L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (March 2020)
32 slides from L1 Long Short Fund's investor presentation, Mar 24, 2020
Slide 1: L1 Long Short Fund Limited March 2020
For personal use only L1 Long Short Fund Limited March 2020
Slide 2: COVID-19 has caused the fastest collapse in equity markets in 100 years
The COVID-19 global pandemic has caused the fastest collapse in equity markets in the last 100 years For personal use only ASX200 (or equivalent) price index during bear markets (20% peak to trough fall) rebased to 100 Typically a bear market of this magnitude would occur over a 52 week period (se
Slide 3: What is the likely impact of the COVID-19 pandemic on equities?
What is the likely impact of the COVID-19 pandemic on equities? For personal use only We expect the impact of the coronavirus outbreak will cause one of the largest negative shocks to global GDP on record. Ironically, China is best placed in the short-term economically, given it was hit first an
Slide 4: Portfolio Positioning – Gross & Net Exposure by Geography
Portfolio Positioning – Gross & Net Exposure by Geography For personal use only Gross Long Gross Short Net Exposure Australia/New Zealand 110% 81% 29% North America 27% 6% 21% Europe 12% 1% 11% Asia 16% 3% 13% Total 165% 92% 74% The market sell-off has been very extreme and indiscriminate in some
Slide 5: Fund performance since inception
Fund performance since inception (Since Inception of Long Short Strategy) For personal use only In the table below, we show the full performance history (net of fees) of the L1 Long Short Strategy since inception on 1 September 2014. Long Short Strategy Performance (Net %) Period Jan Feb Mar Apr* Ma
Slide 6: Market sell-off in Q1 2020
Market sell-off in Q1 2020 For personal use only We came into 2020 with a portfolio skewed more so to cyclical stocks that would perform well assuming a stable or improving global growth backdrop. The trade war and Brexit had finally been resolved and business confidence was improving. Between
Slide 7: Actions taken during the quarter to adjust for COVID-19 impact
Actions taken during the quarter to adjust for COVID-19 impact For personal use only We made a number of important changes to the portfolio early on to reduce our cyclical exposure and protect the portfolio generally. We exited a number of exposed or highly cyclical stocks, prior to them experie
Slide 8: Top long positions (in alphabetical order)
Top 10 long positions (in alphabetical order) For personal use only Alibaba (BABA US) Atlas Arteria (ALX) Brambles (BXB) Chorus (CNU) CK Hutchison (1.HK) Coles (COL) Iluka (ILU) News Corp (NWS) Tencent (700.HK) Visa (V US) We believe each of these stocks represents outstanding qu
Slide 9: Key Long Position – Alibaba (BABA.US)
Key Long Position – Alibaba (BABA.US) Alibaba is a dual listed (NYSE/HKEx) Chinese Internet company (US$483b market cap). For personal use only Alibaba has market dominant positions in Chinese eCommerce, logistics and cloud. It also has leading positions in food delivery, video streaming and Sou
Slide 10: Key Long Position – Charter Communications (CHTR.US)
Key Long Position – Charter Communications (CHTR.US) Charter Communications – US Listed (US$87b market cap). For personal use only HFC (mix of fiber and coax) wired network covering ~51m homes in the US (~40% of the country) selling pay TV, broadband, voice and mobile – free cash flow is primari
Slide 11: Key Long Position – Chorus (CNU)
Key Long Position – Chorus (CNU) Chorus has been one of the largest positions in the Long Short Strategy since inception in Sept 2014. For personal use only Chorus is the monopoly owner of the new ultra-fast fibre network across most of New Zealand (81%) and also owns 100% of the monopoly copper
Slide 12: Key Long Position – CK Hutchison (1.HK)
Key Long Position – CK Hutchison (1.HK) CK Hutchison – HK Listed (US$23b market cap). For personal use only Extremely high quality set of assets - US$40b+ of U.S. infrastructure assets, 51 ports, largest and fastest growing China pharmacy chain, large European telco & towers infrastructure, glob
Slide 13: Key Long Position – Coles (COL)
Key Long Position – Coles (COL) Coles was added to the portfolio due to the significant improvement in the competitive environment For personal use only observed in the Australian supermarket industry over the past year. Aldi’s decade long store roll-out strategy has slowed, price competitivenes
Slide 14: Key Long Position – News Corp (NWS)
Key Long Position – News Corp (NWS) NWS is dual-listed (ASX/NYSE) (Mkt Cap A$9b/US$5b). For personal use only NWS’ 61.6% stake in REA (A$6b) + A$2b net cash = A$8b (almost the entire NWS market cap). However, NWS also owns numerous large media, publishing & digital real estate assets globally
Slide 15: Key Long Position – Tencent (700.HK)
Key Long Position – Tencent (700.HK) Tencent is a HK-listed Chinese Internet Company (US$440b market cap) For personal use only Tencent is the Chinese market leader in mobile messaging (WeChat), games (40% mobile game share in China, and a leading global position - Fortnite, Clash of Clans), vid
Slide 16: Key Long Position – Vivendi (VIV.FR)
Key Long Position – Vivendi (VIV.FR) Vivendi (French Listed €23b market cap). For personal use only French music & media conglomerate - main asset is the world’s number 1 music label, Universal (UMG). UMG has 30% market share of global recorded music, which gives it enormous market power. Re
Slide 17: Other stocks we have been adding to that look oversold
Other stocks we have been adding to that look oversold For personal use only Karoon Energy share price Karoon Energy (KAR ASX) – Share price of 38 cents and cash backing of 70-75 cents (cash is held in USD adding further upside to cash level in AUD). – Proposed Brazil oilfield acquisition is unlik
Slide 18: Other stocks we have been adding to that look oversold (continued)
Other stocks we have been adding to that look oversold (continued) For personal use only NIB (NHF ASX) NIB share price – NIB likely to see profits improve significantly as a result of the pandemic. – Higher demand for private health insurance with significantly lower claims due to reduced demand f
Slide 19: Other stocks we have been adding to that look oversold (mining stocks)
Other stocks we have been adding to that look oversold (Mining stocks that look very oversold) For personal use only Teck Resources (TECK US) Teck share price – High quality diversified mining company with low-cost operations in coking coal, copper and zinc in safe jurisdictions (U.S., Canada, Chi
Slide 20: Addressing the Discount to NTA
Addressing the Discount to NTA For personal use only L1 management and the Board of LSF are disappointed by the expansion of the discount to NTA over recent months Our focus is to substantially reduce the current discount and over time see the shares trading roughly in-line with NTA. The initi
Slide 21: Appendices
For personal use only Appendices
Slide 22: Fund Performance (2019)
Fund Performance (2019) For personal use only The Fund delivered strong performance in 2019 (+26%) These returns have been achieved despite: – maintaining a modest net long position (typically 50-60%) – the continued huge outperformance of ‘growth’ versus ‘value’ stocks – no portfolio benefit from
Slide 23: Attribution breakdown
Attribution breakdown For personal use only Fund attribution Calendar Year 2019 Past quarter - Long 35.4% -14.4% - Short -9.9% 2.1% Total (Gross) 25.5% -12.3% - Domestic 18.6% -5.0% - International 6.9% -7.3% Total (Gross) 25.5% -12.3% All data current as at 29 February, 2020. The past quarter is th
Slide 24: Stock attribution by calendar year since inception
Stock attribution by calendar year since inception For personal use only The largest contributors to portfolio performance in each calendar year and since inception CY 2014 CY 2015 CY 2016 CY 2017 CY 2018 CY 2019 CYTD 2020 SINCE INCEPTION (Inception Sep-14 to Dec-14) (Jan-20-Feb-20) (Inception Sep-1
Slide 25: Monthly Performance
Monthly Performance (Since Inception of Long Short Strategy) For personal use only True alpha generation (115% of the net return has been alpha) Long Short Fund (%) S&P/ASX200 Accumulation Index (%) 10.0 6.0 2.0 -2.0 -6.0 -10.0 JAN-16 AUG-16 APR-17 JAN-15 AUG-15 MAY-17 OCT-17 MAR-17 APR-16 SEP-16 FE
Slide 26: Downside Protection During Down Markets
Downside Protection During Down Markets (Since Inception of Long Short Strategy) For personal use only In the 27 months that the market fell, the Fund returned +23% (vs ASX200AI -71%) Long Short Fund (%) S&P/ASX200 Accumulation Index (%) 10.0 8.1 5.8 5.5 6.0 4.2 3.9 3.5 2.8 2.6 2.5 2.4 2.1 1.9 2.0 1
Slide 27: Positive Returns in Rising and Falling Markets
Positive Returns in Rising and Falling Markets (Since Inception of Long Short Strategy) For personal use only One of the only Long Short Funds in Australia to deliver positive returns in both rising and falling markets Performance in “Down Market” Months Performance in “Up Market” Months (Average of
Slide 28: Sector Contribution
Sector Contribution (Since Inception of Long Short Strategy) For personal use only Strong positive returns across every sector Materials 33.9% Industrials 23.6% Telco Services 17.0% Utilities 13.0% Energy 11.2% Consumer Disc. 9.8% Consumer Staples 9.0% REITs 7.3% Div. Financials 5.4% Health Care 5.0
Slide 29: Strong long-term performance across all L1 Capital Funds
Strong long-term performance across all L1 Capital Funds L1 Capital managed funds (Melbourne office) For personal use only ZENITH AWARD Long Short: Best ‘Australian Launched Long Short Fund (Strategy) Equities – Alternative Sep 2014 16.2% net return p.a. since inception (5 years)1 Strategies’ 2017
Slide 30: Contact
Contact For personal use only Investor Relations Wayne Murray Phone + 61 424 300 003 Email [email protected] Alex Ordon Phone +61 413 615 224 Email [email protected] AFSL 314 302 L1 Long Short Fund Limited 30
Slide 31: Legal Disclaimer
Legal Disclaimer For personal use only Information contained in this presentation The opinions, advice, recommendations and other information contained in this publication, whether express or implied, are published or made by L1 Capital Pty Ltd (ABN 21 125 378 145), Australian Financial Services Lic
Slide 32: 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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