InvestSMART Group Limited · ASX:INV
InvestSMART — IIGF Webinar May 2024
30 slides from InvestSMART's conference presentation, May 23, 2024
Slide 1: Finding value in founder-led small & midcap stocks
Nathan Bell • Portfolio Manager May 2024 Finding value in founder-led small & midcap stocks II Australian Equity Growth Fund (IIGF)
Slide 2: Important information
Important information This publication is general information only, which means it does not take into account your investment objectives, financial situation or needs. You should therefore consider whether a particular recommendation is appropriate for your needs before acting on it, seeking advice
Slide 3: Proven Intelligent Investor approach
Proven Intelligent Investor approach High quality businesses Special situations High insider-ownership New CEO Spin-offs Long growth runways Busted IPOs Hidden assets A large discount to intrinsic value Re-capitalisations Index changes
Slide 4: Skin in the game
Best corporate governance: Skin in the game Founder-led companies vs S&P 500 True even with tech companies excluded Founder-led companies outperform the rest Founder’s Index vs other S&P 500 Based on an analysis of S&P 500 firms in 2014
Slide 5: Performance
Performance As at 30 April 2024 IIGF 1 yr 3 yrs 5 yrs 7 yrs Since Inception IIGF 10.1% 8.4% 11.0% 9.6% 10.2% Benchmark 9.1% 7.3% 8.0% 8.0% 8.2% Difference 1.0% 1.1% 3.0% 1.6% 2.0%
Slide 6: Recent performance
Performance has been improving since November as Recent the bull market is very slowly spreading to smaller performance companies and value stocks. The process is still in its infancy and may play out over years. Market paying ridiculous prices for popular stocks led by passive funds. CBA at same va
Slide 7: When did the banks become AI stocks?
When did the banks become AI stocks?
Slide 8: How does AI improve your plumbing?
How does AI improve your plumbing? IIF
Slide 9: History doesn't repeat itself, but it often rhymes
“History doesn’t repeat itself, but it often rhymes.” – Mark Twain
Slide 10: Market trends
The top five's combined market cap is now 3.3x the size of the entire Russell 2000 Index. That is more than two times the Market level in the 1999-2000 time period! trends From 2000 to 2006, Small-Cap Value had annualised returns of +16%, while the S&P 500 was closer to 1%, and longer-duration equit
Slide 11: Large cap dominance
Large cap dominance FORWARD P/E RATIOS FOR S&P INDEXES: (weekly) ‘S&P 400 / S&P 500 (May 1 6) S&P 600 / S&P 500 (May 1 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 Source: LSEG Datastream and © Yardeni Research. INTELLIGENT INVESTOR
Slide 12: Recent market performance
Recent market performance IIF
Slide 13: Dividends
Not the mainstay of a growth fund, but particularly valuable in a highly inflationary environment that’s reducing asset values Dividends Dividends for numerous stocks in the portfolio still haven’t recovered from Covid Dividend growth should be faster over time than the major index components and th
Slide 14: Is MinRes's mining services division the best, least well understood business on the ASX?
Is MinRes’s mining services division the best, least well understood business on the ASX?
Slide 15: Mineral Resources
$15bn business with incredible track record. Founder and CEO Chris Ellison’s 12% stake = ~$2bn. Mining services business to increase 3x over next five years. Misunderstood infrastructure business. The lithium and iron ore businesses are expected to increase 5x. Large oil and gas discovery could add
Slide 16: Mineral Resources
Lots of catalysts coming up. Decision on exporting gas from WA government. Sale of 49% of Onslow Iron Ore Haul Road should remove balance sheet concerns. Onslow Iron Ore production just started early. Lithium prices expected to improve. Mineral Resources (ASX:MIN)
Slide 17: Lithium charts
Lithium charts sabe . Lithium Carbonate Price Global demand for lithium-ion batteries will be over 3,100 GWh in 2030 Market demand for LiB by application [in GWh] onsored by PORTOFINO. RESOURCES INC. 1327 m ms INTELLIGENT INVESTOR
Slide 18: Is this the cheapest software stock on the ASX?
Is this the cheapest software stock on the ASX?
Slide 19: RPM Global Mining
SaaS Mining software Insider ownership 11% CEO Richard Mathews has done this before XECUTE shaping as another industry standard piece of software to support the flagship AMT software. Likely takeover candidate & Index inclusion Comparable companies acquired at nearly 30x EV/EBITDA. RPM trades at 12.
Slide 20: Valuation keeps falling with results
Valuation keeps falling with results Valuation is a fraction of similar businesses. IIF
Slide 21: There is always something to buy.
“There is always something to buy.” – Chris Cuffe
Slide 22: Intelligent Investor Australian Equity Growth Fund
Buy and sell at net asset value (NAV) just like a regular stock Ready-made portfolio Highly liquid; subject to ASX liquidity rules Intelligent Investor Same Intelligent Investor long-term approach Australian Equity Focus on high quality businesses Growth Fund Long-term holdings help minimise tax (AS
Slide 23: Secondary issue offer FAQ
When does the offer close? Q Closes 5 pm AEST Friday, 31st May 2024. What will the units be issued at? Q Units will be issued at the Net Asset Value price per unit as calculated at close on 31 May 2024. Secondary issue When is the allotment? offer FAQ Q Allotment date 6 June, Listing date 7 June (AS
Slide 24: Secondary issue offer FAQ
Does the fund pay dividends, and will they be franked? Q Yes. The Fund aims to pay half-yearly distributions. All applicable franking credits are passed onto the investor. The distribution comprises all realised capital gains and the Fund's income minus expenses and capital losses. Secondary issue Q
Slide 25: Questions? Comments? Please get in touch.
Questions? Comments? Please get in touch. Email [email protected] Phone 1300 880 160
Slide 26: Audinate
Created at the CSIRO Market size $1bn 13x the volume of next largest competitor 6% insider ownership Brokerage coverage increasing Audinate COVID recovery appearing in higher sales (ASX:AD8)
Slide 27: MA Financial
Used to be Moelis. Like a mini-Macquarie. Founded by executive vice-chairman and 23% shareholder Andrew Pridham Internal succession with co-CEOs Julian Biggins and Chris Wyke – 4% shareholders Morphing from boutique investment bank to asset manager MA Financial Much more scalable business that reduc
Slide 28: Pinnacle Investment Management
Founder/CEO Ian Macoun doing a terrific job Insider ownership over 20% FUM ~$105bn across 20 strategies One stop shop for managers with skin in the game Investors want independent managers Plenty of ways FUM can grow Pinnacle Investment Stock was a gift at $2.50 during the downturn Management (ASX:P
Slide 29: Frontier Digital Ventures
Owns (stakes in) 18 online property classifieds businesses Increasingly attaining 100% ownership Market Cap = $200m; Potentially worth billions. Insider ownership 20%; Founder/CEO is ex REA and iProperty Internet giant Naspers (via OLX) likely acquirer Property transactional market dwarfs advertisin
Slide 30: Looking back 17 years
Looking back 17 years Too focused on esoteric ideas Too focused on statistical cheapness - very stressful; difficult way to invest; not tax effective; Haven’t capitalised on huge winners Very painful given early identification Poor at letting winners run Too quick to dismiss and too slow to change o