September, 2023
The CC Sage Capital Equity Plus Fund returned -2.21% in September, outperforming the S&P/ASX 200 Accumulation Index by 0.63% which returned -2.84%.
The Sage Groups that were the strongest contributors to performance were Yield, Growth and Defensives with Global Cyclicals being a detractor. The key derivers for performance in Yield was driven by long positions in insurers QBE Insurance (ASX: 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.
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The CC Sage Capital Equity Plus Fund returned -2.55% in August underperforming the S&P/ASX 200 Accumulation Index by -1.82% which returned -0.73%.
The Sage Groups that were the strongest contributors to performance were REITs and Resources with Growth and Defensives being detractors. The key drivers of performance in REITs were long positions in Goodman Group (ASX: GMG +14%) which reported its full year results highlighting a strong pipeline for Data Centre development, Mirvac (ASX: MGR +3%) which reported stronger second half apartments sales and a short position in Charter Hall Long Wale REIT (ASX: CLW -14%) which fell on disappointing guidance due to higher interest costs. Resources were driven by a short position in Alumina (ASX: AWC -24%) which gave lower bauxite volume and free cash flow guidance, and a short position in Iluka Resources (ASX: ILU -17.5%) which lowered its production guidance citing weaker demand for synthetic rutile due to subdued economic activity in China.
On the negative side, the Growth Sage Group was impacted by a long position in Resmed (ASX: RMD -24%) which fell after reporting weaker gross margins in its Q4 results, with investor fears that new GLP-1 weight loss drugs would in time materially reduce the market for sleep apnoea masks.
Also, within Growth, a short position in Cochlear (ASX: COH +14%) detracted after guiding to stronger than expected FY24 growth driven by increasing referral rates for adults. The Defensives Sage Group performance was impacted by long positions in Coles Group (ASX: COL -10%) which fell after reporting increased theft impacts on gross margin and delivery centre cost blowouts, and AGL (ASX: AGL -7%) which fell after profit taking following an incredible run into August.
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The CC Sage Capital Equity Plus Fund returned 2.49% in July underperforming the S&P/ASX 200 Accumulation Index by -0.39% which returned 2.88%.
The Sage Groups that were the strongest contributors to performance were Resources and Global Cyclicals with Growth and Yield being detractors.
The key drivers of performance in Resources included short positions in iron ore producer Fortescue Metals Group (ASX: FMG -2%) which gave soft volume and higher capex guidance and Sims Metals (ASX: SGM -4%) on the back of lower scrap prices and a long position in oil producer Santos (ASX: STO +6%) which was driven by a higher oil price. Global Cyclicals were driven by long positions in Corporate Travel (ASX: CTD +17%) which reiterated guidance and gave a positive trading update, along with James Hardie Industries (ASX: JHX +9%) which was driven by an improvement in US housing demand and Incitec Pivot (ASX: IPL +10%) which rallied on indications there may be multiple potential buyers of its fertiliser business.
On the negative side, Growth was impacted by short positions in Megaport (ASX: MP1 +41%) which moved to cashflow profitability and Seek (ASX: SEK +15%) which was strong on speculation that job ad numbers may be bottoming. Within the Yield Sage Group, performance was impacted by a long position in Macquarie Group (ASX: MQG -2%) which fell after guiding to a weaker profit outlook at their AGM, with a long position in QBE Insurance (ASX: QBE +1%) and short positions in Commonwealth Bank (ASX: CBA +5%) and Westpac (ASX: WBC +5%) that saw investors take profits in insurers and rotated into banks on signs that aggressive competition in mortgages is abating.
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The CC Sage Capital Equity Plus Fund returned 1.50% in June underperforming the S&P/ASX 200 Accumulation Index by 0.26% which returned 1.76%.
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 the Defensives Group, 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 within the Yield Sage Group 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 their 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 spend domestically. While in 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 Equity Plus Fund returned -2.00% in May outperforming the S&P/ASX 200 Accumulation Index by 0.53% which returned -2.53%. The Sage Groups* Domestic Cyclicals and Resources were the strongest contributors to performance with Global Cyclicals and Gold Groups being detractors.
The key drivers to performance in Domestic Cyclicals were long positions in Ampol (ASX: ALD +5%) as the market gained increasing confidence in the prospect of a continued recovery in fuel volumes and a more stable margin environment and Graincorp (ASX: GNC +12%) which reported a strong first half result and upgraded full year guidance by 20%. Resources performance was aided by long positions in lithium producers Pilbara Minerals (ASX: PLS +4%) as the lithium price rallied on a recovery in Chinese EV sales, Allkem (ASX: AKE +21%) which announced a merger with US lithium processor Livent Corp to become a vertically integrated producer of lithium and a short position in Fortescue Metals Group (ASX: FMG -8%) which fell on the back of iron ore price weakness due to weak China steel prices and soft demand. On the negative side, Global Cyclicals was impacted by a short position in James Hardie (ASX: JHX +13%) which reported and gave better than expected guidance for the next quarter and a long position in ALS Limited (ASX: ALQ -12%) which reported a weaker than expected result in its Life Sciences business and more challenging conditions for sample volumes in the Geochemistry division.
File:April, 2023
The CC Sage Capital Equity Plus Fund returned 2.62% in April outperforming the S&P/ASX 200 Accumulation Index by 0.77% which returned 1.85%. The Growth and Resources Sage Groups* were the strongest contributors to performance.
The key driver in Growth was a long position in Telix Pharmaceuticals (ASX: TLX +47%) which reported a very strong quarterly result which indicated that the total addressable market for its key product Illuccix may be larger than expected, leading to significant earnings upgrades. Resources was driven by short positions in iron ore exposed companies Fortescue Metals Group (ASX: FMG -7%) and Mineral Resources (ASX: MIN -9%) which fell on the back of a -17% drop in the iron ore price due to lower demand from China and a long position in lithium producer Pilbara Minerals (ASX: PLS +8%) which got a boost from M&A activity in the lithium sector.
The Domestic Cyclicals Sage Group was a detractor for the month driven by a long position in Ampol (ASX: ALD -2%) which delivered a solid quarterly result but was weak on concerns about lower refining margins going forward and a short position in Boral (ASX: BLD +17%) which rallied on the back of the Reserve Bank of Australia (RBA) pausing rates and signs of stabilisation in the Australian property market.
File:March, 2023
The CC Sage Capital Equity Plus Fund returned -0.52% in March versus the S&P/ASX 200 Accumulation Index return of -0.16%.
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 Equity Plus Fund returned -1.48% in February versus the S&P/ASX 200 Accumulation Index return of -2.45%. 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 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 Equity Plus Fund returned 5.91% in January versus the S&P/ASX 200 Accumulation Index return of 6.23%. 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 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 Equity Plus Fund returned -3.76% in December versus the S&P/ASX 200 Accumulation Index return of -3.21%. 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 Ltd (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 Capital Sage Equity Plus Fund returned 4.97% in November versus the S&P/ASX 200 Accumulation Index return of 6.58%. The Domestic Cyclicals and Yield Sage Groups* were the strongest contributors with the Resources and Growth Sage Groups being detractors.
Domestic Cyclicals was driven by a broad range of long and short positions including short positions in consumer discretionary stocks Premier Investments (ASX: PMV 1%) and Eagers Automotive (ASX: APE-1%). Yield was driven by underweight positions in National Australia Bank (ASX: NAB 0%), Westpac Banking Corporation (ASX: WBC +1%) and Commonwealth Bank of Australia (ASX: CBA +3%) as bank stocks lagged the market as bond yields fell and a long position in Computershare (ASX: CPU +10%) which upgraded profit guidance at its AGM due to higher than expected margin income from rapidly rising global interest rates.
The key negative contributor was the Resources Sage Group. Key drivers were short positions and underweights in iron ore related stocks, Fortescue Metals (ASX: FMG +32%), BHP Group (ASX: BHP +22%) and Rio Tinto (ASX: RIO +24%) which rose on the back of a rally in the iron ore price on news of government support for the Chinese property market and post-Covid reopening expectations.
Long positions in lithium stocks Allkem (ASX: AKE -5%) and Pilbara Minerals (ASX: PLS -8%) also detracted as investors became increasingly concerned about the sustainability of high lithium prices. In the Growth Sage Group, detractors were long positions in Aristocrat Leisure (ASX: ALL -5%) which reported a solid result but gave softer than expected guidance on digital revenue growth and James Hardie Industries (ASX: JHX -14%) which fell on fears of a sharp US housing slowdown.
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The CC Sage Capital Equity Plus Fund returned 6.64% in October versus the S&P/ASX 200 Accumulation Index return of 6.04% delivering outperformance of 0.60%. The Resources and Growth Sage Groups* were the strongest contributors to performance with the Yield and Domestic Cyclicals Sage Groups being detractors.
Resources was driven by short positions in Fortescue Metals Group (ASX: FMG -13%) and BHP Group (ASX: BHP -3%) as iron ore prices fell on lower steel demand and higher supply levels. Growth was driven by long positions in Telix Pharmaceuticals (ASX: TLX +47%) which had a strong quarterly and positive clinical trial developments and Aristocrat (ASX: ALL +13%) on the back of positive industry growth data in the US and a short position in BrainChip Holdings (BRN -26%) which continued to lack revenue traction at its quarterly.
On the negative side, Yield was driven by short positions in Commonwealth Bank of Australia (ASX: CBA +15%) and National Australia Bank (ASX: NAB +13%) as the banking sector rallied on strong results due to expanding net interest margins. Domestic Cyclicals was a detractor driven by a long position in Ampol Limited (ASX: ALD -5%) which delivered a disappointing result from a loss in its fuel and infrastructure division.
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The CC Sage Capital Equity Plus Fund returned -5.09% in September, outperforming the S&P/ASX 200 Accumulation Index by 1.08% which returned -6.17%. 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 an overweight 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 an overweight in Computershare (CPU +0.2%) which rose as short-term cash rate expectations increased and an underweight 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 overweights 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 to performance impacted by overweights in Charter Hall Group (CHC -15%) and Shopping Centres Australasia Property Group (-14%) which fell as higher bond yields impacted REIT valuations.
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The CC Sage Capital Equity Plus Fund returned 2.50% in August, outperforming the S&P/ASX 200 Accumulation Index by 1.32%. The Resources and Defensives Sage Groups* were key positive contributors to performance with the Growth Sage Group being a detractor. The Resources Sage Group was driven by long positions in Allkem (AKE + 23%) and Pilbara Resources (PLS +17%) both which rallied on the back of strength in realised lithium pricing, reflecting underlying market tightness on the back of growing battery demand. A long position in Santos (STO +10%) which delivered a solid result, announced a buyback and an imminent selldown in PNG LNG that would be positive for value accretion.
The Defensives Sage Group was driven by short positions in TPG Telecom (TPG -16%) which fell as its result showed poor post-paid subscriber growth in mobile, Endeavour Group (EDV -7%) which fell after a weaker than expected result and ASX Limited (ASX -11%) where costs growth surprised on the upside and interest rate earnings leveraged surprised on the downside.
The Growth Sage Group was negatively impacted by a short position in WiseTech Global (WTC +17%) which reported a very strong result and long positions in ResMed (RMD -6%) which reported a solid result but gave back some of its recent share price gains and Xero (XRO -6%) after citing softer net subscriber additions at its AGM.
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The CC Sage Capital Absolute Return Fund returned -4.15% in July versus the RBA Cash Rate of 0.10%. Sage Groups* Gold and REITs were positive contributors and Growth and Yield were the biggest detractors to performance. The Growth Sage Group detractors were short positions in Wisetech (WTC +32%) which upgraded guidance on the back of better than expected costs, Pinnacle Investment Management Group (PNI +42%) which gave a positive update on performance fee revenue, and ZIP Co (ZIP +158%) which terminated its takeover agreement with Sezzle (SZL) and vowed to streamline and reduce cash burn.
Performance in the Yield Sage Group was impacted by a long position in QBE Insurance Group (QBE -5%) which fell as three to five year bond rates dropped during the month, and short positions in Commonwealth Bank (CBA +11%) and National Australia Bank (NAB +12%), driven higher after a weak June by lower bad debt fears. Detractors in the Domestic Cyclicals Sage Group were long positions in Ampol (ALD -2%) which fell on the back of the oil price drop and GrainCorp (GNC -8%) driven by a fall in the grain price. Positive contributors were the Gold Sage Group, driven by a short position in Newcrest Mining (NCM -8%) which fell as inflation fears eased leading the gold price lower, and the REITs Sage Group, driven by long positions in Charter Hall (CHC +18%) and Goodman Group (GMG +16%) which were strong due to lower bond yields
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Key contributors to performance by Sage Groups were Global Cyclicals, Resources and Yield. Performance in the Global Cyclicals Sage Group was driven by a long position in fertiliser producer Incitec Pivot (IPL +23%) which rallied as global fertiliser prices continued to climb on the back of strong demand combined with supply constraints stemming from export restrictions in Russia and China, conflict in the Ukraine and higher gas prices. Performance in the Resources Sage Group was driven by long positions in lithium producers IGO Limited (IGO +29%) and Allkem Limited (AKE +26%) on the back of a rally in the lithium price. The Yield Sage Group was driven by a short position in Magellan Financial Group (MFG -13%) as the group continued to suffer from fund outflows following a management reshuffle and the announcement in February that its Chief Investment Officer is taking a leave of absence. A long position in Computershare (CPU +14%) which is a major beneficiary of higher cash rates also aided performance.
The main detractor from performance was the Growth Sage Group driven by long positions in US home building exposed stocks James Hardie (JHX -9%) and Reliance Worldwide (RWC -6%) which fell along with US peers on fears that rising mortgage rates will crimp demand. Other detractors included short positions in technology stocks Block Inc (SQ2 +19%) and Novonix Ltd (NVX +23%) which rallied along with the technology sector in general.
Sage Capital believes the impact of rising inflation will continue to be felt across all parts of the economy with the Russia and Ukraine war and further Covid lockdowns in China exacerbating the global shortage of raw materials and driving up food and energy prices. Using food as an example, the wheat price is up 30% year to date and the prices of some standard grocery items are rising as much as 50% due to elevated raw material and freight costs. Cost of living concerns are becoming mainstream and beginning to be reflected in falling consumer confidence. In the consumer space, Sage Capital prefers companies with pricing power that can benefit from higher inflation such as supermarkets. Sage Capital are more cautious on consumer discretionary stocks with a backdrop of high levels of household debt, rising cost of essentials, moderating house prices and looming interest rate rises.
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The CC Sage Capital Equity Plus Fund delivered outperformance of 0.95% in January, returning -5.40% versus the S&P/ASX 200 Accumulation Index which fell 6.35%.
Key contributors to performance by Sage Groups* were Growth, Resources and Yield. Performance in the Growth Sage Group was driven by underweight positions in Reece (REH -20%), Xero (XRO -20%), REA Group (REA -13%) and Points Bet Holdings (PBH -31%) all of which were trading at very high valuations so were particularly vulnerable to the step up in bond yields during the month. The Resources Sage Group was driven by overweight positions in Santos (STO +13%) which rallied on higher oil prices and BHP (+12%) due to a significant upweighting in the index and higher iron ore prices. Performance in the Yield Sage Group was driven by an underweight position in Australian Ethical (AEF) which had been trading at very high valuation multiples.
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The CC Sage Capital Equity Plus Fund returned 0.76% in October versus the S&P/ASX 200 Accumulation Index which fell -0.10% resulting in outperformance of 0.86%. The top positive contributors to performance by Sage Group* were Growth, Resources and Defensives. Key contributors in the Growth Sage Group were long positions in Netwealth Group (NWL +19%) and Reliance Worldwide (RWC +11%) which performed well following positive quarterly updates and short positions in Domino’s Pizza Enterprises (DMP -16%) which fell after a strong run post its result in August and Treasury Wine Estates (TWE -7%) which gave a downbeat quarterly update citing pandemic related logistical challenges getting worse not better and a slower than expected recovery in demand.
Resources performance was driven by a short position in iron ore miner Mineral Resources (MIN -14%) and long positions in energy stocks Karoon Energy (KAR +17%) and Senex Energy (SXY +20%) as the oil price continued to run, up 15% in the past 2 months as demand continues to outstrip supply.
In the Defensives Sage Group key contributors were a long position in supermarket and hardware retailer Metcash Limited (MTS +3.5%) and a short position in Star Entertainment Group (SGR -18%) which fell following media reports alleging criminal activity. The primary detracting Sage Group was Global Cyclicals driven by short positions in Orica Limited (ORI +10%) which rose as the market gained confidence in improving explosives demand and Monadelphous (MND +10%) and a long position in Ansell (ANN -8%) which was weak following an update from a peer citing industry margin headwinds.
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The CC Sage Capital Equity Plus Fund outperformed the S&P/ASX 200 Accumulation Index in September, returning -1.07% versus the benchmark of -1.85% resulting in outperformance of 0.78%.Top positive contributors to performance by Sage Groups* were Resources, Domestic Cyclicals and Yield. In the Resources Sage Group, the portfolio benefited from short positions in Mineral Resources (MIN -18%) and Fortescue Metals (FMG -21%) as the iron ore price fell for a second month in a row on the back of slowing demand from China. Overweight positions in energy stocks also drove performance including Santos (STO +19%) and Karoon Energy (KAR +26) as the oil price jumped as demand exceeded supply. In the Domestic Cyclicals Sage Group, performance came from a broad range of stocks with our overweight positions in stocks such as Ampol, CSR and Accent Group outperforming the market mildly and an underweight in Wesfarmers which underperformed. In the Yield Sage Group, the key drivers were overweights in Computershare (CPU +10%) which benefits from rising bond yields which spiked up during the month, Macquarie Group (MQG +9%) which released a bullish trading update and Auckland International Airport (AIA +9%) which rose when with Sydney Airport (SYD +3%) received an increased takeover offer
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/6163a002f648da61cffca952_CC-Sage-Capital-Equity-Plus-Fund-Class-A-Monthly-Report-September-2021.pdfAugust, 2021
The CC Sage Capital Equity Plus Fund delivered a return of 3.80% in August versus the S&P/ASX 200 Accumulation Index which was up 2.50% resulting in outperformance of 1.30%. Top positive contributors to performance by Sage Groups* were Resources, Growth and Yield and detractors were Domestic Cyclicals and Global Cyclicals. In the Resources Sage Group, short positions in iron ore exposed stocks BHP Group (BHP -15%), Mineral Resources (MIN -15%) and Rio Tinto (RIO -11%) were positive contributors as the iron ore price fell on the back of softening demand from China. In the Growth Sage Group, performance came from a broad range of stocks including a short position in plumbing company Reece (REH -11%) which Sage Capital views as vastly overvalued, and long positions in James Hardie (JHX +16%) which continued to take market share and benefit from the strong US housing market and Domino’s Pizza (DMP +35%) which reported a strong result and upgraded its global store rollout target. Performance in the Growth Sage Group was tempered by the short squeezing Sage Capital saw across a range of stocks that were heavily shorted that reported a not so bad result such as Blackmores (BKL +25%) and Nanosonics (NAN +37%) but as always, the Sage Capital portfolios are well diversified and risk controlled with a broad range of long and short positions.
The main theme of the key detractors for the month was a sell off of Covid winners following strong results and a bounce in Covid losers. In the Global Cyclicals Sage Group, these were a long position in Ansell (ANN -8%) and a short position in Flight Centre (FLT +9%) and in Domestic Cyclicals long positions in Bapcor (BAP -10%), Accent Group (AX1 -21%) and Harvey Norman (HVN -5%)
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/614010208c482f6ebf7b1ad9_SGCEPF_202108.pdfJuly, 2021
The CC Sage Capital Equity Plus Fund delivered a return of 1.48% in July versus the S&P/ASX 200 Accumulation Index which rose 1.10%, resulting in outperformance of 0.38%. Top positive contributors to performance by Sage Groups* were Growth, REITs and Defensives. In Growth, performance was driven by a broad range of stocks with two of note being Carsales.com (CAR +11%) which rose as the market digested its recent capital raising and took a more positive view of its US acquisition and ResMed (RMD +10%) which continued to rally on the prospect of gaining further market share post its key competitor’s product recall. Positive performance from the REITs Sage Group was driven by a short position in Dexus (DXS -4%) which fell as the recovery in office occupancy appeared to stall and major re-leasing decisions were delayed and a long position in Charter Hall Group (CHC +5%) which rose as several industrial transactions provided strong look through valuations for the group.
The Yield Sage Group detracted from performance primarily driven by Computershare (CPU -8%) as the market became more cautious around its near term earnings outlook due to the fall in bond yields and Genworth Mortgage Insurance (GMA -7%) which continued to be dragged down post announcing its long-standing contract with CBA was up for tender
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/61133a5fd4973448ca432893_SGCEPF_202107.pdfJune, 2021
The CC Sage Capital Equity Plus Fund delivered a return of 1.27% in June versus the S&P/ASX 200 Accumulation Index which rose 2.26%, resulting in underperformance of 0.99%. Top positive contributors to performance included the Sage Groups*, Growth and REITs. In Growth, long positions in ResMed (RMD +21%) and Afterpay (APT +27%) drove performance. RMD rallied following a competitor issuing a product recall which is likely to boost RMD’s market share and Afterpay had a strong month along with most other technology stocks as growth stocks in general staged a comeback. Positive performance from the REITs Group was driven by a long position in Charter Hall Group (CHC +8%) on the back of continued upgraded property valuations. A long position in Metcash (MTS +13%) also aided performance after reporting a strong full year result and announcing an off-market buyback.
On the negative side, Resources, Domestic Cyclicals and Global Cyclicals were a drag on performance. In Resources, key detractors were short positions in: lithium and iron ore producer Mineral Resources (MIN +18%) which rallied as increases in the long term price forecasts pervaded the market, Iluka (ILU +19%) which traded up on expectations of elevated mineral sands prices as supply in the market tightens and Worley Limited (WOR +13%) which rallied with a surge in the oil price. A key detractor was the outperformance of these stocks above the long positions across the lithium and energy sectors which were all flat to down. A long position in Genworth Mortgage Insurance (GMA -20%) also hurt performance when it announced that its long-standing contract with CBA was up for tender, despite trading at a discount to book value already
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/60ee6f2c1c57cb7653d4fb9b_SGCEPF_202106.pdfDecember, 2020
The CC Sage Equity Plus Fund delivered a return of 1.01% in December, versus the S&P/ASX 200 Accumulation Index which rose 1.21%, resulting in an underperformance of 0.20%. The equity market was up slightly across the month, trading in a reasonably narrow range. There was broad consolidation of the COVID-19 vaccine induced cyclical rotation, but the market lacked a clear direction or a catalyst outside of easy money.
Key stock contributors for the month included a long position in Credit Corp (CCP +25.0%) which jumped strongly following the accretive acquisition of the debt ledgers of Collection House (CLH). As well as providing an immediate earnings accretion, it also highlights the superior position of Credit Corp within the domestic market with clean accounts and a strong balance sheet. With most of its competition in some form of restructuring this also provides the company with an opportunity to further deploy its strong balance sheet and grow share within the market.
This outcome represents a vindication of one of Sage’s earliest strong conviction ideas where the investment team was short CLH. Other contributors included a short position in Webjet (WEB -12.1%) where its enterprise value had rebounded far in excess of its recovery potential following positive vaccine news. This is now true of many stocks in the travel and re-opening space, but Webjet was a very effective hedge against a long position in Flight Centre (FLT) where the investment team still see value and a greater potential for earnings recovery. A short position in Magellan Financial Group (MFG -9.3%) was also beneficial as weaker fund performance weighed on fund flows and saw the stock de-rate relative to the market.
A key detractor was a short position in Fortescue Metals Group (FMG +28.5%) which rose strongly as the iron ore price hit new highs. This position is hedging overweights in BHP Billiton (BHP), Rio Tinto (RIO) and a range of base metal exposures that offer better value and aren’t as close to the top of the cycle as iron ore. An overweight position in Appen (APX -21.7%) was also a detractor. While this had been one of our preferred long positions in the technology space due to its exposure to the rapidly growing data AI sector, the lack of earnings visibility and the contract nature of some of its earnings has led us to cut the position.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/6004e21138f93f3ee424e2df_SGCEPF_202012.pdfticker: CHN8862AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://www.sagecap.com.au/performance
Monthly performance report
asset_class: Domestic Equity
asset_category: Australian Long Short
peer_benchmark: Domestic Equity - Long Short Index
broad_market_index: ASX Index 200 Index
structure: Managed Fund
manager_contact_details: Array
fund_features:
CC Sage Capital Equity Plus 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. The Fund uniquely blends fundamental and quantitative strategies to develop opportunities to generate returns. This strategy generates concentrated and uncorrelated returns from fundamental investing, improving on returns derived from the breadth of the quantitative process.