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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 | The Paragon Australian Long Short Fund has returned +10.48% p.a. since inception in March 2013. By contrast, the ASX200 Accumulation Index has returned +8.88% p.a. over the same period. The Fund has a down-capture ratio of performance of 40%, indicating that, on average, the Fund has significantly outperformed in falling markets since inception. The Fund returned -3.1% in September. Positive contributors included Atrum, Jumbo and Nickel Mines. These were offset by declines in iSignthis, Agrimin and the Fund's gold holdings. Paragon noted in the previous bull cycle of 2009 - 2011, gold had ten corrections greater than 5% amid its 167% gain. Their view is that volatility in gold bull cycles is a given and historically being patiently invested has paid very well. During the month Paragon visited Atrum's Elan project in Canada and Adriatic released initial metallurgical resutls, both surprising to the upside and discussed in more depth in the Fund's September report. Paragon noted that whilst they're pleased with Atrum's stock price doubling since initiating their position in February, they believe there remains considerable upside ahead. |
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