September, 2023
The CC Sage Capital Absolute Return Fund returned 1.55% in September versus the RBA Cash Rate of 0.32%.
The Sage Groups that were the strongest contributors to performance were Yield, Growth and Defensives with Global Cyclicals being a detractor. The key drivers of performance in Yield was driven by long positions in insurers QBE Insurance (QBE +5%) and Suncorp Group (ASX: SUN +2%) as insurers benefitted from rising long term bond yields. Growth was driven by a short position in Xero (ASX: XRO -10%) as global technology names were hit hard, especially those trading at very high valuations and a long position in Telix (ASX: TLX +3%) on the back of positive sentiment surrounding the growth of the radiopharmaceutical industry. On the negative side, the Global Cyclicals Sage Group was impacted by a short position in Seven Group Holdings (ASX: SVW +12%) as the market became more positive on the growth of its major business Westrac.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/6528c69e528fe58405ed396c_CC-Sage-Capital-Absolute-Return-Fund-Class-A-Monthly-Report-September-2023.pdfJune, 2023
The CC Sage Capital Absolute Return Fund returned -0.28% in June versus the RBA Cash Rate of 0.33%.
The Sage Groups* that were the strongest contributors to performance were Defensives and Yield, with Domestic Cyclicals and Resources Groups being detractors. The key drivers of performance in Defensives included a long position in AGL Energy (ASX: AGL +15%), which rose after providing strong FY24 guidance - well ahead of consensus expectations driven by sustained higher wholesale electricity prices. Within Defensives, a short position in ASX (ASX -6%) contributed strongly as the market digested its investor day which outlined double digit cost growth over the next two years as it works to replace the archaic CHESS settlements system and meet regulatory commitments.
Within the Yield Sage Group, performance was aided by long positions in Insurance Australia Group (ASX: IAG +10%), following its investor day during the month which highlighted margin expansion into FY24 driven by strong insurance premium growth and slowing claims inflation. Another strong contributor in Yield was a long position in QBE Insurance (ASX: QBE +7%). It rallied on the back of broker research highlighting several halves of conservative claims reserving across its US insurance business leading to increased confidence in the company’s earnings outlook. On the negative side, Domestic Cyclicals was impacted by a long position in Qantas (ASX: QAN -7%), which fell on profit taking post its investor day at the end of May, and concerns around slowing consumer spending domestically. Within Resources, a short position in Fortescue Metal Group (ASX: FMG +15%) turned unfavourable as the market anticipated possible Chinese stimulus support for housing during key policy meetings in July.
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The CC Sage Capital Absolute Return Fund returned -0.45% in March versus the RBA Cash Rate of 0.30%.
The Yield and Defensives Sage Groups* were the strongest contributors with the weakest being the Growth and REITs Sage Groups. In Yield, performance was driven by a short position in Computershare (ASX: CPU -13%) which fell with declining US interest rate expectations and short positions in Westpac Banking Corporation (ASX: WBC -4%) and Commonwealth Bank of Australia (ASX: CBA -2%) which underperformed as competition for deposits and home loans intensified. Defensives outperformance was driven by a short position in A2 Milk Company (ASX: A2M -12%) following a profit warning from milk supplier Synlait and a long position in Sonic Healthcare (ASX: SHL +10%) which continued its strong momentum from its result last month.
On the negative side, key detractors in the Growth Sage Group were short positions in REA Group (ASX: REA +13%) which rallied on proposed price increases and a stabilisation in property prices and Cochlear (ASX: COH +7%) which benefited from a market preference for quality defensive earnings. The REITs Sage Group were also a detractor this month with long positions in Charter Hall (ASX: CHC -17%) and Dexus (ASX: DXS -8%) underperforming with unlisted market valuation fears following the collapse of Silicon Valley Bank in the US
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The CC Sage Capital Absolute Return Fund returned -0.30% in January versus the RBA Cash Rate of 0.27%.
The REITs and Global Cyclicals Sage Groups* were the strongest contributors to performance, with Growth and Resources Sage Groups being detractors. REITs performance was driven by long positions in Charter Hall Group (ASX: CHC +15%) and Goodman Group (ASX: GMG +15%) which rose due to a combination of falling bond rates and strong results from Prologis, an overseas competitor, which cited continued high rental growth for industrial property. Global Cyclicals was driven by a short position in Amcor (ASX: AMC -5%) which fell on uncertainties about the outlook for consumer packaging volumes and a long position in Corporate Travel Management (ASX: CTD +25%) which was strong on the back of an expected pick-up in activity following China’s reopening.
On the negative side, Growth Sage Group performance was impacted by short positions in Pro Medicus (ASX: PME +21%) which announced several new client wins, and Breville Group (ASX: BRG +23%) which rallied on a short squeeze as industry data indicated trading over the Christmas period was stronger than expected. The Resources Sage Group performance was impacted by a long position in Santos (ASX: STO 0%) which gave guidance for lower than expected production due to the temporary shut down of the John Brookes platform in Western Australia and a short position in Sims Limited (ASX: SGM +17%) which bounced on perceived improvements in the scrap metal market since the last weak trading update.
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The CC Sage Capital Absolute Return Fund returned -0.95% in December versus the RBA Cash Rate of 0.25%.
The Yield and Defensives Sage Groups* were the strongest contributors with REITs and Resources Sage Groups being detractors. Performance in Yield was driven by QBE Insurance Group (ASX: QBE +4%) which continued to rally after a strong performance update in late November. Defensives was driven by a short position in Endeavour Group (ASX: EDV - 8%) which fell over concerns around regulatory changes in gaming that would impact its Hotels division and a long position in Telstra Group (ASX: TLS 0%) which held up better than sector peers in a falling market.
On the negative side, REITs Sage Group performance was impacted by long positions in Charter Hall Group (ASX: CHC -13%) and Goodman Group (ASX: GMG -8%) which fell after news reports that Blackstone Real Estate Income Trust, a large US REIT that owns build to rent residential property, would have to divest assets to meet redemption requests. Resources Sage Group performance was impacted by short positions in Fortescue Metals Group (ASX: FMG +6%) and BHP Group (ASX: BHP 0%) which were relatively strong driven by a further 14% rise in the iron ore price in the month and a long position in lithium miner Allkem (ASX: AKE -18%) which was weak due to a fall in the lithium price on concerns of near term weaker demand from China for electric vehicle production.
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The CC Sage Capital Absolute Return Fund returned 2.29% in September versus the RBA Cash Rate of 0.18%.
The Growth, Yield and Resources Sage Groups* were the strongest contributors to performance with REITs being a detractor. The Growth Sage Group was driven by a long position in ResMed (RMD +5%) which rallied on the prospect of further market share gains as more bad news emerged from its key competitor, a short position in Carsales.com (CAR -16%) which fell on the back of poor updates from US peers raising concerns about the recent US acquisition and a short position in Pinnacle Investment Management (PNI -19%) which declined along with other fund managers as markets fell. The Yield Sage Group was driven by a long position in Computershare (CPU +0.2%) which rose as short-term cash rate expectations increased and a short position in Macquarie Group (MQG -14%) which fell being sensitive to credit spreads which spiked up over the month. The Resources Sage Group was driven by long positions in lithium stocks Pilbara Minerals (PLS +25%) and Allkem (AKE -0.4%) as the lithium price continued to rise and a short position in Worley (WOR-12%) as the oil price fell amid a deteriorating demand outlook.
The REITs Sage Group was a detractor t
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release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.sagecap.com.au/cc-sage-capital-absolute-return-fund
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asset_class: Alternatives
asset_category: Market Neutral
peer_benchmark: Alternatives - Market Neutral Index
broad_market_index: Credit Suisse AllHedge Long/Short Equity Index
structure: Managed Fund
manager_contact_details: Array
fund_features:
The Fund aims to achieve positive returns in excess of the Fund Benchmark, after fees and expenses, over the long term by taking both long positions and short positions in selected Australian shares.