L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (February 2021)
33 slides from L1 Long Short Fund's investor presentation, Feb 12, 2021
Slide 1: Investor update webinar invitation
For personal use only L1 Capital is holding an Investor Update on Friday 12 February 2021 at 11am (AEDT) where Mark Landau will talk through this presentation and address some investor questions. To join the webinar online, please click here to register.
Slide 2: L1 Long Short Fund Limited Investor Presentation February 2021
For personal use only L1 Long Short Fund Limited Investor Presentation February 2021
Slide 3: Overview
Overview For personal use only The L1 Long Short Fund performed very strongly in 2020. (LSF NTA +29.5%, ASX200 Accumulation Index +1.4%). The Board announced an interim dividend of 1.5 cents per share fully franked. After a year dominated by the pandemic and ‘top-down’ trends, we believe the s
Slide 4: Portfolio Positioning
For personal use only Portfolio Positioning
Slide 5: Performance Summary
Performance Summary For personal use only The Fund has had pleasing performance in both 2019 (+25.5%) and 2020 (+29.5%), driven by strong stock picking, despite enormous headwinds for ‘value investors’ like L1. Staying composed and investing rationally during the crisis has paid off, with very s
Slide 6: 2020 Recap
2020 Recap For personal use only The portfolio was very badly positioned for a global pandemic, given our skew to value and cyclical stocks (which were hit hard). In the crisis, we aggressively bought stocks and closed numerous shorts, taking advantage of a once-in-a-decade buying opportunity.
Slide 7: COVID-19: Vaccine success and global rollout
COVID-19: Vaccine success and global rollout The results of the western vaccine trials have been exceptional, with high efficacy and minimal side effects. For personal use only Efficacy for Efficacy for Company Type Size of Trial Infections Severe Disease Pfizer mRNA (2 dose) 43,000 95% 89%* Moderna
Slide 8: High conviction long positions
High conviction long positions For personal use only 1) News Corp (NWS) High quality set of growth businesses – REA, Realtor.com, WSJ, Digital book publishing. 50%+ upside to sum of parts of valuation. A$2b cash on balance sheet. Catalyst – Strong earnings growth ahead of consensus expectation
Slide 9: High conviction long positions
High conviction long positions For personal use only 4) Teck Resources (TECK – Canada) High quality, low cost, long-life coking coal, copper and zinc mines. Strong commodity price outlook due to limited supply response. Catalyst – Rising commodity prices, cost-out program designed to lower cok
Slide 10: Key Contributors (Past months: Nov – Jan)
Key Contributors (Past 3 months: 1 Nov – 31 Jan) Total For personal use only Company Name Return Comment Bed Bath & Beyond* +151% Continued positive operating momentum & imminent large scale buybacks. Short squeeze in January caused spike in share price. Exited our holding near share price peak in J
Slide 11: Key Detractors (Past months: Nov – Jan)
Key Detractors (Past 3 months: 1 Nov – 31 Jan) For personal use only Pleasingly, there were no stocks that detracted more than 1% over the past quarter. Key stock detractors included: Ferrovial (tollroads/airports) – shares fell due to COVID-19 second wave. Hudbay Minerals (copper) – profit taki
Slide 12: Portfolio Positioning – Gross and Net Exposure
Portfolio Positioning – Gross and Net Exposure For personal use only As at 31 January 2021 Gross Long Gross Short Net Exposure Australia/New Zealand 139% 66% 74% North America 31% 13% 18% Europe 30% 0% 30% Asia 9% 0% 9% Total 209% 79% 130% Higher than usual net long due to extreme central bank and
Slide 13: Market Observations
For personal use only Market Observations
Slide 14: Market Outlook
Market Outlook For personal use only Central banks are enacting the most extreme monetary stimulus on record. ─ Federal Reserve bought more Treasuries in 6 weeks than in the 10 years post GFC. ─ RBA conducting $100b of QE. Commitment to not raise rates until at least 2024. Massive pent up consum
Slide 15: Growth v Value – year extreme
Growth v Value – 50 year extreme Value stocks have endured the largest and longest period of underperformance on record. For personal use only COVID-19 caused a melt-up in high P/E stocks, as investors sought safety in “COVID-winners”. 200 Growth Outperforming The vaccine news triggered the earl
Slide 16: For personal use only
For personal use only Corporate Update
Slide 17: On-market buyback and interim dividend
Corporate Update On-market buyback to take advantage of share price discount to NTA. For personal use only The Company has bought back ~$71 million of LSF shares at an average price of $1.31 per share, representing ~7.6% of issued capital (as at 31 January 2021). Buyback has been highly effective,
Slide 18: Conclusion
Conclusion For personal use only The portfolio has performed very strongly in 2019 and 2020. Our detailed, bottom-up research has identified numerous companies with major underappreciated upside that should continue to drive portfolio performance. We believe the global vaccine rollout will unl
Slide 19: Q&A
L1 CAPITAL AlUO SSHeUOSJSECd JOS Q&A
Slide 20: Appendices
For personal use only Appendices
Slide 21: Portfolio Positioning
Portfolio Positioning For personal use only We see four main areas of compelling, asymmetric risk-reward opportunities at present. Monopoly or privileged assets with normalised dividend (or FCF) yields of 5-7% p.a. and growing. Monopoly real assets Further upside from buybacks/special dividends.
Slide 22: Theme 1: Monopoly Real Assets
Theme 1: Monopoly Real Assets For personal use only Ferrovial (FER – Spain) Chorus (CNU) Very valuable long dated toll road concessions in Monopoly owner of New Zealand’s world class Canada (407 ETR – 78 years left) and US (managed ultra-fast fibre broadband network (81%) and Monopoly network in
Slide 23: Theme 2: COVID-19 Hit Stocks
Theme 2: COVID-19 Hit Stocks For personal use only Star Entertainment (SGR) Safran (SAF – France) Owner of monopoly casinos in Sydney1, Brisbane, World’s highest quality aerospace company. Gold Coast. Global leader in manufacturing and parts for Monopoly narrow-body jet engines. real assets Ma
Slide 24: Theme 3: Depressed Commodities
Theme 3: Depressed Commodities For personal use only Teck Resources (TECK – U.S.) Hudbay Minerals (HBM – Canada) Owner of some of the world’s best quality copper, Mid-tier mining producer of copper concentrate coking coal and zinc mines, including majority of (containing copper, gold and silver)
Slide 25: Theme 4: Restructures & Demergers
Theme 4: Restructures & Demergers For personal use only CK Hutchison (0001 – Hong Kong) News Corp (NWS) High quality infrastructure conglomerate with Materially undervalued conglomerate including US$40b of U.S. power infrastructure, 50+ ports, digital real-estate portal, media, subscription vide
Slide 26: Strong Long Term Performance Across All L1 Capital Funds
Strong Long Term Performance Across All L1 Capital Funds For personal use only ZENITH AWARD Launched Long Short Fund (Strategy) (Melbourne) Long Short: Best ‘Australian Sep 2014 21.4% net return p.a. since inception (ASX200AI 6.8% p.a.).1 Equities – Alternative Returned over 25% p.a. in 5 out of
Slide 27: Net Performance of the Long Short Strategy (since inception)
Net Performance of the Long Short Strategy (since inception) For personal use only Long Short Strategy Performance (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
Slide 28: Significant Outperformance in Falling Markets (Net)
Significant Outperformance in Falling Markets (Net) (Since Inception of the Long Short Strategy) For personal use only Performance in “Down Market” Months Performance in “Up Market” Months (Average of 29 months) (Average of 47 months) 5.0% 2.9% 3.1% 3.0% 1.0% 0.0% -1.0% -3.0% -3.3% -5.0% L1 Long Sho
Slide 29: Downside Protection During Falling Markets (Net)
Downside Protection During Falling Markets (Net) (Since Inception of the Long Short Strategy) For personal use only In aggregate, during the 29 months that the market fell, the Fund was flat (while the ASX200AI was -95%), outperforming 86% of the time (25 out of 29 months). 8.0 5.8 5.5 4.2 3.9 3.4 2
Slide 30: Sector Contribution (Net)
Sector Contribution (Net) (Since Inception of the Long Short Strategy) For personal use only Strong performance across most sectors Materials 60.8% Communication Services 50.5% Industrials 42.9% Financials 21.2% Utilities 21.5% Real Estate 14.4% Consumer Discretionary 13.5% Energy 13.0% Consumer Sta
Slide 31: Contact
Contact For personal use only Investor Relations 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
Slide 32: Legal Disclaimer
Legal Disclaimer For personal use only Information contained in this presentation 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
Slide 33: 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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