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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 rose +2.0% in January, taking 12-month performance to +26.17% versus the ASX200 Accumulation Index's +24.72%. Since inception in March 2013, the Fund has returned +10.09% per annum. The Fund's capacity to significantly outperform in falling markets is highlighted by its down-capture ratio of 41% for performance since inception. Positive contributors during the month included PointsBet, Alkane and Xero. These were partially offset by declines in Alacer Gold and Atrum. Paragon noted January was a volatile month, with global markets initially hitting new highs and then selling off on the coronavirus outbreak. Looking at 40 years of viral outbreaks including the 2003 SARS epidemic, Paragon point out markets generally went through 1 - 2 months of weakness followed by 6 - 12 months of solid recovery. January's volatility also saw the market bring forward expectations for a 4th Fed rate cut in July 2020 (from December 2020), which Paragon believe bodes well for gold. The Fund's latest report includes Paragon's latest views on Tesla. They believe Tesla's bull-case is strengthening. They also point out that they don't like to bet against a company with such a significant short interest as, in their view, typically when so many are positioned one way the opposite will happen (e.g. Fortescue in 2015). Click here to view the full report. |
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