L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (November 2022)
36 slides from L1 Long Short Fund's investor presentation, Nov 10, 2022
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, November 10 at 11am (AEDT). ABN 21 125 378 145 | AFSL 314 302 Please click here to register to join t
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 November 10, 2022
Slide 3: Performance summary
For personal use only 1 Performance summary
Slide 4: Performance summary
Performance summary The LSF portfolio has delivered strong absolute and relative 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 31 Oct 2022 (%) portfolio Index (AUD) Index (USD) Fund Index (USD) 3 months 2.5
Slide 5: Stock contributors and detractors
Stock contributors and detractors Calendar year to date For personal use only Company name Company news Cenovus ✓ Strong operational performance and low all-in cost structure supporting rapid de-gearing at prevailing oil prices. Chorus ✓ Improved regulatory certainty and good execution leading to st
Slide 6: Market review
For personal use only 2 Market review
Slide 7: Market review: surge in inflation and aggressive monetary policy
Market review A surge in inflation has led to the most aggressive monetary policy response in 40 years For personal use only Inflation has surged… leading to aggressive rate rises… and a withdrawal of liquidity. U.S. CPI Change in Federal Funds Rate 6m change in Central Bank balance sheets ($b) 30 J
Slide 8: Market review: sharp correction in asset values
Market review Higher interest rates and a withdrawal of liquidity has caused a sharp correction in asset values For personal use only Largest sell off in equity indices since March 2020 Collapse in bond markets Major global equities indices performance (3 years to 31 Oct 2022) Bloomberg global aggre
Slide 9: Market outlook
For personal use only 3 Market outlook
Slide 10: Equity markets likely to remain difficult and volatile
Market outlook Equity markets likely to remain difficult and volatile For personal use only Equities backdrop: March 2020 – March 2022 Equities backdrop: Current ▪ Incredibly attractive valuations ▪ Full valuations ▪ Corporate earnings likely to beat expectations ▪ Corporate earnings unlikely to bea
Slide 11: The Fed is unlikely to pivot in the near-term
Market outlook The Fed is unlikely to ‘pivot’ in the near-term For personal use only “We are taking forceful and rapid steps to moderate It’s very premature in my view to think about, or be demand so that it comes into better alignment with talking about, pausing our rate hikes. supply, and to keep
Slide 12: U.S. economic indicators are flashing red
Market outlook U.S. economic indicators are flashing red For personal use only 30-year mortgage rates are now over 7% Yield curve inversion implies a U.S. recession is likely U.S. 30-year fixed mortgage rate U.S. yield curve (2s10s) 8% 4% 7.1% 7% 3% 2% 6% 1% 5% 0% 4% -1% 3% 3.1% -2% 2% -3% 1975 1980
Slide 13: The investment playbook of the last decade is unlikely to work
Market outlook The investment playbook of the last decade is unlikely to work going forward For personal use only Markets over the last decade: Markets going forward: ▪ Benefited from interest rates falling to near-zero, ▪ Higher interest rates and higher inflation. low bond yields, low inflation. ▪
Slide 14: LSF advantages
For personal use only 4 LSF advantages
Slide 15: Three enduring advantages
Portfolio tools Three enduring advantages For personal use only LSF has a number of key advantages over many other funds: Market exposure Shorting International Adjust portfolio net long to Able to profit from Exploit research reflect the risk-reward of both rising and falling insights offshore, not
Slide 16: Downside protection
Downside protection The strategy has protected our investors’ capital in falling markets For personal use only Performance in ‘down market’ months Performance in ‘up market’ months (Average of 37 months) (Average of 61 months) 5.0% 3.0% 3.0% 2.5% 0.0% -0.4% -2.5% -3.3% -5.0% Long Short Strategy Retu
Slide 17: LSF positioning
For personal use only 5 LSF positioning
Slide 18: Portfolio skewed to lower P/E stocks with strong cashflow
LSF positioning The portfolio is skewed to lower P/E stocks with strong cashflow generation For personal use only Low P/E firms trade at a 59% discount to the market ▪ Low P/E stocks are far better value than high P/E stocks (see charts). (13% below 20-year Average) -30 ▪ High P/E stocks remain very
Slide 19: Short book has been a strong positive contributor
LSF short positioning – Past 12 months Short book has been a strong positive contributor to performance For personal use only Late 2021 Mar/Apr 2022 Aug 2022 to present COVID ‘winners’ U.S. retail Transport & Logistics ▪ COVID gave a one-off boost to sales/EPS. ▪ Slowing sales & surging inventory le
Slide 20: Four key portfolio themes
LSF positioning Four key portfolio themes – Compelling, asymmetric risk-reward For personal use only China re-opening Resources Sports betting Cash machines ▪ China set to re-open over ▪ Copper & oil shares have ▪ Sector under pressure ▪ Low P/E stocks, with the coming 6 months. fallen since June on
Slide 21: China re-opening
China re-opening Chinese travel and consumer-related stocks will see a surge in operating trends For personal use only ▪ Many market commentators believe China will remain in harsh lockdowns indefinitely. Key positions ▪ Chinese aviation activity is incredibly depressed (domestic -50%, international
Slide 22: Copper: the forgotten play on electric vehicles
Resources Copper – The forgotten play on electric vehicles For personal use only ▪ Copper price has fallen close to ~30% CYTD on rising global recession fears. ▪ However, physical copper inventories are incredibly tight (see chart below right). Key positions ▪ Medium term copper fundamentals remain
Slide 23: Energy: structural under-investment suggests high oil prices
Resources Energy – Structural under-investment suggests a prolonged period of high oil prices For personal use only ▪ Oil market set to become increasingly tight: ̶ Demand has recovered quickly to above pre-COVID levels (+ China potential re-opening). Key positions ̶ U.S. strategic petroleum reserve
Slide 24: U.S. sports betting
U.S. sports betting One of the most exciting, high growth industries globally For personal use only ▪ U.S. sports betting/iGaming industry set to grow 18% p.a. to 2030. Key positions ▪ Major inflection point in 2023 – underlying profitability will finally become apparent. ▪ Leveraging Australian and
Slide 25: Cash machines
Cash machines High quality companies with exceptional cash generation potential For personal use only Compelling risk-reward to buy companies that have: Key positions ▪ Enormous cashflow generation ▪ Conservative balance sheets ▪ Strong industry positions ▪ Attractive valuations ▪ Proven management
Slide 26: Summary
For personal use only 6 Summary
Slide 27: Summary
Summary For personal use only 1 We expect a major rotation in sector leadership to ‘old economy’ sectors (and away from growth, yield and momentum stocks). 2 Despite our cautious macro view, we believe the recent sell-off has been quite erratic and is providing us with a better than usual set of lon
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 For personal use only Business Overview London ▪ Founded in 2007 Since 2017 UK Residential Property ▪ Circa A$5b FUM ▪ Investment professionals in 5 locations globally New
Slide 31: L1 Capital Funds: investment excellence
L1 Capital Funds Investment Excellence – Outstanding performance since inception across all strategies For personal use only Long Short Fund Global Opportunities International Equities net return S.I. net return S.I. 19.7% p.a. (ASX200AI 6.8% p.a.)1 32.9% p.a. net return p.a. S.I.3 9.7% p.a. (MSCI W
Slide 32: Competitive Edge
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 industry and macro research
Slide 33: Monthly performance, strategy returns
L1 Long Short Fund Limited Monthly performance, strategy returns (Net, %) For personal use only 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 Best performing long sh
Slide 34: Important information
Important information L1 Long Short Fund Limited For personal use only Disclaimer This communication has been prepared for L1 Long Short Fund Limited (ACN 623 418 539) by its investment manager, L1 Capital Pty Ltd (ABN 21 125 378 145 and AFS Licence 314302). L1 Capital Pty Ltd has prepared this publ
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 Matthew Leung Edward Vine Inv
Slide 36: 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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