NEWS
25 May 2019 - Loftus Peak | Market Update (April 2019)
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Alex Pollak (CIO & Founder) discusses Loftus Peak's performance and portfolio composition as at April 2019. Alex points out that the net debt to equity ratio of the companies in their portfolio as group is negative, meaning they don't have debt. This, he believes, is what allows Loftus Peak's portfolio holdings to better manage exogenous shocks and thus outperform over the long-term. |
24 May 2019 - Hedge Clippings | The excitement's over, now back to work!
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24 May 2019 - Loftus Peak | Auto Industry Disruption
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Alex Pollak, Loftus Peak's CIO & Founder, expects electric vehicles to cause significant disruption to the auto industry. In this video, Alex details Loftus Peak's views on the disruption being caused to the industry and how they're taking advantage of it to benefit their investors. |
24 May 2019 - Performance Report: Wheelhouse Global Equities Income Fund
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| Fund Overview | To pursue this objective, the Investment Manager is responsible for actively managing, monitoring and tailoring the integration of derivative contracts alongside the Morningstar Portfolio, while taking into account changing market and stock specific conditions. The Investment Manager is responsible for maximising the structural benefits of short option positions (lowered Volatility, improved capital preservation, higher income generation), whilst mitigating, minimising and monitoring the structural negatives (variable market exposure, option expiries, collateral management and asymmetric return profiles). In addition, long derivatives positions are also used to enhance the capital preservation characteristics of the Fund in more extreme market movements. As a consequence of the integration of Derivatives, returns of the strategy, intra-cycle, are expected to vary from the underlying Morningstar Portfolio due to these characteristics. For example in weak markets, or in extended sideways markets, the Fund is expected to outperform relative to the Morningstar Portfolio. Conversely in strong positive markets the Fund is expected to underperform. |
| Manager Comments | Top contributors included Disney, ServiceNow, Microsoft, United Technologies Corp and Guidewire Software. Detractors included Amgen, Intel, Pfizer, Zimmer Biomet and Roche. The Fund is designed to deliver equity returns with higher income generation and active downside protection. The strategy's high income generation and active tail risk program are designed to lower risk and deliver equity returns with a smoother, more retiree-friendly return profile. As a result, Wheelhouse intend for returns to add relative value in weak and low-growth markets and to drag in more positive markets. |
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24 May 2019 - Performance Report: Quay Global Real Estate Fund
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| Fund Overview | The Fund will invest in a number of global listed real estate companies, groups or funds. The investment strategy is to make investments in real estate securities at a price that will deliver a real, after inflation, total return of 5% per annum (before costs and fees), inclusive of distributions over a longer-term period. The Investment Strategy is indifferent to the constraints of any index benchmarks and is relatively concentrated in its number of investments. The Fund is expected to own between 20 and 40 securities, and from time to time up to 20% of the portfolio maybe invested in cash. The Fund is $A un-hedged. |
| Manager Comments | The largest contributors were Safestore (US Storage), Hysan (HK Diversified) and Unite (UK Student Accommodation). Detractors were Scentre (Aust Malls), LEG Immobilien (German Apartments) and Ventas (US Healthcare). During April many of the Fund's US investees reported their 1Q19 results. Quay noted the results are pleasing for all of their investees and represent a continuing trend of robust operating fundamentals against the backdrop of a healthy US economy. |
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23 May 2019 - Performance Report: Frazis Fund
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| Fund Overview | The manager follows a disciplined, process-driven, and thematic strategy focused on five core investment strategies: 1) Growth stocks that are really value stocks; 2) Traditional deep value; 3) The life sciences; 4) Miners and drillers expanding production into supply deficits; 5) Global special situations; The manager uses a macro overlay to manage exposure, hedging in three ways: 1) Direct shorts 2) Upside exposure to the VIX index 3) Index optionality |
| Manager Comments | Top contributors included Carvana, Afterpay, Stanmore Coal, Amazon and Facebook. Detractors included Aurelia Metals, Bluebird Bio, iQiyi, Oxford Biomedica and the Fund's short book. Frazis noted that as the portfolio rallied this year (+23% YTD) they have been steadily increasing their short positions in structurally flawed sectors. These shorts were increased further in the first week of May. In the latest report the manager gives a brief summary of the Fund's structural shorts. Frazis say their portfolio is positioned more conservatively than ever. |
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23 May 2019 - Performance Report: Loftus Peak Global Disruption Fund
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| Fund Overview | The investment process involves a combination of top-down analysis with fundamental bottom-up qualitative and quantitative research to derive a risk-adjusted discounted cash flow (DCF) valuation of companies in the target universe. The investment team will generally buy stocks from the pool of securities that are trading below Loftus Peaks' valuation and sell them when they are trading above Loftus Peak's valuation. The approach allows for both fundamental accounting information as well as market-oriented inputs to be factored into the portfolio construction process. Loftus Peak's model typically does not rely on leverage to deliver investment returns and specifically takes into account risk in the valuation process. Capital preservation can be managed by holding up to 50% cash. Index and currency options and futures may also be used to manage risk. |
| Manager Comments | Top contributors in April included Qualcomm, Microsoft and Apple. Detractors included Anritsu, Tesla and Xilinx. Loftus Peak remain confident in Xilinx's long-term strategy, especially as the world increases demand for faster processing. They noted the Fund's cash levels are increasing as they continue to take profits on positions to which they deployed cash in December. The Australian dollar depreciated -0.92% over the month against the US dollar, which meant the value of the Fund's US dollar positions increased. As at 30 April 2019, the Fund carried a foreign currency exposure of 99%. |
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23 May 2019 - Performance Report: Glenmore Australian Equities Fund
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| Fund Overview | The main driver of identifying potential investments will be bottom up company analysis, however macro-economic conditions will be considered as part of the investment thesis for each stock. |
| Manager Comments | Top contributors in April included Jumbo Interactive (+32.7%), NRW Holdings (+24.4%), Magellan Financial Group (+22.5%), Stanmore Coal (+16.4%), Pinnacle Investment Management (+15.1%), Charter Hall Education Trust (+7.2%) and Bravura Solutions (+5.5%). Detractors included Mastermyne (-7.5%) and Atlas Arteria (-3.0%). Glenmore noted the strong rally in equities in 2019 has resulted in valuations in a number of the Fund's key stocks becoming less attractive, resulting in the Fund's holdings in those stocks being trimmed. They added that, despite the lessening valuation appeal, their positive short and medium-term view on the earnings outlook has led to them maintaining a holding in these stocks. |
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22 May 2019 - Performance Report: DS Capital Growth Fund
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| Fund Overview | The investment team looks for industrial businesses that are simple to understand; they generally avoid large caps, pure mining, biotech and start-ups. They also look for: - Access to management; - Businesses with a competitive edge; - Profitable companies with good margins, organic growth prospects, strong market position and a track record of healthy dividend growth; - Sectors with structural advantage and barriers to entry; - 15% p.a. pre-tax compound return on each holding; and - A history of stable and predictable cash flows that DS Capital can understand and value. |
| Manager Comments | The DS Capital Growth Fund rose +5.76% in April, outperforming the ASX200 Accumulation Index by +3.39% and taking annualised performance since inception in December 2012 to +15.13% versus the Index's +10.10%. This return has been achieved with an annualised volatility of 7.33% versus the Index's 11.13%. The Fund's Sharpe and Sortino ratios, 1.71 and 3.51 respectively, by contrast with the Index's Sharpe ratio of 0.75 and Sortino ratio of 1.09, highlight the Fund's capacity to achieve superior risk-adjusted returns whilst avoiding the market's downside volatility. Regarding the activity of a few of the Fund's holdings over the month:
DS Capital's view is that with the uncertainty of the Australian Federal Election behind us investors will focus on global and domestic economic conditions and related interest rates. They believe softer economic growth will maintain pressure on interest rates that have fallen since October 2018, deferring a return to higher rates that seemed likely just six months ago. While lower interest rates are theoretically favourable for equity markets, they add, weaker economic conditions can make it more difficult for businesses to grow earnings. They noted this was evident in the recent reporting season which, together with a recent lift in share prices, gives DS Capital cause for caution. They expect continuing volatility from the US-China trade tensions. Post reporting season company meetings, DS Capital have compiled a shopping list of businesses that they would like to own or add to their current holdings. They are seeing new opportunities and have a current cash holding of 20%. They noted they will take these opportunities sparingly. |
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