September, 2023
The Fund returned -1.17% (after fees) for the month of September, while the S&P/ASX Small Ordinaries Accumulation Index returned -4.04% and the S&P/ASX Small Industrials Accumulation Index returned -5.04% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in internet service provider Aussie Broadband, billing software provider Gentrack and marine services company MMA Offshore. Shares in Aussie Broadband lifted 15.1% for the month as the company continued to surge following the release of a strong FY23 result. Gentrack gained 7.5% after the Board released a proposed Long Term Incentive (LTI) structure which reflected Earnings Per Share (EPS) growth ahead of the market’s expectations and rich share price hurdles. MMA Offshore added 4.5% on no company specific news.
The largest detractors from performance included underweight positions in uranium miner Paladin Energy, imaging software provider Pro Medicus and lithium developer Liontown Resources. Paladin Energy gained 30.2% due to ongoing strength in the uranium price. Pro Medicus rallied 14.0% following the announcement of a 10-year contract with a large Texas based hospital. Liontown Resources shares rose 10.7% as takeover interest intensified from multiple parties. The Fund added to its position in diagnostic imaging provider Capitol Health. After a period of below average growth across the industry, we believe the combination of elevated price and volume recovery will see the company deliver a period of above average organic growth from FY24.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/206298751.pdfAugust, 2023
The Fund returned 1.82% (after fees) for the month of August, while the S&P/ASX Small Ordinaries Accumulation Index returned - 1.31% and the S&P/ASX Small Industrials Accumulation Index returned -1.47% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in internet service provider Aussie Broadband, hotel software provider Siteminder and location-sharing technology company Life360. Shares in Aussie Broadband lifted 29.8% for the month as the company released its full year results, achieving the top end of its guidance range, as well as strong subscriber adds in early FY24 and full year guidance in-line with expectations. Siteminder rose 16.2% following the release of its full year results, which highlighted strong half-on-half improvements in a number of key operating metrics such as subscriber numbers and ARPU. Life360 was up 20.7% for the month as it announced its first half results, with strong cost control being the key feature as the company announced an in-line vs expectation revenue number but a strong beat at the EBITDA line.
The largest detractors from performance included overweight positions in international payments provider OFX Group, drilling services provider Imdex and mortgage broker Australian Finance Group. Shares in OFX Group fell 17.6% following the company's AGM, where it announced a healthy recovery in its top line but also disclosed the departure of a handful of traders from Firma. Imdex dropped 17.3% as the company delivered its full year results, with the company navigating challenging market conditions well on the top-line, but missing expectations on costs. Australian Finance Group was down 13.7% as it posted its full year result, with NIM compressing progressively through the financial year and further into early FY24.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/204602244.pdfJuly, 2023
The Fund returned 8.99% (after fees) for the month of July, while the S&P/ASX Small Ordinaries Accumulation Index returned 3.54% and the S&P/ASX Small Industrials Accumulation Index returned 4.80% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions hotel software provider Siteminder, network connection company Megaport and youth fashion retailer Universal Stores. Shares in Siteminder jumped 44.2% for the month as the company released its Q4 result with revenues, cash flow performance and growth indicators all tracking ahead of expectations. Megaport added 44.3% as the company upgraded earnings guidance due to continued improvement in operating metrics and tight cost control. Shares in Universal Stores were up 20.1% as fears around a general slowdown in consumer facing stocks eased.
The largest detractors from performance included overweight positions in diagnostic imaging provider Capitol Health, NBN retailer Aussie Broadband and RV rental operator Tourism Holdings. Shares in Capitol Health ended the month down 13.0% following a softer than expected earnings outcome for FY23 driven by persistent cost pressures. Aussie Broadband traded down 7.7% on the back of general weakness in telco sector. Tourism Holdings sold off 6.8% due to ongoing concerns around the impact of extreme weather conditions in the North American market.
During the month, Lennox opened a position in foreign exchange payments company OFX Group. We are attracted to the large Company's value proposition which presents an exiting opportunity to win share from incumbents in a large addressable market. Central to our thesis is an increasing contribution from higher value customers in the corporate segment which accelerated following the acquisition of Firma.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/203801981.pdfJune, 2023
The Fund returned 1.89% (after fees) for the month of June, while the S&P/ASX Small Ordinaries Accumulation Index returned 0.03% and the S&P/ASX Small Industrials Accumulation Index returned 0.50% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of June included overweight positions in biotech company ImpediMed, fast food operator Collins Foods and technology company Infomedia. ImpediMed shares were up 28.6% following a number of payor policy changes to include bioimpedance spectroscopy as medically necessary. Shares in Collins Foods added 17.0% for the month as the company released its full year results, with revenues and profit ahead of expectations and positive commentary around early FY24 trading. Infomedia gained 14.3% off no company specific news.
The largest detractors from performance included overweight positions in internet service provider Superloop, timber producer Big River Industries and charter flight company Alliance Aviation. Superloop fell 12.1% off no company specific news. Shares in Big River dropped 2.4% for the month off no company specific news. Shares in Alliance Aviation dropped 8.6% off no company specific news.
During the month, Lennox exited its position in Big River.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/202761392.pdfMay, 2023
The Fund returned -6.64% (after fees) for the month of May, while the S&P/ASX Small Ordinaries Accumulation Index returned - 3.26% and the S&P/ASX Small Industrials Accumulation Index returned -1.72% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of May included overweight positions in utilities software company Gentrack, family security and monitoring company Life360 and networking company Megaport. Gentrack shares were up 29.4% in May as the company released its half year results, with further upgrades to its FY23 and FY24 guidance. Life360 grew 34.1% as the company delivered a strong quarterly update while tech names also broadly performed well.
Megaport gained 21.1% in May as share price momentum in the stock continued following a strong update in April. The largest detractors from performance included a write-down of the fund's pre-IPO investment in tech business Canopy Tools, as well as overweight positions in retailer Universal Store and engineering company Austin Engineering. Canopy Tools is a pre-IPO business the fund has held for 18 months that was priced downwards to reflect the business' current cash burn and tightened credit availability.
The business has commenced a sale process to provide an exit for current holders. Universal Store shares declined 39.8% as the company delivered a trading update, indicating that consumers are reducing their spending which is expected to continue into FY24. Shares in Austin Engineering fell 25.6% following a material downgrade to its profit guidance, driven by a large and delayed customer order.
During the month, Lennox added to its position in Life360.
File:April, 2023
The Fund returned 0.28% (after fees) for the month of April, while the S&P/ASX Small Ordinaries Accumulation Index returned 2.78% and the S&P/ASX Small Industrials Accumulation Index returned 3.61% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of April included overweight positions in laser clinic operator Silk Laser, utilities software company Gentrack and networking company Megaport. Silk Laser shares were up 45.7% in April as Australian Pharmaceutical Industries submitted an acquisition proposal for the company at $3.15 per share. Gentrack gained 15.6% off no company specific news. Shares in Megaport added 36.7% for the month as it announced a drastically-above-expectation Earnings Before Interest, Tax, Depreciation & Amortization (EBITDA) outlook for FY23 and FY24. The largest detractors from performance included overweight positions in education technology company Keypath Education, contract flight operator Alliance Aviation and mining services contractor DDH1.
Keypath Education shares declined 44.1% as the company delivered modest revenue growth for the third quarter year on year, with the company reiterating that it expects to be fully funded through to cash flow breakeven. Shares in Alliance Aviation fell 10.4% as the ACCC opposed Qantas' acquisition of Alliance, with Qantas seeking more information under the belief the acquisition would not materially lessen competition in the market. DDH1 dropped 5.6% in April off no company specific news. During the month, Lennox opened a position in tourism company Tourism Holdings.
File:January, 2023
The Fund returned 0.38% (after fees) for the month of February, while the S&P/ASX Small Ordinaries Accumulation Index returned - 3.70% and the S&P/ASX Small Industrials Accumulation Index returned -1.71% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in). The largest contributors to performance for the month of February included overweight positions in timber manufacturer and distributor Big River, marine services company MMA Offshore and auto technology company Infomedia.
Big River shares added 12.0% in February following the release of the company's results, with results coming in 12% ahead of expectations. MMA Offshore grew 21.2% following a strong first half result, with profits more than doubling and incremental contracts in renewable sources being secured. Infomedia gained 26.7% following the release of its half year results, delivering solid top-line growth.
The largest detractors from performance included overweight positions in insurance technology company Fineos, online task portal Airtasker and dental clinic Pacific Smiles. Fineos shares declined 31.6% as it delivered a miss on its revenue guidance. Airtasker fell 27.1% as the company continued to burn cash to grow its top line. Shares in Pacific Smiles fell 21.6% as the half yearly results came in below expectations. During the month, Lennox topped up its position in diagnostic imaging company Capitol Health.
File:December, 2022
The Fund returned -1.62% (after fees) for the month of December, while the S&P/ASX Small Ordinaries Accumulation Index returned -3.73% and the S&P/ASX Small Industrials Accumulation Index returned -3.38% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in). The largest contributors to performance for the month of December included overweight positions in IT services company COSOL and timber manufacturer Big River, as well as an underweight position in miner Liontown Resources. COSOL rallied 9.5% as the company announced several major contract wins. Shares in Big River added 6.5% for the month off no company specific news. Liontown Resources shares dropped 31.8% for the month as lithium names were broadly weaker. Lennox does not hold Liontown and was positively impacted by the underweight position relative to the benchmark.
The largest detractors from performance included overweight positions in social media company Life360, mining equipment engineer Austin Engineering and mortgage broker Australian Finance Group. Life360 shares dropped 22.2% as the company undertook a $50m capital raising at the end of November. Austin Engineering fell 17.4% despite the company announcing strong fundamental momentum in the business in Indonesia, with revenues over 80% above the prior period. Shares in Australian Finance Group withdrew 12.6% as concerns around the real estate market grew. During the month, Lennox initiated a position in MMA Offshore. The company operates a fleet of vessels which provide various services to the offshore oil and gas industries, such as storage and maintenance. MMA is experiencing materially improved utilisation compared to the prior comparable period, which is flowing through to strong bottom-line improvement in the business.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/195721640.pdfNovember, 2022
The Fund returned 0.88% (after fees) for the month of November, while the S&P/ASX Small Ordinaries Accumulation Index returned 4.92% and the S&P/ASX Small Industrials Accumulation Index returned 2.60% (the Small Industrials index excludes mining and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of November included an overweight position in software solutions business Gentrack Group, software and digital services provider COSOL and an underweight position in real estate and agricultural company Elders Limited. Gentrack added 63.7% in November after a strong result (beating consensus expectations) with further growth in the pipeline. COSOL added 12.3% over the month as the business provided an AGM update largely in line with expectations with an indication of potential inorganic growth. Finally, Elders Limited lost 18.4% from news of the CEO stepping down – Lennox does not hold Elders in the portfolio.
The largest detractors from performance included overweight positions in timber manufacturer and distributor Big River Industries, education platform provider Keypath Education and airline services business Alliance Aviation Services. Big River Industries took away 7.0% over the month off no news aside from the appointment of a new CEO (pre-announced). Keypath moved down 23.2% on no company-specific news. Finally, Alliance Aviation Services was down 7.1% off no company-specific news. During the month, Lennox topped up its position in Gentrack Group. The business released a strong result, ahead of all expectations. The fund sees upside in the business from more evidence of a cost turnaround – with earnings further buoyed by new logos and top-line momentum.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/193867908.pdfOctober, 2022
The Fund returned 1.94% (after fees) for the month of October, while the S&P/ASX Small Ordinaries Accumulation Index returned 6.46% and the S&P/ASX Small Industrials Accumulation Index returned 7.37% (the Small Industrials index excludes mining and energy companies, which the Fund does not invest in). The largest contributors to performance for the month of October included an overweight position in location sharing app company Life360, an underweight position in NIB Holdings and an overweight position in telco services provider Superloop. Life360 rallied 39.6% following positive news flow regarding the Company's monthly pricing which were officially increased after months of testing. NIB Holdings was down 10.2% after it completed the $150m capital raise to fund M&A in NDIS Plan management space. While shares in Superloop rallied 13.6% following the announcement of another small bolt on acquisition and a stronger than expected September quarterly business update.
The largest detractors from performance included overweight positions in baby retailer Baby Bunting, cloud connectivity provider Megaport and luxury car dealer Autosports. Baby Bunting sold off 25.9% on a weak AGM trading update which flagged gross margin headwinds from domestic freight costs, competitor pricing pressure and FX. Shares in Megaport were down 21.8% following the release of a softer than expected quarterly with missed expectations. While Autosports retraced 4.0% on no company specific news.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/192719643.pdfAugust, 2022
The Fund returned +1.2% (after fees) for the month of August, while the S&P/ASX Small Ordinaries Accumulation Index returned 0.6% and the S&P/ASX Small Industrials Accumulation Index returned -1.0% (the Small Industrials index excludes mining and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of August included overweight positions in aerial imaging company Nearmap, luxury auto-dealer Autosports and mining equipment manufacturer Austin Engineering. Nearmap was up 49.6% after entering into an implementation deed to be acquired by technology focused private equity firm Thoma Bravo. Autosports rose 16.8% as the company delivered profit growth of 29% for the financial year. Shares in Austin Engineering added 45.8% as it announced a highly accretive acquisition of Maintec.
The largest detractors from performance included internet service provider Aussie Broadband, insurance software provider Fineos and internet service provider Superloop. Shares in Aussie Broadband were down 23.4% as it announced its results, with its operating cost outlook for FY23 coming in above expectations. Shares in Fineos were down 25.7% in August despite the company announcing FY23 revenue guidance above expectations. Superloop dropped 12.9% as the company announced intentions to increase marketing spend ahead of expectations. During the month, Lennox entered a new position in Baby Bunting.
Despite a clear and compelling rollout story in a defensive industry, markets have sold the stock off heavily relative to its highs. We see the consistent weakness in the stock as an attractive opportunity to gain exposure to this quality business with a strong runway ahead.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/190873773.pdfJuly, 2022
The Fund returned +9.8% (after fees) for the month of July, while the S&P/ASX Small Ordinaries Accumulation Index returned 11.4% and the S&P/ASX Small Industrials Accumulation Index returned +11.8% (the Small Industrials index excludes mining and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of July included overweight positions in aerial imaging company Nearmap, services marketplace Airtasker and insurance software provider FINEOS Corp Holdings. Strong demand for Nearmap location data from US federal agencies prompts the business to stake claim as an approved vendor on the GSA, leading to a share price increase of 35% over July. Airtasker was up 54% after the business reported a quarterly result that was not as bad as feared, given challenging operating conditions. The largest detractors from performance included aviation services provider Alliance Aviation Services, timber producer and distributer Big River Industries and PDF productivity/e-sign software business Nitro Software. Shares in Alliance Aviation Services were down 9.8% in July off no company-specific news, rather fear of reduced utilisation of the fleet. Big River Industries lost 4.7% off the back of no company-specific news. Finally, Nitro Software was down 11.6% after the company a trading update – noting a soft ARR. During the month, Lennox added Siteminder Limited to the Microcap portfolio, seeing opportunity in the long-term ability of the business to continually grow ARR (more than 25% ARR growth year-on-year in the fourth quarter of FY22) and deliver cash flow.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/190039509.pdfJune, 2022
The Fund returned -12.0% (after fees) for the month of June, while the S&P/ASX Small Ordinaries Accumulation Index returned - 13.1% and the S&P/ASX Small Industrials Accumulation Index returned -10.0% (the Small Industrials index excludes mining and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of June included overweight positions in contractor SRG Global, productivity software provider Nitro and dentist operator Pacific Smiles. Shares in SRG Global were down 2.4% in a tough market after it delivered several positive contract announcements which bodes well for the Company's FY23 pipeline. Nitro was flat across the month of June which primarily reflected a recovery following a weak trading period through Apr-May. Finally, Pacific Smiles rallied 15.8% as its patient fee performance update for the month of May was ahead of expectations despite ongoing Covid-related absenteeism.
The largest detractors from performance included service marketplace provider Airtasker, education service provider Keypath and medical device distributor Trajan. Airtasker shares dropped 38.3% after the company completed a capital raise to acquire Oneflare. Shares in Keypath Education were down 28.6% on the back of negative sentiment towards unprofitable businesses that remain focused on top-line growth. Whilst Trajan fell 28.3% in June following the completion of the ~$30m capital raise to acquire CRS.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/189000616.pdfApril, 2022
The Fund returned -4.18% (after fees) for the month of April, while the S&P/ASX Small Ordinaries Accumulation Index returned - 1.5% and the S&P/ASX Small Industrials Accumulation Index returned -2.13% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in wood manufacturer Big River Industries, life sciences manufacturer Trajan Group and auto retailer Autosports Group. Big River Industries rose 16.8% as strong pricing and availability of the building products it distributes supports ongoing growth, Trajan Group and Austosports Group added 11.3% and 5.5%, respectively as investors saw value in quality businesses that were disproportionately sold down.
The largest detractors from performance included education technology company Keypath Education, services business Airtasker and payments solutions company Tyro Payments. Keypath Education lost 23.6% despite the release of a solid third quarter result. Airtasker was 24.3% lower as the market continued to penalise loss-making technology businesses, despite a positive quarterly result. Tyro Payments was down 28.7% as payments names were weaker in April.
During the month, Lennox opened a position in Pacific Smiles Group as the business began posting initial signs of recovery in patient fees
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/187152732.pdfFebruary, 2022
The Fund returned -4.33% (after fees) for the month of February, while the S&P/ASX Small Ordinaries Accumulation Index returned -0.01% and the S&P/ASX Small Industrials Accumulation Index returned -2.09% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in). The largest contributors to performance included overweight positions in domestic telco Aussie Broadband and contractor SRG Global and an underweight position in lithium miner and battery developer Novonix.
Aussie Broadband rallied 16.8% following a strong first half result buoyed by continued market share gains and the near completion of the highly accretive acquisition of Over The Wire. Shares in SRG Global rallied 21.1% following a strong 1H22 result buoyed by strong cash flow conversion and an upgrade to full year Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) guidance. Novonix fell 32.9% as it continued to pull back with other unprofitable growth names on high multiples. Lennox does not hold Novonix and was positively impacted by an underweight position relative to the benchmark.
The largest detractors of performance included payment software provider Tyro, telecommunications provider Superloop, and healthcare product supplier Trajan. Tyro lost 31.5% following the release of an underwhelming 1H22 result which reflected weaker than expected operating leverage and cash flow conversion. Superloop was down 19.3% following an underwhelming first half result that reflected cost inflation and an unwind of the new subscriber momentum the Company had achieved across the first quarter. Shares in Trajan were down 20.5% across the month of February despite delivering the first-half result broadly in line with market expectations, we put the underperformance down to a lack of liquidity.
During the month, Lennox opened a position in aerial imagery software provider Nearmap. We are attracted to the Company's long-term growth prospects driven by its subscription model offering, premium product differentiation and favorable industry dynamics. Management continues to scale its North American business which remains important to the validation of the Company's business model and expands their ability to generate meaningful future cash flows.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/185154543-1.pdfJanuary, 2022
The Fund returned -7.1% (after fees) for the month of January, while the S&P/ASX Small Ordinaries Accumulation Index returned - 9.0% and the S&P/ASX Small Industrials Accumulation Index returned -9.8% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included life sciences company Trajan Group Holdings, digital education provider Keypath Education and automotive software provider Infomedia. Trajan was up 7.7% in January as the company bedded down two small acquisitions announced in December (LEAP parts and Neoteryx), consistent with the business's growth strategy. Keypath was up 2.1% over the period as it delivered a January trading update that reaffirmed the Company remains on track to deliver another strong year of growth and meet its guidance for FY22. Infomedia was down 2.0% for the month on no Company specific news, a resilient outcome in a difficult market for the technology sector.
The largest detractors from performance included PDF productivity provider Nitro Software, telecommunications provider Pentanet and wholesale mortgage provider Australian Finance. Nitro Software was down 25.1% through the month of January on the back of continued selling pressure across the technology sector and a December quarter update that slightly missed market expectations. Pentanet was down 26.4% despite releasing its quarterly cash flow in line with the market's expectations. Shares in Australian Finance fell 18.5% on no company specific news but was brought down in line with the draw down across the financial sector in January.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/183927274.pdfDecember, 2021
The Fund returned -5.5% (after fees) for the month of December, while the S&P/ASX Small Ordinaries Accumulation Index returned 1.4% and the S&P/ASX Small Industrials Accumulation Index returned 0.8% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included IVF provider Monash IVF Group, life sciences company Trajan Group Holdings and battery materials business Noxonix. Monash IVF was up 13.9% in December as its main competitor Virtus Health received a non-binding indication of interest from BGH Capital for $7.10 per share. Trajan Group Holdings was up 16.8% as the business made two small acquisitions during the month (LEAP parts and Neoteryx), consistent with the business's growth strategy. While Novonix was down 23.1% over the period off the back of news relating to Tesla sourcing graphite from China. Lennox does not hold NVX and was positively impacted by the underweight position relative to the benchmark.
The largest detractors from performance included men's underwear retailer Step One Clothing, ecommerce company Booktopia Group and PDF productivity business Nitro Software. Step One Clothing was down 42.4% during the month due to an underwhelming trading update with logistics bottlenecks severely impacting on the crucial November/December trading period. Shares in Booktopia were down 35.7% in December after a weak trading update, in which management called out cost inflation and staff issues relating to COVID-19. Nitro Software lost 30.1% off the back of DocuSign releasing a weak Q4 guidance to the market and subsequently selling off 30%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/182705806.pdfNovember, 2021
The Fund returned -3.70% (after fees) for the month of November, while the S&P/ASX Small Ordinaries Accumulation Index returned -0.31% and the S&P/ASX Small Industrials Accumulation Index returned -1.45% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in). The largest contributors to performance included men's underwear retailer Step One Clothing, aviation services company Alliance Aviation Services and teleco services business Aussie Broadband. Step One Clothing rallied 82% in the first month of trading as the market realises the underlying growth potential of the business, particularly offshore. Alliance Aviation Services was up 12.8% following its better than anticipated AGM. The fleet expansion is on track to deliver strong results which confirmed overall FY22 consensus expectations, with a positive outlook beyond FY22. While Aussie Broadband rose 7.4% for the month after its AGM at the end of October. The ACCC also released sector data for the NBN for the 1Q22 period and ABB took 31% of net new adds – a record market share gain for the business.
The largest detractors from performance included buy-now-pay-later operator Laybuy Group Holdings, captioning software company Ai-Media Technologies and business marketplace Airtasker. Laybuy Group was down 40.8% after releasing their 1H22 result to the market – confirming they are operating on thin margins and also restating some previously announced financial metrics. Ai-Media Technologies lost 26.6% following a broker report that highlighted potential cannibalisation of the premium offering by shifting towards SaaS. Airtasker was down 12.7% as the market began to price in the negative impact which an omicron-induced lockdown would have on the business.
During the month, Lennox topped up its position in Universal Store Holdings (UNI). The business has been growing significantly and has a firm target of 100 stores across Australia and New Zealand. With a tight control over the supply chain strategy, rollout pla
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/181977023.pdfSeptember, 2021
The Fund returned 0.7% (after fees) for the month of September, while the S&P/ASX Small Ordinaries Accumulation Index returned -2.1% and the S&P/ASX Small Industrials Accumulation Index returned -1.3% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included NBN retailer Aussie Broadband, communications company Pentanet and driller DDH1. Aussie Broadband rallied 28.3% in September as the Company successfully completed a capital raising for M&A opportunities that are expected to be complimentary and earnings accretive. Pentanet rallied 20.8% on no company specific news. DDH1 shares were up 10.5% as environment for drillers around the globe continues to improve.
The largest detractors from performance included travel agent Flight Centre, online book retailer Booktopia and health care device company Trajan. Flight Centre rallied 30.8% due to improving sentiment towards the resumption of global travel. Shares in Booktopia pulled back 8.1% for the month on the back of seasonally weaker website traffic numbers along with management flagging potential M&A and a subsequent capital raising. Trajan fell 12.2% as the market took profits following a strong run into the Company's FY21 result
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/180181066.pdfAugust, 2021
The Fund returned 6.4% (after fees) for the month of August, while the S&P/ASX Small Ordinaries Accumulation Index returned 5.0% and the S&P/ASX Small Industrials Accumulation Index returned 6.1% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included communications company Aussie Broadband, systems software company Family Zone Cyber Safety and buy-now-pay-later company Laybuy Group Holdings. Aussie Broadband rallied 40.4% as the company announced a deal with Telstra to provide fibre and data centre connectivity, further buoyed by expectations of a strong FY21 result. Family Zone Cyber Safety rose 9.4% for the month as Lennox Capital participated in a capital raising at a discount following the Q4 result in late July. Laybuy Group Holdings added 27.9% as it reported a strong 1Q22 result, with revenues up 70% on the prior comparable period
Communication Services was the best performing sector in August, up 9.8%, followed by Consumer Staples (+8.2%) and Financials (+8.0%). Materials was the worst performing sector over the past month, returning -0.9%, followed by Industrials (-0.7%) and Information Technology (+2.5%).
The top performers of the month were personal products company Blackmores, biotechnology company Clinuvel and diversified metals and mining business Ioneer. Blackmores shares rose 37.4% for the month due to a positive China/International segment outlook. Shares in Clinuvel rose 35.6% off the back of strong revenue and earnings results, followed by broker upgrades. Ioneer shares were up 34.1% off the back of a new engineering design contract and the gains realised by the broader lithium industry
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/178966785.pdfJuly, 2021
The Fund returned 0.03% (after fees) for the month of July, while the S&P/ASX Small Ordinaries Accumulation Index returned 0.68% and the S&P/ASX Small Industrials Accumulation Index returned -0.93% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in medical devices company Trajan, cloud licensing company Rhipe and legal cloud software company Ansarada. Trajan rallied 35.4% for the month off no company specific news. Rhipe was up 21.1% as it returned to trading following the announcement and subsequent recommendation to shareholders to vote in favour of a takeover initiated by Crayon Group. Shares in Ansarada rose 29.2% as the company released its quarterly results, with highlights including record new customer wins and 76% growth in deferred revenues.
The largest detractors from performance included overweight positions in buy-now pay-later operator Laybuy, sports technology company Catapult and online services marketplace Airtasker. Laybuy was down 18.9% in July despite the company releasing a strong set of quarterly results. The company suffered as the buy-now pay-later sector traded weaker through the month. Catapult shares dropped 14.0% for the month off no company specific news. We believe Catapult, as the leading elite wearables provider globally, is well positioned to capture the long-term industry growth of the sports technology market. Shares in Airtasker withdrew 10.5% despite the company releasing results comfortably ahead of its prospectus outlook. While lockdowns are demonstrating more challenging conditions for the company, the long-term growth story continues to remain compelling.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/175738967.pdfJune, 2021
The Fund returned 0.68% (after fees) for the month of June, while the S&P/ASX Small Ordinaries Accumulation Index returned 3.08% and the S&P/ASX Small Industrials Accumulation Index returned 3.91% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in medical devices company Trajan, internet service provider Aussie Broadband and cloud licensing company Rhipe. Trajan was rallied 34.7% from its IPO price in June after successfully listing on the ASX. Aussie Broadband was up 19.0% following the release of a market update late in May. The update announced an earnings before interest, tax, depreciation and amortisation (EBITDA) guidance upgrade to between $17m and $20m excluding IPO costs, up from a previous range of $16m to $19m. Shares in Rhipe jumped 14.2% prior to it entering a trading halt at the end of June, with no further information from the company as at the end of June.
The largest detractors from performance included overweight positions in internet service provider Pentanet, IT services company Cosol and technology company Access Innovation. Pentanet was down 21.1% in June following a capital raising to secure additional servers for a gaming service and secure exclusivity with partners, as well as to fast track its Terragraph rollout. We believe fundamentally the company has some attractive medium-term growth drivers and continue to hold.
Cosol shares dropped 13.1% for the month off no company specific news. The company has undergone significant fundamental growth as at the last update and we believe it continues to remain an attractive investment opportunity. Shares in Access Innovation withdrew 9.4% with the only noticeable announcement for the month being a contract renewal. We believe the company has attractive long-term industry tailwinds which should help drive performance
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/174256820.pdfApril, 2021
The Fund returned 6.36% (after fees) for the month of April, while the S&P/ASX Small Ordinaries Accumulation Index returned 4.98% and the S&P/ASX Small Industrials Accumulation Index returned 3.91% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in internet service provider Pentanet, cloud software company Rhipe and legal and financial software company Ansarada. Pentanet was up 43.8% in April following the release of its third quarter report, which demonstrated strong growth on all key metrics. Rhipe shares were up 26.9% for the month as the company announced its acquisition of cyber security specialist emt Distribution and released a strong set of numbers in its third quarter report. Shares in Ansarada rose 23.8% as it released its third quarter report, with material contract wins and revenue growth being a key feature.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/171887090.pdfDecember, 2020
The Fund returned 1.77% (after fees) for the month of December, while the S&P/ASX Small Ordinaries Accumulation Index returned 2.76% and the S&P/ASX Small Industrials Accumulation Index returned 1.25% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in online book retailer Booktopia, cloud-based infrastructure provider Sovereign Cloud and biotech company Mesoblast. Booktopia rallied 13.0% in December as the stock listed on the ASX. Sovereign Cloud shares were up 37.3% for the month as it also listed on the ASX. Mesoblast shares fell 45.9% for the month as its Remestemcel-L trial in Covid-19 patients did not meet the minimum mortality reduction desired.
The largest detractors from performance included overweight positions in consumer goods company McPhersons and gym operator Viva Leisure, as well as an underweight position in diversified miner IGO. McPhersons was down 25.5% in December as the company released a trading update, reducing PBT guidance down significantly, as well as announcing the resignation of its CEO. We believe the companies issues are temporary and its valuation at current prices remains attractive relative to its medium-term prospects. Viva Leisure fell 9.0% in December off no firm specific news as investors grew concerned about the potential short-term impacts of renewed lockdowns in Sydney.
IGO shares rallied 37.4% in the month as lithium continued to rally, with the company acquiring lithium assets for $766m. Lennox does not invest in mining companies and was negatively impacted by the underweight position relative to the benchmark. During the month, the fund participated in the Booktopia IPO. We believe the company's management team have demonstrated a clear competitive edge, as highlighted by its ability to grow market share in an increasingly competitive book retailing marketplace.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/163548962.pdfticker: HOW1289AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://investmentcentre.moneymanagement.com.au/factsheets/mi/ouh1/lennox-australian-microcap
quick links -> Provider’s own factsheet
asset_class: Domestic Equity
asset_category: Australian Micro Cap
peer_benchmark: Domestic Equity - Micro Cap Index
broad_market_index: ASX Index Small Ordinaries Index
structure: Managed Fund
manager_contact_details: Array
fund_features:
Lennox Australian Microcap Fund aims to outperform the S&P/ASX Small Ordinaries Accumulation Index over the medium to long term (after fees). Lennox applies a structured and rigorous approach to investing. Every business that is considered an investment opportunity is assessed using Lennox’s proprietary quality screening tool.
- Businesses are assessed on 4 key factors: the ability of management, sustainability, quality of earnings and industry dynamics.
- Only businesses that pass Lennox’s quality screen and for which they believe they can confidently forecast future earnings are eligible for further research.
- Lennox’s research process is driven by fundamental, in-depth and comprehensive analysis of a business’ operations.