L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (April 2021)
35 slides from L1 Long Short Fund's investor presentation, Apr 30, 2021
Slide 1: L1 Long Short Fund Limited April 2021
For personal use only L1 Long Short Fund Limited APRIL 2021
Slide 2: Overview
Overview For personal use only The L1 Long Short Fund (LSF) has performed very strongly over the last year (LSF NTA +112.5%, S&P/ASX200 Accumulation Index +37.5%). LSF’s differentiated positioning underpinned the strong performance generated over the last 12 months. We believe equity markets wil
Slide 3: Performance Summary and Stock Contributors
For personal use only Performance Summary and Stock Contributors
Slide 4: Performance Update
Performance Update For personal use only LSF has had an exceptional 12 months. Pre-tax NTA up 112.5%, LSF share price up 153.2%. Pre-tax NTA Net Performance L1 Long Short S&P ASX Net to 31 March 2021 (%) Fund 200 AI Difference 3 months 8.7 4.3 +4.4 6 months 46.0 18.5 +27.5 1 year 112.5 37.5 +75.0
Slide 5: Top Long Contributors – March 2021 Quarter
Top 10 Long Contributors – March 2021 Quarter For personal use only Company Name Comment Continued positive operating momentum & imminent large scale buybacks. Bed Bath & Beyond* Exited our holding near share price peak (driven by short squeeze) in January. Canadian Natural Focused management team a
Slide 6: LSF Advantages
For personal use only LSF Advantages
Slide 7: LSF Advantages
LSF Advantages For personal use only LSF has a number of key advantages over many other funds. It is able to: Adjust portfolio net long to reflect the risk-reward of the market. Market Scaled up market exposure to capitalise on the crash in March Exposure and again ahead of positive vaccine news.
Slide 8: LSF Advantages – Market Exposure
LSF Advantages – Market Exposure For personal use only Ability to adjust portfolio net long to reflect the risk-reward of the market. Market Exposure 140% Shorting Aug – Nov 2020: 130% Increased net long based International on vaccine confidence 120% Mar – Apr 2020: Net Long: ~120-130% Dec 2020 – Ja
Slide 9: LSF Advantages – Shorting
LSF Advantages – Shorting For personal use only Delivered strong positive performance from shorting despite an extremely difficult backdrop. Market Exposure Arguably the most difficult market for shorting in the past decade: 35 Shorting – market rallying strongly Closed numerous shorts during – sh
Slide 10: LSF Advantages – International
LSF Advantages – International For personal use only Ability to exploit research insights offshore, not just domestically. Market Exposure Capitalise on key sector insights by buying the best opportunity globally (not limited to a narrower set of domestic opportunities). Shorting International l
Slide 11: Market Outlook
For personal use only Market Outlook
Slide 12: Market Outlook
Market Outlook For personal use only We expect the following trends to dominate financial markets in 2021: Strong & accelerating global GDP growth should trigger a rotation from: Market Cash and bonds Equities Rotation Growth stocks Value stocks Defensives Cyclicals The “vaccine trade" has furth
Slide 13: Market Rotation
Market Rotation For personal use only Value stocks are set to recover after an epic period of underperformance. Market Rotation Since 2007, value stocks have endured the 1. Growth vs Value – Relative performance largest and longest period of 200 Growth Outperforming Vaccine Success underperformanc
Slide 14: Vaccine Success
Vaccine Success For personal use only We remain positive on the ability for vaccines to control the pandemic. Market Rotation We believe vaccines will be able to combat COVID-19 for 3 key reasons: Most vaccines have already proven effective against identified mutant strains, Vaccine Success Vacc
Slide 15: M&A Upturn
M&A Upturn For personal use only We expect a significant upturn in M&A and restructuring activity: Market Rotation Business confidence is surging – strong EPS & GDP growth, undergeared balance sheets. Debt & equity is cheap and easy to access. Vaccine Success Massive pool of capital that must
Slide 16: Inflation
Inflation For personal use only Our research suggests rising inflationary pressures in 2021, largely due to Market surging input prices: Rotation Leading indicators suggest strong inflationary pressures are building: Vaccine Success – ISM Prices Paid Index – highest reading in >10 years. – Produce
Slide 17: Portfolio Positioning & Themes
For personal use only Portfolio Positioning & Themes
Slide 18: Current Portfolio Positioning
Current Portfolio Positioning For personal use only Gross Long (%) Gross Short (%) Net Exposure (%) Australia/New Zealand 114 66 48 North America 29 8 21 Europe 29 0 29 Asia 8 0 8 Total 180 74 106 Equities: Positive. Extreme central bank & Government stimulus, negative real rates for cash and bond
Slide 19: Portfolio Themes
Portfolio Themes For personal use only We see four themes that offer a compelling, asymmetric risk-reward at present: Vaccine success has only partially been reflected in some share prices. Vaccine Expect accelerating operating trends to lead to EPS upgrades and P/E re-rating. Recovery Have take
Slide 20: Theme – Vaccine Recovery
Theme 1 – Vaccine Recovery For personal use only Ferrovial (FER – Spain) Safran (SAF – France) Vaccine Recovery Valuable long dated toll road concessions in World’s highest quality aerospace company. Canada (407 ETR – 78 years left) and U.S. (Texas Global leader in manufacturing and parts for an
Slide 21: Theme – Global Reflation
Theme 2 – Global Reflation For personal use only Wells Fargo (WFC – USA) QBE Insurance (QBE) Vaccine Recovery Top 4 U.S. bank with strong consumer franchise. Global commercial lines insurer with strong Business stagnated in recent years due to operations in Australia and Europe (and a sub- com
Slide 22: Theme – New Energy
Theme 3 – New Energy For personal use only Mineral Resources (MIN) Wood Group (WG – U.K.) Vaccine Recovery Diversified mining services company, run by an Leading consulting/engineering firm operating entrepreneurial and highly-regarded across the energy and infrastructure sectors. management tea
Slide 23: Theme – Corporate Restructures
Theme 4 – Corporate Restructures For personal use only News Corp (NWS) Tabcorp (TAH) Vaccine Materially undervalued conglomerate. Provides gambling and entertainment services. Recovery Main asset is a 61.4% stake in REA (US$9.6b), Lotteries benefiting from shift to digital sales – which is ~
Slide 24: For personal use only
For personal use only Corporate Update
Slide 25: Share price and NTA have increased strongly over the last 12 months
Corporate Update For personal use only The share price and NTA has increased strongly over the last 12 months. Pre-tax NTA has increased 112.5%. LSF Share Price and Pre-Tax NTA Share price has increased 153.2%. 3.00 Active on-market share buy-back: 2.50 – Over the past year, the Company has bo
Slide 26: Conclusion
Conclusion For personal use only The portfolio has performed very strongly in 2019, 2020 and 2021 (YTD). Our detailed, bottom-up research continues to identify numerous companies with major underappreciated upside that should continue to drive portfolio performance. We see four broad areas of
Slide 27: Appendices
For personal use only Appendices
Slide 28: L1 Capital Funds
L1 Capital Funds For personal use only Outstanding Long-term Performance Across All Funds ZENITH AWARD Launched Long Short Fund (Strategy) (Melbourne) Long Short: Best ‘Australian Sep 2014 22.1% net return p.a. since inception (ASX200AI 7.2% p.a.)1 Equities – Alternative Returned over 25% p.a. i
Slide 29: L1 Capital's Competitive Edge
L1 Capital’s Competitive Edge For personal use only Track Top decile performance across both the Long Short strategy Record and Australian Equities Fund since inception. Quality Differentiated company, industry and macro research Research (e.g. vaccine). Independent Low correlation with other fund m
Slide 30: Long Short Fund – Monthly Performance
Long Short Fund – Monthly Performance For personal use only Pre-tax NTA Monthly Returns (Net) (%) Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year 2014 - - - - - - - - (2.42) 3.03 2.85 1.61 5.17 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 60.52 2016 5.81 0.59 5.47 2
Slide 31: Long Short Fund – Performance in Rising & Falling Markets
Long Short Fund – Performance in Rising & Falling Markets For personal use only Performance in “Down Market” Months Performance in “Up Market” Months (Average of 29 months) (Average of 50 months) 5.0% 2.9% 3.0% 3.0% 1.0% 0.0% -1.0% -3.0% -3.3% -5.0% L1 Long Short ASX200 (AI) Return L1 Long Short ASX
Slide 32: Long Short Fund – Sector Contribution
Long Short Fund – Sector Contribution For personal use only Sector Contribution Since Inception (Net) (%) Materials 65.0% Communication Services 57.0% Industrials 47.9% Financials 25.1% Utilities 24.0% Consumer Discretionary 19.5% Real Estate 15.8% Energy 15.3% Consumer Staples 14.2% Health Care 5.8
Slide 33: Contact
Contact For personal use only Chris Clayton (QLD and WA) Wayne Murray (VIC) Head of Distribution Investment Specialist Phone + 61 417 279 183 Phone + 61 424 300 003 Email [email protected] Email [email protected] Alexander Ordon (NSW and SA) Aman Kashyap (NSW and VIC) Investment Specialist Investme
Slide 34: Legal Disclaimer
Legal Disclaimer 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 securities, which provides a fl
Slide 35: For personal use only
For personal use only ABN 21 125 378 145 | AFSL 314 302 Level 28, 101 Collins Street Melbourne Victoria 3000 Australia Phone +61 3 9286 7000 Fax +61 3 9286 7099 Web L1.com.au
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