Written by Mike Ross, Investment Analyst
An eventful February
February is always a busy month for the Australasian funds, with most of our companies involved in reporting season. The investment team also monitors dozens of non-investee company results to scan for new ideas and pick up on relevant market trends. At the same time, volatility returned to markets after US economic data raised concerns about inflation and a steeper path for interest rate rises.
The benefit of market volatility is it presents attractive opportunities to deploy capital, if one is willing to take a longer-term view. We initiated new positions during the month and the investment team is travelling to Australia this week to meet management of existing holdings and new prospects. Having raised cash levels to 30-35% recently, the funds are well positioned to be opportunistic should volatility return, as it has in early March.
The benefit of market volatility is it presents attractive opportunities.
Reporting season scorecard
Looking at the results of our portfolio companies relative to our expectations, most were in-line with, or exceeded, our expectations. However, a couple of our larger holdings had weaker results, with more pronounced impact on fund performance. Apart from the Dividend Fund, our funds were down for the month.
Contributors and detractors
Key contributors to fund performance during the month included Smart Parking, Nearmap, Kogan.com, Redbubble and NRW Holdings. Key detractors included EML Payments, Catapult, MNF Group, Pacific Current and Easton.
As previously discussed in this newsletter, we tend not to invest in resources companies directly. We have taken positions in companies that service the resources industry and have benefited from the recent resurgence in commodity related activity. These have included Imdex, Emeco Holdings and NRW Holdings, which all delivered positive performance for the funds.
Past performance is not an indicator for future performance. This is not intended to be financial advice and does not take into account any particular person’s circumstances. Before relying on this information, please speak to an independent financial adviser.