Absolute Equity Performance Fund Limited Monthly NTA and ... · Long Caltex (CTX) Short Viva Energy...
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Absolute Equity Performance Fund Limited Monthly NTA and Performance Update Net Tangible Assets Per Share (NTA) NTA before tax $1.042 NTA after tax $1.063 NTA* Performance 1 month -0.84% 3 months -2.35% 12 months -3.20% Since inception (annualised) 1.27% $ currency notation refers to Australian Dollars. *Before tax. These calculations are unaudited and intended to illustrate the performance of the investment portfolio minus corporate expenses. They are calculated including dividends. ‘Since inception (annualised)’ is annualised NTA performance since listing at $1.065 after listing related expenses. Company Details ASX code AEG Listing date 16 December 2015 Share price $0.99 NTA* per share $1.042 Dividend yield † (fully franked) 4.55% Shares on issue 101,508,804 NTA* $105,758,843 Portfolio Snapshot Long exposure Month End 50.2% Short exposure Month End -49.8% Net market exposure Month End 0.4% Gross market exposure* Month End $497,427,310 Leverage factor (x NTA) Month End 4.7 Average leverage factor (x NTA) Since Inception 4.7 Most Profitable Pairs for the Month Long Macquarie (MQG) Short Bendigo Bank (BEN) Long Ramsay Health Care (RHC) Short Healius (HLS) Least Profitable Pairs for the Month Long Challenger (CGF) Short IOOF (IFL) / ANZ Bank (ANZ) Long Caltex (CTX) Short Viva Energy (VEA) Contact Details Company Absolute Equity Performance Fund Limited (ACN 608 552 496) Address Level 12, Grosvenor Place, 225 George St, Sydney, NSW 2000 Phone Number 02 8016 2819 Email [email protected] Website www.aepfund.com.au As at 28 February 2019 *Before tax, † Dividends paid over the past 12 months divided by share price stated above. Portfolio Performance The Company’s Portfolio performance was modestly negative for the month. We experienced an even mix of winners and losers across the 31 pairs (matched long and short positions) in the Portfolio. Reporting season led to a slight downgrade to market earnings forecasts with resources positive and industrials negative. Several companies had a soft December 2018 half and are hopeful of a better June 2019 half. We were comfortable with our overall hit rate based on earnings revisions. Pair performances were closely matched with our best five pairs and worst five pairs producing a combined break even result. Other positions generated the small negative return. Overall, no one pair stood out with the Portfolio finely balanced. By sector we saw positive contributions from Financials and Health care, while Materials and Energy were laggards. Notable results included Macquarie confirming guidance for strong earnings growth this year, whilst Bendigo Bank announced a subdued December half with weak revenue and persistent cost growth. Both stocks contributed positively to the pair. On the negative side, long Challenger (CGF) / short IOOF Holdings (IFL) and ANZ was our weakest pair due to the performance of IFL. Whilst IFL reported a weak result which was below forecasts, (interim) management presented an optimistic update on IFL’s progress repairing the relationship with regulators, which was received well. We think it is premature to assume the impact of the Financial Services Royal Commission is over. We did not regard this results season as a headwind to working our way through the current under-performance cycle. The long portfolio continues to deliver superior earnings growth and return on equity and capital relative to the short portfolio. *Sum of long and short positions in the Portfolio. Market Observations The old adage ‘Don’t fight the Fed’ was on display in February with markets continuing to rally in the wake of January’s news from US Fed Chairman Jerome Powell that the Federal Reserve will adopt a more patient approach to its policy normalisation path than previously advised. Is the Fed influencing economic activity and market direction – or the other way around? Also helping markets were signs of progress on trade negotiations between the US and China. Across the major regions, US markets gained 3% (S&P 500 +3.0%, Nasdaq +3.4%), Europe +3.9% (MSCI Europe Index), Japan +2.0% (Nikkei Index) and rest of Asia +2.9% (MSCI Asia ex Japan Index). It was a strong start to the calendar year for sharemarkets. This is shown in the below histogram of the S&P 500. It shows that only three times in the near 100-year history of the S&P 500 has the index rallied between +10% and +12% in the first two months of the calendar year. Typically, some 90% of the time, the index ranges between -6% and +10%. For personal use only
Transcript of Absolute Equity Performance Fund Limited Monthly NTA and ... · Long Caltex (CTX) Short Viva Energy...
Absolute Equity Performance Fund LimitedMonthly NTA and Performance Update
Net Tangible Assets Per Share (NTA)NTA before tax $1.042
NTA after tax $1.063
NTA* Performance1 month -0.84%
3 months -2.35%
12 months -3.20%
Since inception (annualised) 1.27%
$ currency notation refers to Australian Dollars.
*Before tax. These calculations are unaudited and intended to illustrate the performance of the investment portfolio minus corporate expenses. They are calculated including dividends. ‘Since inception (annualised)’ is annualised NTA performance since listing at $1.065 after listing related expenses.
Company DetailsASX code AEG
Listing date 16 December 2015
Share price $0.99
NTA* per share $1.042
Dividend yield † (fully franked) 4.55%
Shares on issue 101,508,804
NTA* $105,758,843
Portfolio SnapshotLong exposure Month End 50.2%
Short exposure Month End -49.8%
Net market exposure Month End 0.4%
Gross market exposure* Month End $497,427,310
Leverage factor (x NTA) Month End 4.7
Average leverage factor (x NTA) Since Inception 4.7
Most Profitable Pairs for the MonthLong Macquarie (MQG) Short Bendigo Bank (BEN)
Long Ramsay Health Care (RHC) Short Healius (HLS)
Least Profitable Pairs for the MonthLong Challenger (CGF) Short IOOF (IFL) / ANZ Bank (ANZ)
Long Caltex (CTX) Short Viva Energy (VEA)
Contact DetailsCompany Absolute Equity Performance Fund Limited (ACN 608 552 496)
Address Level 12, Grosvenor Place, 225 George St, Sydney, NSW 2000
Phone Number 02 8016 2819
Email [email protected]
Website www.aepfund.com.au
As at 28 February 2019
*Before tax, †Dividends paid over the past 12 months divided by share price stated above.
Portfolio Performance
The Company’s Portfolio performance was modestly negative for the month. We experienced an even mix of winners and losers across the 31 pairs (matched long and short positions) in the Portfolio. Reporting season led to a slight downgrade to market earnings forecasts with resources positive and industrials negative. Several companies had a soft December 2018 half and are hopeful of a better June 2019 half. We were comfortable with our overall hit rate based on earnings revisions.
Pair performances were closely matched with our best five pairs and worst five pairs producing a combined break even result. Other positions generated the small negative return. Overall, no one pair stood out with the Portfolio finely balanced. By sector we saw positive contributions from Financials and Health care, while Materials and Energy were laggards.
Notable results included Macquarie confirming guidance for strong earnings growth this year, whilst Bendigo Bank announced a subdued December half with weak revenue and persistent cost growth. Both stocks contributed positively to the pair. On the negative side, long Challenger (CGF) / short IOOF Holdings (IFL) and ANZ was our weakest pair due to the performance of IFL. Whilst IFL reported a weak result which was below forecasts, (interim) management presented an optimistic update on IFL’s progress repairing the relationship with regulators, which was received well. We think it is premature to assume the impact of the Financial Services Royal Commission is over.
We did not regard this results season as a headwind to working our way through the current under-performance cycle. The long portfolio continues to deliver superior earnings growth and return on equity and capital relative to the short portfolio.
*Sum of long and short positions in the Portfolio.
Market Observations
The old adage ‘Don’t fight the Fed’ was on display in February with markets continuing to rally in the wake of January’s news from US Fed Chairman Jerome Powell that the Federal Reserve will adopt a more patient approach to its policy normalisation path than previously advised. Is the Fed influencing economic activity and market direction – or the other way around?
Also helping markets were signs of progress on trade negotiations between the US and China. Across the major regions, US markets gained 3% (S&P 500 +3.0%, Nasdaq +3.4%), Europe +3.9% (MSCI Europe Index), Japan +2.0% (Nikkei Index) and rest of Asia +2.9% (MSCI Asia ex Japan Index). It was a strong start to the calendar year for sharemarkets. This is shown in the below histogram of the S&P 500. It shows that only three times in the near 100-year history of the S&P 500 has the index rallied between +10% and +12% in the first two months of the calendar year. Typically, some 90% of the time, the index ranges between -6% and +10%.
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Absolute Equity Performance Fund LimitedMonthly NTA and Performance Update
As at 28 February 2019
US S&P 500 HistogramPrice Return over first 2 Months of Calendar Year
Source: BloombergBin
Locally the S&P/ASX 200 Index had a good month with a return of +5.2%. All sectors gained with exception of Consumer Staples which was weighed down by weakness in Woolworths following a soft first half interim profit result.
The results from reporting season were mixed, as is always the case. Common across the market was a general trend of negative earnings revisions, excluding the Materials sector. The chart below shows this is the norm given the tendency for analysts to forecast in accordance with management commentary that often depicts future prospects as being a glass half full.
Industrials (Excluding Res, Banks & LPTs) Earnings Per Share Growth (%)
Source: Macquarie
FY19 EPS Change vs Share Price Change - February 2019
Source: Bloomberg
Company OverviewThe Company’s portfolio of investments is managed by Bennelong Long Short Equity Management Pty Ltd, using the same market neutral investment strategy behind the award winning Bennelong Long Short Equity Fund.
DirectorsMarc Fisher (Chair)
Graham Hand
Andrew Reeve-Parker
Company SecretariesJeff Phillips
Lisa Dadswell
Investment ObjectiveThe Absolute Equity Performance Fund Limited aims to generate positive returns regardless of the overall equity market performance, through employing a ‘market neutral’ equity strategy.
Investment ManagerBennelong Long Short Equity Management Pty Ltd.
Investment TeamSam Shepherd Portfolio Manager
Sam Taylor Head of Research
Steven Lambeth Senior Analyst
Justin Hay Senior Analyst
Daniel Sanelli Analyst
Our internal review of earnings revisions sector by sector also showed the same result. That is, growth forecasts for FY19 decreased for all sectors which stands somewhat in contrast with respective price performance.
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Absolute Equity Performance Fund LimitedMonthly NTA and Performance Update
As at 28 February 2019
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec YTD2019 -3.51% -0.84% -4.32%2018 1.27% -0.15% 0.76% 1.98% 4.75% 0.08% -3.67 10.22% -3.87% -6.90% -3.16% 2.05% 2.29%2017 4.91% 2.06% 0.17% 5.83% 2.80% 1.15% -1.28% -6.62% 3.61% 5.26% -1.58% 2.93% 20.19%2016 -0.23% 2.28% -7.20% -2.89% 8.53% -0.92% 1.38% -5.90% -1.06% -1.73% -2.32% -3.31% -13.39%
2015 - - - - - - - - - - - 2.25% 2.25%
*Before tax. These calculations are unaudited and intended to illustrate the performance of the investment portfolio minus corporate expenses. They are calculated on a pre-dividend NTA basis.
*These calculations are unaudited. ‘AEG Portfolio Cumulative Return’ is intended to illustrate the performance of the investment portfolio net of corporate expenses and manager fees, and including the hypothetical reinvestment of dividends.
Important DisclaimerThis monthly report has been prepared by Absolute Equity Performance Fund Limited with commentary provided by the Investment Manager, Bennelong Long Short Equity Management Pty Ltd (ABN 63 118 724 173). This document has been prepared for the purpose of providing general information only. It is not an offer or invitation for sub-scription or purchase, or a recommendation of any financial product and is not intended to be relied upon by investors in making an investment decision. This report does not take into account individual investors’ investment objectives, particular needs or financial situation. While every effort has been made to ensure the information in this report is accurate, its accuracy, reliability or completeness is not guaranteed. Past performance is not a reliable indicator of future performance.
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AEG PerformanceSince Inception - Dec 2015
AEG Portfolio Cumulative Return AEG Share Price (Dividend Adjusted)
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