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| Fund Overview | MHOR looks for investment that exhibit the following set of characteristics: -Opportunity - to take advantage of growth and positive alignment with industry themes and trends. -Quality business - competitively advantaged product or service offering. -Financial flexibility - appropriately resourced to capture its opportunity. -Management - with the vision and capability to bring it all together. -Fundamentally undervalued. MHOR also considers labour standards, environmental, social and ethical considerations when making investment decisions but only to the extent that these factors impact the assessment of risk or return. The minimum suggested investment timeframe is 3-5 years. |
| Manager Comments | Positive contributors in October included Alliance Aviation Services (AQZ), IPH Ltd (IPH) and G8 Education (GEM). The key detractor were Xenith IP Group (XIP) which, as MHOR noted, provided a disappointing trading updated citing lower than anticipated earnings from the newly acquired Griffith Hack business. MHOR thinks these integration issues will likely be transitory rather than systematic while valuation remains supportive at these levels (sub 10x PE, 7% yield). The Fund entered October with 36 stocks and 6.7% cash, exiting the month with 33 stock and 13.5% cash. MHOR's view is that synchronised global economic growth continues to underpin a constructive outlook for equity markets. Monetary policy is expected to normalise, however, MHOR only anticipate a gradual tightening cycle considering stubbornly low wage inflation and relatively high household debt levels. Domestically, MHOR remain cautious on retail and property, preferring to play resources, mining services and technology whilst remaining disciplined on valuation. The Fund's relatively high cash levels provides them MHOR with ample flexibility to capitalise on investment opportunities over the coming months. |
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