October, 2020
Fund highlights
The Fund returned 0.75% (after fees) for the month of October, while the S&P/ASX Small Ordinaries Accumulation Index returned 0.46% and the S&P/ASX Small Industrials Accumulation Index returned 0.61% (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, portfolio administration platform HUB24 and medical imaging platform provider Pro Medicus. Shares in Aussie Broadband listed at a significant premium to IPO price, closing up 83% at the end of the month. HUB24 was up 24.2% following the announcement of the acquisition of positions in 3 smaller businesses which is expected to be strongly accretive. Pro Medicus shares rose 19.7% in October off the back of several material contract wins over the past couple of months.
The largest detractors from performance were underweight positions in consumer goods company McPhersons, corporate travel company Corporate Travel Management and software networking company Megaport. McPhersons shares dropped 25.3% in October following a trading update which highlighted weaker than expected growth in the second half of FY21. We believe that the company is taking a relatively conservative outlook for the remainder of the year and remain extremely comfortable with the position. Corporate Travel Management was down 15.3% in the month as several European countries re-entered lockdown. We continue to see Corporate Travel Management as an attractive way to gain upside exposure to the economy re-opening. While shares in Megaport fell 16.3% following a quarterly update which highlighted modest growth in monthly recurring revenue despite an acceleration in ports added. We believe the latter is the primary driver of the company and view the momentum in this datapoint as continuing to be positive.
During the month, the fund's pre-IPO position in internet service provider Aussie Broadband listed on the ASX. The fund further topped this position up on-market. We think Aussie Broadband's offering is highly competitive, which is highlighted by the continued capture of market share the company is experiencing. The growth profile of the company continues to remain attractive, particularly in light of the broader industry tailwinds as a result of COVID.
File: https://commentary.quantreports.net/wp-content/uploads/2020/11/LASCF_FR_mnth.pdfticker: HOW3590AU
commentary_block: Array
factsheet_url:
https://www.lennoxcapitalpartners.com.au/funds/lennox-australian-small-companies-fund/
asset_class: Domestic Equity
asset_category: Australian Small Cap
peer_benchmark: Domestic Equity - Small Cap Index
broad_market_index: ASX Index Small Ordinaries Index
structure: Managed Fund