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| Fund Overview | L1 Capital uses a combination of discretionary and quantitative methods to identify securities with the potential to provide attractive risk-adjusted returns. The discretionary element of the investment process entails regular meetings with company management and other stakeholders as well as frequent reading and analysis of annual reports and other relevant publications and communications. The quantitative element of the investment process makes use of bottom-up research to maintain financial models such as the Discounted Cashflow model (DCF) which is used as a means of assessing the intrinsic value of a given security. Stocks with the best combination of qualitative factors and valuation upside are used as the basis for portfolio construction. The process is iterative and as business trends, industry structure, management quality or valuation changes, stock weights are adjusted accordingly. |
| Manager Comments | L1 Capital noted the Fund's robust returns in 2020 were driven by strong stock picking across a wide range of sectors. Returns were further supported by decisive buying during the crisis in March and positioning the portfolio for vaccine success in November. They believe the vaccine rollout will trigger a rotation into value and cyclical stocks (which lagged the market in 2020) and they expect this to be a major positive tailwind for performance heading into 2021. Key contributors to performance in December included Imdex Limited (long, +26%), Lyft (long, +23%), Teck Resources (long, +10%), Liberty Financial Group (long, +30%), Metcash (long, +17%), and Cenovus Energy (long, +16%). The portfolio ended the month most heavily weighted towards Australia/NZ, followed by Europe, North America and Asia. |
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