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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 outperformed the ASX200 Accumulation Index by +2.47% in December, taking 12-month performance to +24.69% and annualised performance since inception in March 2013 to +9.90%. By contrast, the Index has returned +23.40% over the past 12 months and +8.65% p.a. since the Fund's inception. The Fund's down-capture ratio for performance over the past 12 months of -26.23% and for performance since inception of 41.02% highlight the Fund's capacity to significantly outperform in falling markets. Positive contributors for December included Adriatic and Atrum (resource upgrades), offset by declines in Audinate and Telix Pharma. In their latest report Paragon discuss the Fund's performance over the past 12 months, noting that the Fund outperformed almost all relevant indices. Their latest report also includes Paragon's 2020 outlook. In their view, many macro flags, such as central banks globally resuming quantitative easing and improvements in the US-China trade war, have turned green (from red a year ago). Around half of the Fund's exposure is in Resources (which includes the Fund's gold stocks) and the other half is in structural growth stocks across tech/medtech/fintech. Paragon anticipate near-term catalysts to drive ongoing re-ratings for many of the Fund's stocks and their performance for 2020 and beyond. |
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