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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 | Performance in December was driven by contributions from long holdings in the Fund's electric vehicle theme, along with Updater, Aristocrat, Dacian Gold and Global Energy and short in Qantas, offset by declines in European Cobalt and New Century Zinc. At the end of the month the Fund had 39 long and 15 short positions. Paragon noted they remain constructive on markets, particularly within their areas of focus - Resources and Industrials, both exhibiting medium to long term tailwinds across the Fund's key thematics. In terms of the Fund's Resources thematics, Paragon noted Lithium and Cobalt continue to boast strong fundamentals. Paragon's proprietary Lithium Supply & Demand model shows industry deficits and strong Lithium prices for at least CY18 and CY19. With regards to the Industrials thematics, Paragon believe the strength in the emerging consumer will continue to drive ongoing growth in China facing industries. Paragon also believe their Medical Innovation and Mobile Internet thematics are set to go from strength to strength. |
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