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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 | In October the Fund returned -5.44% with performance impacted by a sharp market sell-off in the last week of the month - the worst-ever loss in the week leading up to a US presidential election. Paragon's view is that the sell-off and rise in volatility was driven by anxiety around the election outcome and it being contested, the next US fiscal stimulus bill delayed until after the election, and further COVID-19 lockdowns in Europe and potentially the USA. Positive contributors for the Fund included a long position in Tesserent and short positions in AFL and Atlas Arteria. These were offset by declines across the remainder of the portfolio. The Fund ended the month with 27 long positions and 6 short positions. Paragon continue to view gold as being in a correction since its August 2020 highs - as it was in Feb-May 2019 and Aug-Nov 2019 before it broke out strongly. |
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