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Pengana International Equities Limited (ASX: PIA)

The largest International Ethical LIC on the ASX. Targeting fully franked dividends, paid quarterly.

January 2021 - Monthly REPORT

When there is blood in the streets, the sharks will circle

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NTA POST-TAX

NTA PRE-TAX

INVESTMENT PERFORMANCE1

DIVIDEND YIELD2

CONSECUTIVE DIVIDENDS PAID

1. Investment performance since new mandate adopted 1 July 2017.
2. Dividend yield is based on current displayed share price and dividends declared over the previous 12 months
3. Grossed up yield is based on current displayed share price, dividends declared over the previous 12 months and the tax rate and franking percentage applicable for the most recently declared dividend

SUMMARY

The largest market-related news event during January was the performance of heavily shorted shares including GameStop, Bed Bath & Beyond, and Blackberry. These price moves were driven mainly by retail investors, facilitated by Reddit’s WallStreetBets chat room and free trading on platforms like Robinhood. Hedge Funds that were heavily short these stocks sustained material losses that will be difficult for them to recover from. For example, Melvin Capital was reported to have declined >50% during the month.

View full commentary HERE

PORTFOLIO

Top Holdings (alphabetically)

Alibaba Group Holding LTD China Consumer Discretionary Charter Communications Inc United States Communication Services Cigna Corp United States Health Care Dollar Tree Inc United States Consumer Discretionary Houlihan Lokey Inc United States Financials Indus Towers Ltd India Communication Services Lumentum United States Information Technology Tencent Holdings China Communication Services Thermo Fisher Scientific United States Health Care UnitedHealth Group Inc United States Health Care
See Portfolio Breakdown

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

Segment

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Jan 20211
1 Month1 Year3 Years P.A.SINCE MANDATED
Fund 1.1%13.8%12.1%12.6%
Benchmark -0.4%0.7%10.3%11.5%
1 Month1 Year3 Years P.A.SINCE MANDATED
Fund
1.1%
13.8%
12.1%
12.6%
Benchmark
-0.4%
0.7%
10.3%
11.5%

COMMENTARY

The largest market-related news event during January was the performance of heavily shorted shares including GameStop, Bed Bath & Beyond, and Blackberry. These price moves were driven mainly by retail investors, facilitated by Reddit’s WallStreetBets chat room and free trading on platforms like Robinhood. Hedge Funds that were heavily short these stocks sustained material losses that will be difficult for them to recover from. For example, Melvin Capital was reported to have declined >50% during the month.

As is typical on Wall Street, when there is blood in the streets, the sharks will circle. The ‘sharks’ looked through the portfolios of the Hedge Funds experiencing the most pain and commenced selling their long positions, in anticipation that the weakened Hedge Funds would have a flood of redemptions and be forced sellers. This created some opportunities, which we took advantage of, and we added one new name (currently undisclosed) to the portfolio, however, in aggregate the portfolio remained relatively unchanged.

The portfolio remains meaningfully differentiated from the Market. Approximately 44% of the portfolio is invested in the US, vs the Market’s c65% weight, it does not hold a single FAANG stock, and it is overweight Europe and Asia. In aggregate, we calculate the portfolio is on a c5% FCF yield, 10% revenue growth, and has zero debt (the companies held by the fund are actually net cash). These metrics compare favourably to the broader market, which gives us some optimism about PIA’s outlook.

 

Our new colours

We are proud to be Australia’s largest international Ethical LIC, having dedicated significant resources to ensuring that we offer the most transparently clear international ethical investment portfolio listed on the ASX.  In line with this, this month’s newsletter has moved away from our historical ‘red’ and now incorporates a lighter, clearer blue as part of the PIA brand.

PROFILE

STATISTICAL DATA (Since Mandated)

PORTFOLIO SUMMARY
VOLATILITY3
8.3%
NUMBER OF STOCKS
35
BETA4
0.66

FEATURES

  • ASX CODE PIA
  • FEES Management Fee: 1.23% p.a.
    Performance Fee: 15.38% of any return greater than the Index***
  • INCEPTION DATE 19 March 2004
  • MANDATED 1 July 2017
  • BenchmarkMSCI World Total Return Index, Net Dividend Reinvested, in A$ ("Index")
  • NTA Post Tax ** A$ 1.331
    29/01/2021
  • NTA Pre Tax ** A$ 1.379
    29/01/2021
  • Price Close ** A$ 1.250
  • Shares On Issue ** 254.68m
  • DRP Yes

Portfolio Managers

Peter Baughan

Portfolio Manager

Jingyi Li

Portfolio Manager

Description

Pengana International Equities Limited (trading on the ASX as PIA) is the largest international ethical Listed Investment Company (“LIC”) on the ASX. PIA’s objective is to provide shareholders with capital growth as well as regular, reliable, and fully franked dividends.

The strategy aims to generate superior risk-adjusted returns, through investing in an actively managed portfolio of global companies that meet the investment team’s high-quality and durable growth criteria at reasonable prices. A robust ethical framework provides an added layer of risk mitigation.

These companies are identified through the conduct of fundamental research, with a long-term, global perspective, and must exhibit the following four key investment criteria: competitive advantages, quality management, financial strength, and sustainable growth potential.

EXPLORE OUR FUNDS

Harding Loevner International Fund
Harding Loevner International Fund
Axiom International Fund
Axiom International Fund
Axiom International Fund (Hedged)
Axiom International Fund (Hedged)
Australian Equities Fund
Australian Equities Fund
High Conviction Property Securities Fund
High Conviction Property Securities Fund
Global Small Companies Fund
Global Small Companies Fund
WHEB Sustainable Impact Fund
WHEB Sustainable Impact Fund
Emerging Companies Fund
Emerging Companies Fund
High Conviction Equities Fund
High Conviction Equities Fund
Pengana International Equities Limited (ASX: PIA)
Pengana International Equities Limited (ASX: PIA)
Private Equity Trust (ASX: PE1)
Private Equity Trust (ASX: PE1)
Alpha Israel Fund
Alpha Israel Fund
Pengana Diversified Private Credit Fund
Pengana Diversified Private Credit Fund

1. As at the last day of last month prior to publishing of this report. Performance figures refer to the movement in net assets per share, reversing out the impact of option exercises and payments of dividends, before tax paid or accrued on realised and unrealised gains. Please refer to the PDS for information regarding risks. Past performance is not a reliable indicator of future performance, the value of investments can go up and down.
2. Inception date of PIA: 19 March 2004, new investment team with new mandate adopted: 1 July 2017. Pengana International Equities Limited has been managed under the new investment mandate by the Pengana investment team since 1 July 2017. The performance since mandated in the table above refers to the movement in net assets per share since the new mandate adopted on 1 July 2017.

3. Annualised Standard Deviation since mandated
4. Relative to MSCI World Total Return Index, Net Dividends Reinvested
**As at the last day of last month prior to publishing of this report. The figures are unaudited.
*** Index/MSCI World refers to the MSCI World Total Return Index, Net Dividends Reinvested, in A$.