L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (May 2023)
37 slides from L1 Long Short Fund's investor presentation, May 11, 2023
Slide 1: Investor Webinar invitation
For personal use only We invite you to join L1 Capital’s Joint Managing Director and Co-Chief Investment Officer, Mark Landau for a L1 Long Short Fund Limited (ASX:LSF) Investor Webinar on Thursday, May 11 at 11am (AEST). ABN 21 125 378 145 | AFSL 314 302 Please click here to register to join the we
Slide 2: L1 Long Short Fund Limited Investor Webinar
For personal use only L1 Long Short Fund Limited Investor Webinar Mark Landau, Joint Managing Director and Chief Investment Officer May 11, 2023
Slide 3: Performance summary
For personal use only 1 Performance summary
Slide 4: Performance summary: strong long-term performance
Performance summary Strong long-term performance For personal use only Pre-tax NTA Net Performance1 L1 Long Short Fund S&P ASX 200 Accum. MSCI World Accum. HFRX Global Hedge to 30 Apr 2023 (%) portfolio Index (AUD) Index (USD) Fund Index (USD) 3 months 0.1 (0.8) 2.4 (1.3) 6 months 16.4 8.7 12.3 0.4
Slide 5: Capital protection in falling markets
Capital protection in falling markets The strategy has protected 90% of investors' capital in falling markets Performance in ‘ASX down market’ months Performance in ‘ASX up market’ months For personal use only (Average of 40 months) (Average of 64 months) 5.0% 3.0% 3.1% 2.5% 0.0% -0.3% -2.5% -3.2% -
Slide 6: Stock contributors and detractors
Stock contributors and detractors Calendar year to date Company name Company news ✓ For personal use only Alibaba Favourable sentiment surrounding China’s re-opening and indications regulatory intervention would ease BlueScope ✓ Earnings guidance increased by more than 40% due to strong improvement
Slide 7: Market review
For personal use only 2 Market review
Slide 8: Bond market volatility
Bond market volatility The recent banking crisis has driven significant volatility in interest rate expectations For personal use only Implied U.S. interest rate expectations Change in two-year bond yields 5.5% 1.0 9 Mar 2023 5.3% Stickier inflation 0.5 31 Dec 2022 5.0% Banking crisis 4.8% 0.0 31 Ma
Slide 9: Stock market trends
Stock market trends Narrow stock market rally led by large-cap technology stocks and high-multiple growth-stocks For personal use only MSCI growth vs. value performance S&P500 equal weight vs. market-cap weight index 100% 2 1.8 80% 1.6 60% 1.4 1.2 40% 1 20% 0.8 0% 0.6 0.4 -20% 0.2 -40% 0 1975 1979 1
Slide 10: Investor positioning
Investor positioning Cyclicals are extremely under-owned. Defensives are crowded. U.S. Cyclicals vs. Defensives relative weight JPM Fund Manager Survey: For personal use only Long only funds and hedge funds “What is the best way to position in equities in the current environment?” 2.8 Lower Defensiv
Slide 11: Valuation disparity
Valuation disparity Defensives and growth stocks valuations appear stretched. Low P/E and resources look very undervalued versus history. For personal use only ASX 200 valuation premium of selected sectors/factors relative to historical ranges 12m forward P/E vs. 10-year range (percentile rank versu
Slide 12: Market outlook
For personal use only 3 Market outlook
Slide 13: Inflation
Inflation U.S. Inflation is now moderating and we expect a further decline over the coming months For personal use only U.S. Headline CPI breakdown, YoY % Change U.S. Headline CPI vs. ISM prices index % YoY 8% 90 9% 6% 80 8% 70 7% 4% 60 6% 2% 50 5% 0% 40 4% -2% 30 3% Jul 2019 Jan 2020 Jul 2020 Jan 2
Slide 14: U.S. economic outlook
U.S. economic outlook Several indicators suggest an elevated risk of a U.S. recession For personal use only U.S. yield curve (10-year – 3-month spread) ISM Manufacturing PMI and recessions (grey shading) % 5 80 1 0.9 4 0.8 3 0.7 60 2 0.6 1 0.5 0.4 0 PMI = 45 Current 40 PMI: 47.3 0.3 -1 0.2 -2 0.1 -3
Slide 15: Bond market vs. Fed commentary
Bond market vs. Fed commentary Large divergence between bond market interest rate expectations compared to Fed guidance For personal use only Fed ‘dot plot’ median vs. market current expectations There is a major disconnect between what the bond market is saying and what the Fed is saying…. 5.2% 5.1
Slide 16: Market outlook – Summary
Market outlook – Summary Equity markets look less attractive compared to the last few years Equities backdrop For personal use only Positive factors Negative factors ▪ Inflation pressures likely to reduce ▪ Full valuations over the next 6 months ▪ Corporate earnings unlikely to beat expectations ▪ I
Slide 17: Portfolio exposure
Portfolio exposure Lower net market exposure reflects a more cautious outlook LSF portfolio net long exposure – Last three years For personal use only Jan – May 2021: 125% May – Nov 2020: Vaccine catalyst Oct 2021 – Apr 2022: Conviction in vaccine played out Market rally & more success balanced risk
Slide 18: LSF positioning
For personal use only 4 LSF positioning
Slide 19: Active vs. passive
Active vs. passive Improving backdrop for stock picking and active management For personal use only Markets going forward: ▪ We believe passive and index hugging strategies will no longer be able to deliver 10%+ returns ▪ ‘Fed Put’ no longer in effect to provide safety net for investors ▪ Going forw
Slide 20: LSF positioning: skewed to lower P/E stocks
LSF positioning The portfolio is skewed to lower P/E stocks with strong cashflow generation In general: For personal use only Low P/E firms trade at a 61% discount to the market ▪ Low P/E stocks are far better value than high P/E stocks (see charts) (14% below the 20-year average) -30 ▪ High P/E sto
Slide 21: Flutter
Flutter No. 1 player in the one of the most exciting, high growth industries globally ▪ #1 player in U.S. online sports betting (~50% market share) Flutter share price – 1 year For personal use only $175 ▪ Industry set to grow at 18% CAGR to 2032 ▪ Major inflection point in 2023 $150 − Hitting U.S.
Slide 22: Capstone
Capstone Strong production outlook with significant upside from higher copper prices For personal use only ▪ Fast-growing and well-managed copper miner focused in Capstone share price – 1 year the Americas $8 ▪ Expected to more than double copper production over the next few years with a capex effic
Slide 23: Cenovus
Cenovus Exceptional free cash flow generation potential with capital management optionality For personal use only ▪ Integrated energy company operating mainly in Canada Cenovus share price – 1 year ▪ Long-life oil sands assets and low cost of production $25 providing a break-even oil price at around
Slide 24: Chorus
Chorus Continued strong growth in dividends, allowing for ongoing re-investment in asset base ▪ Long-term LSF portfolio position For personal use only Chorus share price – Since L1 investment (since September 2014 - $1.60 share price) $10 $8 ▪ High-speed fibre broadband infrastructure owner (NZ) $6
Slide 25: Imdex
Imdex Underappreciated growth company with the best suite of new and improved drilling technology products For personal use only ▪ Global leader in mining exploration drilling technology Imdex share price – Since L1 investment $3.00 ▪ Announced acquisition of #2 player (Devico) to accelerate $2.50 g
Slide 26: Summary
For personal use only 5 Summary
Slide 27: Summary
Summary For personal use only 1 The portfolio has performed very strongly over the past 3 years (33.4% p.a.1). 2 We have reduced our net market exposure as we believe the outlook for equities is less positive than it has been for the past few years. 3 Going forward, we believe passive strategies wil
Slide 28: Appendix: Overview of L1 Capital
For personal use only I Appendix Overview of L1 Capital
Slide 29: L1 Capital – Business overview
L1 Capital – Business overview For personal use only Specialist investment manager founded by Mark Landau & Rafi Lamm in 2007 ▪ ‘L’ – Derived from the surnames of the founders (Lamm & Landau). ▪ ‘1’ – Genuine firm-wide aspiration to be the “best”, not just “good”. ▪ Reputation for investment excelle
Slide 30: Global investment manager
Global investment manager Well resourced and experienced team across investments, operations, compliance and investor relations Business Overview London For personal use only ▪ Founded in 2007 Since 2017 UK Residential Property ▪ Circa A$5.5b FUM ▪ Investment professionals in 5 locations globally Ne
Slide 31: L1 Capital Funds
L1 Capital Funds Long Short Fund Global Opportunities Catalyst For personal use only net return S.I. 20.7% p.a. (ASX200AI 7.4% p.a.)1 31.1% p.a. net return p.a. S.I.3 10.8% p.a. net outperformance of ASX200AI S.I. Best performing long short fund One of the best performing High conviction in Australi
Slide 32: Long Short Strategy – Competitive edge
Long Short Strategy – Competitive edge A proven team that drives performance through high quality, independent research For personal use only Track Record Quality Research Independent Thinking Best performing long short fund Differentiated company, Low correlation with other in Australia since indus
Slide 33: LSF positioning: Diversified portfolio exposure
LSF positioning Diversified portfolio exposure For personal use only Long Short Fund portfolio characteristics Total Typical range: 50 – 100 positions (longs + shorts combined) positions Average: 80 positions Typical range: 1-5% weight Long Average: 3% weight positions Exceptional risk/reward: >5% w
Slide 34: Monthly performance, strategy returns
L1 Long Short Fund Limited Monthly performance, strategy returns (Net, %) Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year For personal use only 2014 - - - - - - - - (2.42) 3.03 2.85 1.61 5.17 Best performing long short 2015 0.59 9.14 2.42 1.71 3.73 (0.86) 3.30 2.06 5.51 8.49 8.11 4.62 60
Slide 35: Contact Us
Contact Us For personal use only Chris Clayton Alexander Ordon Aman Kashyap Head of Distribution Investment Specialist Investment Specialist +61 (3) 9286 7021 +61 (0) 413 615 224 +61 (0) 477 341 403 [email protected] [email protected] [email protected] Alejandro Espina Edward Vine Investment Specia
Slide 36: Important information
Important information L1 Long Short Fund Limited For personal use only L1 Long Short Fund Limited has been established to invest in a portfolio of predominantly Australian and New Zealand securities, with up to 30% invested in global securities. The Company has the ability to both buy and short-sell
Slide 37: For personal use only
For personal use only ABN 21 125 378 145 | AFSL 314 302 Level 45, 101 Collins Street Melbourne Victoria 3000 Australia Phone +61 3 9286 7000 Fax +61 3 9286 7099 Web www.L1.com.au
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