and Lynas plus shorts in Telstra, Domino's Pizza and Select Harvest. At the end of the month the Fund had 42 long and 18 short positions. The Fund's cash holdings were reduced to 20.8% from 29% in July. Paragon's short in Telstra was initiated at $4.83 per share in February 2017, premised on rising Mobile & Broadband competition. In August, Telstra downgraded its FY17 results, cutting its FY18 dividend from 29.5cps to 22cps. Paragon's short in Domino's was initiated at $71 per share based on the view that it was an expensive growth stock (greater than 50x PE ratio) under pressure. Paragon are maintaining their short positions in both Telstra and Domino's. |
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