September, 2023
The Fund returned -3.87% (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 an overweight position in internet service provider Aussie Broadband, an underweight position in West African lithium miner Leo Lithium and an overweight position in wealth platform provider HUB24. Shares in Aussie Broadband lifted 15.1% for the month as the company continued to surge following the release of a strong FY23 result. Shares in Leo Lithium dropped 55.7% due to ongoing issues with the Mali Government before going into trading halt. HUB24 gained 1.3% due to ongoing support from the Company's on market buy-back announced at the FY23 result.
The largest detractors from performance included an underweight position in uranium miner Paladin Energy, an overweight position in GQG Partners and an underweight position in imaging software provider Pro Medicus. Paladin Energy gained 30.2% due to ongoing strength in the uranium price. Shares in GQG Partners weakened in-line with the general market performance, closing the month down 11.1%. Pro Medicus rallied 14.0% following the announcement of a 10-year contract with a large Texas based hospital.
During the month, the fund added to its position in Kelsian as a weaker than expected FY23 result that was negatively impacted by labour availability headwinds presented an attractive entry price to add to the funds existing overweight position.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/206298752.pdfAugust, 2023
The Fund returned 1.02% (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 travel management company Corporate Travel, mortgage broker Australian Finance Group and electronic conveyancing company PEXA. Shares in Corporate Travel fell 10.9% in August following the release of its full year results, with a slightly weaker than expected FY24 guidance number. Australian Finance Group dropped 13.7% as it posted its full year result, with NIM compressing progressively through the financial year and further into early FY24. PEXA was down 12.8% as the company delivered a noisy result, with the domestic business beating expectations but the international business missing expectations.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/204600973.pdfJuly, 2023
The Fund returned 8.17% (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 global fund manager GQG Partners. 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. GQG Partners advanced 16.9% following another strong month of performance and net flows across its portfolio of funds.
The largest detractors from performance included positions in NBN retailer Aussie Broadband, public transport operator Kelsian and steel distributor Vulcan Steel. Aussie Broadband traded down 7.7% on the back of general weakness in telco sector. Shares in Kelsian retreated 4.5% reversing the strong performance seen in the prior month. Vulcan Steel ended the month down 5.6% following an earnings downgrade due to softer than expected end market expectations in New Zealand
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/203801983.pdfJune, 2023
The Fund returned 1.44% (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 included overweight positions in fast food operator Collins Foods, transportation company Kelsian and family security software company Life360. 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.
Kelsian grew 6.8% as the company announced the completion of its All Aboard America! acquisition. Life360 gained 11.6% in June as share price momentum in the stock continued following a strong first quarter update released in May.
The largest detractors from performance included overweight positions in travel company Corporate Travel Management, travel company Flight Centre and charter flight company Alliance Aviation. Corporate Travel Management shares fell 13.7% as travel exposed names were broadly weak, despite the company announcing a material contract win. Flight Centre shares declined 9.8% as the company hosted a strategy session, with no notable changes to outlook. Shares in Alliance Aviation dropped 8.6% off no company specific news.
During the month, Lennox topped up EBOS as the market reacted to the loss of the Chemist Warehouse wholesale supply arrangement.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/202761363.pdfMay, 2023
The Fund returned -3.02% (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 included overweight positions in transportation company Kelsian, family security and monitoring company Life360 and software networking company Megaport. Shares in Kelsian added 11.5% for the month as it announced the approval of its acquisition of All Aboard America. 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 overweight positions in retailer Universal Store, retailer Lovisa and media company oOh!media. 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 Lovisa dropped 22.5% as retail performed poorly for the month following weak trading updates from several industry participants. oOh!media dropped 25.8% following the release of a trading update, noting a sharp decline in April media revenue.
During the month, Lennox trimmed its NextDC position, taking advantage of recent share price gains.
File:April, 2023
The Fund returned 2.99% (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 included overweight positions in networking company Megaport, plumbing supplies manufacturer Reliance and corporate travel company Corporate Travel Management. Shares in Megaport added 36.7% for the month as it announced a drastically-above-expectation EBITDA outlook for FY23 and FY24. Reliance grew 10.9% as the company provided a trading update for the 9 months to date of the financial year, with a 10.3% uplift in revenues year on year. Corporate Travel Management grew 15.8% in April as it was awarded the Bridging Accommodation & Travel Services contract by the UK Home Office, worth approximately AU$3.0bn of TTV.
The largest detractors from performance included overweight positions in education technology company Keypath Education and contract flight operator Alliance Aviation, as well as an underweight position in biotech company Telix. 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. Telix gained 47.1% following the release of its quarterly update, with record revenues and a positive update on its Olaratumab products. Lennox does not hold a position in Telix and was negatively impacted by its relative outperformance. During the month, Lennox opened a position in tourism company Tourism Holdings.
File:February, 2023
The Fund returned -0.41% (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 included overweight positions in funds administration platform Hub24, transit operator Kelsian and auto technology company Infomedia. Hub24 grew 11.5% as the company delivered strong profit growth in its half year result, with profit before tax up 39% compared to the prior comparable period. Kelsian shares added 12.5% in February as the company delivered a solid first half result, with profit up over 20%, as well as a new Sydney bus contract win. 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, mining services company NRW and an underweight position in Eagers Automotive. Fineos shares declined 31.6% as it delivered a miss on its revenue guidance. NRW shares fell 16.8% in February as the company delivered a result in-line with its guidance. Shares in Eagers Automotive rallied 19.9% as the company delivered its FY22 result, with the company beating consensus expectations at the profit line and positive commentary around FY23. Lennox does not hold a position in Eagers Automotive and was negatively impacted by its relative outperformance. During the month, Lennox opened a position in travel agent Flight Centre.
File:December, 2022
The Fund returned -3.46% (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 included an underweight position in miner Liontown Resources, as well as overweight positions in Pharmaceutical and Animal Care company Ebos and transport contractor Kelsian. 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. Ebos rallied 8.1% in a month which saw Woolworths acquire 55% of Petspiration, providing validation to the market that the animal care strategy Ebos is pursuing is sound. Shares in Kelsian were up 4.3% as it announced the successful contract retention of Sydney's Southwest bus region.
The largest detractors from performance included overweight positions in proptech company Pexa, social media company Life360 and travel operator Corporate Travel. Pexa fell 17.9% as Link Administration undertook an in-specie distribution of its Pexa stake to its shareholders. Life360 shares dropped 22.2% as the company undertook a $50m capital raising at the end of November. Shares in Corporate Travel dropped 10.9% in a month that saw share price pressure broadly across the travel sector. During the month, Lennox trimmed its position in the strongly performing NRW to realise some profits.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/195721642.pdfNovember, 2022
The Fund returned 1.67% (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 2.6% (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 enterprise business software Technology One, transport and tourism company Kelsian Group and an underweight position in real estate and agricultural business Elders Limited. Shares in Technology One rallied 12.9% after releasing a result to the market that was well-received. Kelsian jumped 17.2% over the month as investors gained some confidence around stability of earnings after the business won the Gladstone Marine contract.
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 restaurant and fast food operator Collins Foods, travel management provider Corporate Travel Management and education platform Keypath Education. Shares in Collins Foods were down 18.6% after the business called out margin pressures for the full year at its first half result. Corporate Travel Management lost 5.4% as the business highlighted slower than anticipated recovery due to capacity constraints.
Finally, Keypath moved down 23.2% on no companyspecific news. During the month, Lennox added Superloop Limited to the portfolio. As the business wins more customers through subscribers and market share, it will add incremental margin through a largely fixed cost base.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/193867884.pdfOctober, 2022
The Fund returned 6.71% (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 resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in wealth platform provider HUB24, location sharing app company Life360 and enterprise software player Technology One. Shares in HUB24 were up 21.5% after it delivered 1Q23 net inflows of $3bn – up 22% qoq – and reached an updated cash margin agreement with BOQ ahead of the market's expectations. Life360 rallied 39.6% following positive news flow regarding the Company's monthly pricing which were officially increased after months of testing. Shares in Technology One finished the month up 12.7% ahead of what is expected to be another strong result in November.
The largest detractors from performance included positions in cloud connectivity provider Megaport, global fund manager GQG Partners and transport operator Kelsian. Shares in Megaport were down 21.8% following the release of a softer than expected quarterly that missed market expectations. GQG Partners sold off 2.1% after delivering a mixed monthly FUM update despite ongoing strength in the investment performance of underlying funds. Kelsian continued to trade weak on no company specific news and finished the month of October down 3.3%.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/192716654.pdfAugust, 2022
The Fund returned -0.3% (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 resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in jewellery retailer Lovisa, mining services company NRW and fund manager GQG. Share in Lovisa gained 29.6% as it delivered results well above expectations and highlighted a strong start to the FY23 period. NRW was up 26.0% following the announcement of its FY22 results, delivering income in excess of its guidance and a strong order book. Shares in GQG advanced 12.0% as it announced its mid-year results, with strong net inflows and attractive revenue growth for the period.
The largest detractors from performance included overweight positions in internet service provider Aussie Broadband, insurance software provider Fineos and accommodation booking technology company Siteminder. 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. While Siteminder sold off 18.6% while delivering of a strong set of results, with annualised recurring revenue growth returning to its pre-Covid trajectory.
During the month, Lennox entered a new position in Megaport as ongoing share price weakness provided an attractive opportunity to gain exposure to a high-quality business. Megaport provides digital infrastructure which is critical to the operations of cloudenabled businesses so is therefore less impacted by the broader economic cycle.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/190873806.pdfJuly, 2022
The Fund returned +9.4% (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 jewellery retailer Lovisa Holdings, insurance software provider FINEOS Corp Holdings and car dealership Eagers Automotive. Lovisa added 28.9% as investors gained confidence on the US expansion strategy. FINEOS was up 36.5%. The business released its 4Q results in-line with expectations, however the stock rallied after being sold off significantly. Shares in Eagers Automotive advanced 28.9% after prereleasing results ahead of guidance.
The largest detractors from performance included oil retailer Viva Energy Group, aviation services company Alliance Aviation Services and funds management business GQG Partners. Shares in Viva Energy Group were down 7.9% for the month of July despite a positive quarterly result as crack spreads retraced. Alliance Aviation Services were down 9.8% in July off no companyspecific news, rather fear of reduced utilisation of the fleet. GQG Partners sold off 1% as it reported FUM for June with net inflows but decline overall due to market movements.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/190038734.pdfJune, 2022
The Fund returned -11.1% (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 fast food retailer Collins Foods, ERP platform specialist Technology One and fuel retailer Viva Energy. Collins Foods was up 7.5% after both its FY22 result and FY23 LFLs were ahead of market expectations. Technology One rallied 2.4% as the market rewarded the defensive nature and perceived quality of its earnings. Finally, shares in Viva Energy advanced 1.8% in anticipation of a strong operating result for the period to 30 June.
The largest detractors from performance included tourism and transport provider Kelsian, employee finance provider SmartGroup and broadband retailer Aussie Broadband. Shares in Kelsian were down 24.3% as the company confirmed it was in talks to acquire UK transport operator Go-Ahead which is expected to require equity funding. SmartGroup fell 27.2% after it lost a material contract held with the Victorian Department of Education to a competitor. Shares in Aussie Broadband were down 20.8% in June as a follow on from the downgrade to FY22 earnings management delivered in May.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/189000746.pdfMay, 2022
The Fund returned -3.03% (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 mining and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of April included overweight positions in travel solutions company Corporate Travel Management, fuel distribution company Viva Energy and transport services/tourism business Kelsian. Corporate Travel Management rallied 10.5% as the broader travel sector performed strongly in the month of April. Viva Energy was up 19.6% after a positive trading update reflecting strong refining margins and commercial fuel growth, despite mobility restrictions. Finally, Kelsian added 12.5% as the market realised its exposure to defensive contracts which may act as an inflation hedge.
The largest detractors from performance included cloud connections provider Megaport, payments company Tyro Payments and education technology company Keypath Education. Shares in Megaport were down 37.6% in April as it delivered an underwhelming third quarter result to the market. Tyro Payments was down 28.7% as payments names were weaker in April (continued technology sell-off). While Keypath Education lost 23.6% despite the release of a solid third quarter result.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/187152711-1.pdfApril, 2022
The Fund returned -3.03% (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 mining and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of April included overweight positions in travel solutions company Corporate Travel Management, fuel distribution company Viva Energy and transport services/tourism business Kelsian. Corporate Travel Management rallied 10.5% as the broader travel sector performed strongly in the month of April. Viva Energy was up 19.6% after a positive trading update reflecting strong refining margins and commercial fuel growth, despite mobility restrictions. Finally, Kelsian added 12.5% as the market realised its exposure to defensive contracts which may act as an inflation hedge.
The largest detractors from performance included cloud connections provider Megaport, payments company Tyro Payments and education technology company Keypath Education. Shares in Megaport were down 37.6% in April as it delivered an underwhelming third quarter result to the market. Tyro Payments was down 28.7% as payments names were weaker in April (continued technology sell-off). While Keypath Education lost 23.6% despite the release of a solid third quarter result.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/187152711.pdfFebruary, 2022
The Fund returned 0.91% (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 mining & engineering contractor NRW Holdings, domestic telco Aussie Broadband and employee benefits provider Smartgroup. NRW Holdings was up 36.3% after it reported a strong 1H22 result and reaffirmed full year guidance despite tough operating conditions, strong cash flow was the key surprise in the result. 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 Smartgroup closed the month of February up 17.2% due to a strong first half result buoyed by a special dividend of 30cps.
The largest detractors from performance included overweight positions in payment software provider Tyro, aviation leasing company Alliance Aviation and insurance software provider FINEOS. Tyro lost 31.5% following the release of an underwhelming 1H22 result which reflected weaker than expected operating leverage and cash flow conversion. Alliance Aviation was down 17.4% following a weaker than expected first-half result and outlook statement that was negatively impacted by delays in the ramp up of the Qantas wet-lease agreement due to Omicron breakout. Shares in FINEOS were down 12.7% in February as the Company guided to full year revenue at the low end of the previously disclosed guidance range (€125-130m). FINEOS attributed the downgrade to softer services revenue and re-affirmed subscription revenue guidance of +30%
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/185154529.pdfJanuary, 2022
The Fund returned -9.5% (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 overweight positions in steel distributor Vulcan Steel and digital education provider Keypath Education along with an underweight position in software provider Pro Medicus. Vulcan Steel was down 1.6% in January as it continued to benefit from buoyant trading conditions across the steel industry. 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. Pro Medicus lost 27.8% for the month of January on no company specific news but was weighed down by general weakness in the technology sector. Lennox does not hold Pro Medicus and was positively impacted by an underweight position relative to the benchmark.
The largest detractors from performance included overweight positions in software providers FINEOS and Technology One along with an underweight position in neuro technology company Brainchip Holdings. Shares in FINEOS were down 23.0%% in January due to general weakness in the technology sector despite reaffirming FY22 guidance in line with market expectations. Shares in Technology One were down 18.6% across the month on the back of general weakness in the technology sector. Brainchip was up 109.6% after it reported to be working with Mercedes on the Vision EQXX EV concept car. Lennox does not hold a position in Brainchip Holdings and was negatively impacted by an underweight position relative to the benchmark.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/183927969.pdfDecember, 2021
The Fund returned 0.3% (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 0.5% (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 steel distributor Vulcan Steel, battery materials company Novonix along with tourism and transportation business Kelsian Group. Vulcan Steel rallied 18.8% in December as it released a trading update with an upgraded earnings guidance. 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. Kelsian Group was up 14.6% in December as it was awarded a retention of the Kangaroo Island ferry services contract for 15-years with options to extend for another 10 years.
The largest detractors from performance included ecommerce business Booktopia, internet network operator Aussie Broadband and youth apparel retailer Universal Store. Shares in Booktopia were down 35.7% in December after a weak trading update, in which management called out cost inflation and distribution bottlenecks due to COVID-19. Aussie Broadband lost 9.2% for the month of December as the market considered whether the acquisition of Over The Wire may be slightly dilutive in the near-term. While Universal Store was down 10.6% in December as the Omicron variant became rampant across the country, hampering optimism for youth apparel retail.
During the month, Lennox topped up its position in the hotel commerce platform operator Siteminder. The business has been growing significantly within a large addressable market, with a long runway ahead. We continue to believe the growing number of hotel subscribers and average revenue per user will lead to higher recurring revenue.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/182697550.pdfNovember, 2021
The Fund returned -1.73% (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 overweight positions in data interconnection services provider Megaport, restaurant and food retail business Collins Foods along with steel distributor Vulcan Steel. Megaport rallied 19.2% in November as it announced a distribution agreement with Arrow Electronics – also buoyed by broker initiations. Collins Foods was up 10.2% over the period as they released a strong 1H22 result showing a rebound in top-line and EBITDA margin. Vulcan Steel was up 12.7% in the first month of trading following the company's IPO.
The largest detractors from performance included payments company Tyro Payments, battery materials company Novonix and media business oOh!media Limited. Shares in Tyro Payments were down 28.7% in November following a weak trading update at the AGM. The business has demonstrated gross margin/TTV pressure due to a change in mix from Bendigo Bank. Novonix added 61.5% for the month of November as it opened a new facility in Chattanooga. Lennox does not hold NVX and was negatively impacted by the underweight position relative to the benchmark. oOh!media Limited was down 10.7% in November as HT&E sold its entire stake in the business for $1.78
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/181976829.pdfSeptember, 2021
The Fund returned 2.13% (after fees) for the month of September, while the S&P/ASX Small Ordinaries Accumulation Index returned -2.14% and the S&P/ASX Small Industrials Accumulation Index returned -1.26% (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 NBN reseller Aussie Broadband, automotive leasing company SmartGroup and fuel retailer Viva Energy. 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. Smartgroup rose 21.4% following the receipt of a non-binding bid of $10.35 per share (~31.7% to prev. closing price). The bid was made by a consortium of bidders (PE/Super Funds) and remain in their due diligence process before a formal bid can be lodged and recommended by the board. Viva Energy rallied 13.2% in September due to continued oil price strength and generally positive sentiment towards the re-opening trade.
The largest detractors from performance included mining and construction contractor NRW Holdings, travel agent Flight Centre and miner Whitehaven Coal. NRW Holdings fell 15.0% in September due to continued weakness in the iron ore price which we view as overdone with only 17% of the business exposed to iron ore. Flight Centre rallied 30.8% due to improving sentiment towards the resumption of global travel. Whitehaven Coal rose 27.7% following strong rallies in both thermal and metallurgical coal prices which continue to benefit from favourable supply demand dynamics
Energy was the best performing sector in September, up 18.1%, followed by Communication Services (+1.3%) and Consumer Discretionary (+1.0%). Materials was the worst performing sector over the quarter, returning -7.6%, followed by Information Technology (-5.1%) and Financials (-3.3%).
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/180015604.pdfAugust, 2021
The Fund returned 6.51% (after fees) for the month of August, while the S&P/ASX Small Ordinaries Accumulation Index returned 4.98% and the S&P/ASX Small Industrials Accumulation Index returned 6.10% (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 communications company Aussie Broadband, jewellery retailer Lovisa and application software company Infomedia. Shares in Aussie Broadband rallied 40.4% in August as the company announced a deal with Telstra to provide fibre and data centre connectivity, further buoyed by expectations of a strong FY21 result. The business continues to grow its pipeline with the fibre work on track, providing confidence in the medium-term outlook. Lovisa Holdings was up 25.3% as the company released its FY21 results in line with consensus. The trading update for the first eight weeks of FY22 was strong, with LFLs up 38% (open stores) with only approximately 20% of stores impacted by lockdowns. The business is well positioned for further growth with strong balance sheet capacity for a continued store roll-out. Infomedia shares rose 26.8% for the month of August as the company released its FY21 result. Revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) were moderately ahead of consensus expectations, reflecting in the stock performance. Furthermore, the business also added commentary around contract wins and improving activity upon global reopening
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/178968285.pdfJuly, 2021
The Fund returned -2.39% (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 mining services company NRW, fuel distributor and refiner Viva Energy and education technology platform provider Keypath Education. Shares in NRW rallied 16.4% in July as the company announced a multitude of contract wins. The company continues to trade at a compelling valuation and the volume of ongoing new work being announced provides confidence in the medium-term outlook of the business. Viva Energy shares rose 6.7% for the month as the company provided an operational update. In this update, it guided to a strong first half earnings before interest, tax, depreciation and amortisation (EBITDA) result, with demand rising across its non-aviation business. Keypath Education was up 8.4% as the company released its fourth quarter results. The results saw a comfortable beat on revenue compared with the recently upgraded guidance.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/175739215.pdfJune, 2021
The Fund returned 3.42% (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 technology company Megaport, internet service provider Aussie Broadband and buy-now pay-later operator Sezzle. Megaport shares rallied 23.0% following its investor briefing, providing increased confidence to the market. 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. Sezzle shares rose 17.9% as the company announced a three-year agreement with Target in the US.
The largest detractors from performance included overweight positions in restaurant operator Collins, homewares retailer Adairs and service station operator Viva Energy. Collins shares withdrew 9.0% in June following the release of its results. The company announced revenue and EBITDA growth of 12.4% with KFC Australia delivering a strong performance, as well as a 12.7% decrease in net debt as cash flows were strong. We believe this was a strong result with the share price decline being driven by short term profit taking, and continue to hold confidence in the company's ability to execute. Shares in Adairs pulled back 11.1% for the month as the company brought forward the settlement for its acquisition of Mocka. Viva Energy fell 4.9% in June off no company specific news. We believe Viva offers attractive defensive earnings over the medium term.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/174257576.pdfApril, 2021
The Fund returned 6.75% (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 buy-now pay-later provider Sezzle, networking company Megaport and fund administration platform HUB24. Shares in Sezzle rallied 30.8% for the month as the company released its first quarter cash flow report. Here it announced significant growth, with merchant sales up 214% on the year and revenue up 216%. The company also lodged its intention to file a registration statement to IPO in the United States. Megaport was up 29.7% in April following the release of its quarterly cash flow report. Monthly recurring revenue and port growth was strong at 26% and 31% respectively relative to the prior comparable period. HUB24 shares rose 21.8% for the month as the company updated the market on its third quarter performance. In the March quarter the company experienced record net inflows of $1.9b, up 41% on the prior comparable period. This brings the platform to $51.4b under administration
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/172013796.pdfDecember, 2020
The Fund returned 1.35% (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 an overweight position in data software company Nuix, as well as underweight positions in biotech company Mesoblast and education company IDP Education. Shares in Nuix rallied 55.4% for the month as the stock 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. Lennox does not hold Mesoblast and was positively impacted by the underweight position relative to the benchmark. IDP Education shares fell 20.4% for the month on no company specific news. Lennox does not hold IDP Education and was positively impacted by the underweight position relative to the benchmark. The largest detractors from performance were overweight positions in corporate travel company Corporate Travel and consumer goods company McPhersons, as well as an underweight position in diversified miner IGO.
Corporate Travel shares fell 12.5% in December as the travel sector sold down. We believe this is simply a case of investors taking profits as the stock has rallied heavily over the quarter. With no material changes to fundamentals, we remain happy holders of the company. 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. 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 topped up its position in media company outdoor media company oOh!media. We believe oOh!media offers attractively valued exposure to the reopening of the economy stimulated by the vaccine. The company is a dominant player in the advertising space, which is heavily driven by the economic cycle.
File: https://commentary.quantreports.net/wp-content/uploads/2021/01/163537317.pdfticker: HOW3590AU
release_schedule: Monthly
commentary_block: Array
factsheet_url:
https://investmentcentre.moneymanagement.com.au/factsheets/mi/o5lw/lennox-australian-small-companies
Right sidebar -> quick links -> provider’s own factsheet
manager_contact_details: Array
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
fund_features:
Lennox Australian Small Companies 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.
- Lennox’s research process is driven by fundamental, in-depth and comprehensive analysis of a business’ operations.
- Lennox apply this practically in two ways – external research (site visits) and internal research (detailed financial modelling). External research is conducted ‘in the field’ by engaging with a business’ senior management team, employees, competitors and industry experts.
- Manager Address : Level 2, 5 Martin Place, Sydney NSW 2000
- Phone : +61 1800 195 853
- Website : https://www.lennoxcapitalpartners.com.au/
- Contact Email : info@fidante.com.au