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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 contributors included long holdings in the Fund's Electric Vehicle theme (CleanTeq, Kidman and Orocobre) along with Aristocrat, Agrimin, Link Financial, Macquarie, New Century Zinc, Cimic, Wattle Health, Cann Group and Global Energy Ventures. Detractors included Updater, Lend Lease and Lynas. At the end of the month the Fund had 39 long and 15 short positions. Paragon noted that FY18 has commenced strongly, with performance driven by their thematic-led, high-conviction fundamental stock picks delivering as anticipated. Despite several stocks already rerating, Paragon sees attractive risk-reward in these key long positions, along with others yet to rerate boasting near term catalysts and remaining well placed to deliver. |
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