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High Conviction Equities Fund

A concentrated portfolio of ethically screened global companies

December 2022 - Monthly REPORT

December Report

SUMMARY

The Fund fell 1.1% in December.

In this month’s commentary we cover our holdings in: Walkme, Major Drilling, Ciena, Meyer Burger, Immutep, K+S, Dave and Busters, and Eckert and Zeigler.

PORTFOLIO

Top Holdings (alphabetically)

Ciena Corp
United States
Information Technology
Ciena Corporation develops and markets communications network platforms, software, and offers professional services. The Company's broadband access, data and optical networking platforms, software tools, and global network services support worldwide telecom and cable/MSO services providers, and enterprise and government networks.
HCA Healthcare Inc
United States
Health Care
HCA Healthcare, Inc. offers health care services. The Hospital provides diagnosis, treatments, consultancy, nursing, surgeries, and other services, as well as medical education, physician resource center, and training programs. HCA Healthcare serves patients in the United States.
Major Drilling Group Internati
Canada
Materials
Major Drilling Group International Inc. is a contract drilling company. The Company has drilling operations in Canada, United States, Mexico, South America, Australia, Europe, Asia, and Africa. Major Drilling also conducts directional, environmental, and geotechnical drilling and, in addition, manufactures drills and support equipment.
Opthea Ltd
Australia
Health Care
Opthea Limited operates as a biotechnology company. The Company develops therapies for diabetic macular edema, corneal neovascularization and transplantation, and dry eye disease. Opthea serves patients and healthcare providers in Australia.
Telix Pharmaceuticals Ltd
Australia
Health Care
Telix Pharmaceuticals Limited operates as a biotechnology company. The Company develops and commercializes molecularly-targeted radiation therapy for the treatment of prostate, renal, and brain cancer. Telix Pharmaceuticals serves patients worldwide.

Sector Breakdown

Capitalisation Breakdown

Region Breakdown

PERFORMANCE

Performance Table

NET PERFORMANCE FOR PERIODS ENDING 31 Dec 20221
1 MTH 1 YEAR 2 YEARS P.A. 3 YEARS P.A. 5 YEARS P.A. SINCE INCEPTION P.A.
High Conviction Equities Fund Class A -1.1% -22.9% -8.3% -0.1% 6.2% 21.5%
MSCI World Total Return Index (net, AUD) -5.4% -12.2% 6.5% 6.2% 9.2% 10.0%
RBA Cash Rate plus 3% 0.5% 4.2% 3.7% 3.6% 3.9% 4.2%

Swipe horizontally to see all columns

Performance Chart

NET PERFORMANCE SINCE INCEPTION2

COMMENTARY

US software company Walkme rose 26% after presenting at several conferences. We continue to like the stock, which trades on a much lower valuation than software peers. The company expects to breakeven in 2023, which we believe will close the valuation gap.

Canadian listed mining services company Major Drilling rose 13% on the back of strong earnings results and rising metal prices, which are being driven by China’s relaxation of COVID restrictions.

US optical communications equipment producer Ciena rose 13% after reporting strong results and earnings guidance for the coming year. Demand for bandwidth remains robust and the potential to replace Huawei equipment at European operators is also a positive factor. Semiconductor supply constraints are easing which should allow the company to process some of its large order backlog in the year ahead.

European solar panel producer Meyer Burger rose 8% as sentiment towards the renewable energy sector remains positive given the energy shortages around the world. 2023 will be an important year for the company as it grows its production in Germany. We also expect major new contracts to be signed.

Australian cancer immunotherapy company Immutep fell 26% on little news after a strong prior month of performance and we used the opportunity to add to our holding with the next catalyst being the results of its head and neck cancer study due mid 2023. The company continues to be an attractive acquisition target in the healthcare sector.

German potash producer K+S fell 10% on the back of falling global fertilizer prices. We also added to the holding as we believe the low valuation already reflects lower prices.

US entertainment company Dave and Busters fell 12% after results that disappointed the market. We believe the new management team from the recently acquired business Main Event will drive better results in 2023. Main Event had been outperforming Dave and Busters for several years.

German isotope producer Eckert and Zeigler fell 12% after the founder announced his retirement as CEO but staying on as a director. His long-serving deputy will take over.

PROFILE

STATISTICAL DATA

PORTFOLIO SUMMARY
VOLATILITY3
24.8%
NUMBER OF STOCKS
17
BETA4
0.63
MAXIMUM DRAW DOWN
-32.1%

FEATURES

  • APIR CODE HHA0020AU
  • REDEMPTION PRICEA$ 0.9329
  • FEES * Management Fee: 1.80% p.a. (Class A) | 1.25% p.a. (Class B)
    Performance Fee: 15.38% (Class A) | 20% (Class B)
  • Minimum initial investment A$10,000
  • FUM AT MONTH END A$ 36.49m
  • STRATEGY INCEPTION DATE 11 December 2014
  • BenchmarkRBA Cash Rate + 3%

Fund Managers

James McDonald

Portfolio Manager

Jeremy Bendeich

Portfolio Manager

Description

The Pengana High Conviction Equities Fund (the Fund) invests globally in a concentrated portfolio of up to 20 stocks. The Fund can invest in both small and large cap stocks and is diversified across countries and sectors. We avoid investment in companies that are currently, in our opinion, unnecessarily harmful to people, animals or the environment.

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1. Net performance figures are shown are those of Class A Units, after all fees and expenses and assume reinvestment of distributions. No allowance has been made for buy/sell spreads. 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 11 December 2014.
3. Annualised standard deviation since inception.
4. Relative to MSCI World. Using daily returns.
* For further information regarding fees please see the PDS available on our website.