Cadence Opportunities Fund returned a positive performance of 7.1% in January, compared to the All Ordinaries Accumulation Index which was up 6.4% for the month. The top contributors to performance during the month were Patriot Battery Metals, Capstone Copper, BHP, Stanmore Coal, Citi Chic Collective, Lynas and Retail Food Group. The largest detractors from performance were Sayona Mining, New Hope Corp and Health and Happiness International.
After declining through December, global equity markets had a strong start to the new year in January. The ASX All Ordinaries Index is now 1% away from all-time highs, whereas the S&P 500 is still 13% below, and the tech-heavy NASDAQ remains 24% off its highs. The Australian market has outperformed many of its international peers over the past year owing to its large weightings towards resource companies such as BHP and Rio Tinto which have performed very well, as well as ‘value’ style blue-chips such as the major banks which have been resilient.
For the fund, the top performers through the month were mainly resources related positions which meet our core criteria. Stock specific announcements from Patriot Battery Metals, which is proving up the world-class Corvette deposit in Canada, and Capstone Copper, which is on track to increase copper production by 60% in the next 18 months, aided stock performance. Consumer turnaround Citi Chic Collective rebounded following Brett Blundy’s BB Capital taking a stake in the company while Retail Food Group rallied following settlement of its long-standing dispute with the ACCC.
The detractors for the month were mainly short positions and thermal coal related equities. The fund has decreased its thermal coal exposure significantly in recent months which has reduced the impact to portfolio performance from recent falls. While these stocks continue to trade cheaply (WHC on 2.5x PE, NHC on 3.5x PE at current coal prices), the trend change in the thermal coal price has been significant (moving from US$450 to US$250 a tonne). Resource companies are highly leveraged to their underlying commodity and will ultimately follow its trend. Elsewhere, Hong Kong listed stocks such as Health and Happiness International consolidated its recent gains after performing well for the fund in recent months.
Fully Franked Half Year Dividend
On the 3 February the Board declared a 7.5 cent fully franked half-year dividend. This interim dividend equates to a 6.5% annualised fully franked yield or a 9.2% gross yield (grossed up for franking credits) based on the share price on the date of the announcement of $2.32 per share. CDO shares have been trading closer to its NTA, so shareholders currently do not need to pay a large premium for its shares.
After paying this dividend the Company still has 36 cents per share of profits reserves to pay future dividends. The Ex-Date for the dividend is the 14 April 2023. The payment date for the dividend is the 28 April 2023.
The Dividend Re-Investment Plan (“DRP”) is in operation for the half-year dividend. The issue price will be at a 3% discount to the weighted average of the prevailing share price over the relevant DRP pricing period.
Half Year Audiocast
In the coming weeks we will be releasing the half-year audiocast which will give an update on the Company’s performance, its portfolio composition, some of its current investment holdings and the outlook for the rest of the year.
Fund NTA
Fund Performance
Historic Portfolio Exposure
Portfolio Sector Analysis
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News
Portfolio manager Jackson Aldridge was recently interviewed:
- Nadine Blayney interviewed Jackson Aldridge on Ausbiz – 6 January 2023 (Click here to watch)
- Nadine Blayney interviewed Jackson Aldridge on Ausbiz – 20 January 2023 (Click here to watch)
- Nadine Blayney interviewed Jackson Aldridge on Ausbiz – 27 January 2023 (Click here to watch)
To view all previous Cadence webcasts and interviews please visit the Media Section of the website.
Cadence Opportunities Fund held its AGM and Investor Briefing on the 16 November 2022. Karl Siegling started the Investor Briefing by giving an update on the performance of the funds, discussed the changes in the portfolio and talked about some important changes in market trends. Karl Siegling, Jackson Aldridge and Charlie Gray then discussed a number of current long and short positions in the funds. Karl Siegling closed with the outlook for 2023. Click here to view this Investor Briefing.
We encourage you to visit our 52 books you should read before buying your next stock page on our website. We have compiled a list of books/ documentaries that have influenced our investment style or helped provide insight into the investment process.
