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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 +13% in July, outperforming the ASX200 Accumulation Index by +12.5% and taking 12-month performance to +19.41% against the Index's -9.87%. Since inception in March 2013, the Fund has returned +11.98% p.a. against the Index's annualised return over the same period of +6.43%. The Fund has a down-capture ratio for performance since inception of 68.7% which highlights its capacity to outperform in falling markets. Positive contributors during the month came from the Fund's gold and polymetallic holdings, with Adriatic the standout, offset by declines in Mesoblast and Telix. OceanaGold is currently the Fund's largest position, having entered at near recent lows. Paragon expect OceanaGold to soon be net cash, unhedged, with enviable self-funded organic growth. The Fund ended the month with 27 long positions and 5 short positions. Paragon believe unprecedented US fiscal and monetary stimulus, combined with ballooning US twin deficits, record government debt and a surging Fed balance sheet (not seen since the post-1940's war era) in time is likely to create an inflation problem. This is one of the factors mentioned in their latest report which they believe to be a key driver for gold. |
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