INVESTMENT UPDATE
JUNE 2022
INVESTMENT UPDATE
JUNE 2022

Cadence Capital Limited ended the financial year with the fund down 3.3%, outperforming the index by 4.1%. Over the past two years the fund is up 17.7% per annum, outperforming the All Ordinaries Accumulation Index by 7.9% per annum. The fund was down 9.8% in June, compared to the All Ordinaries Accumulation Index which was down 9.4% for the month. The top contributors to performance during the financial year were Whitehaven Coal, TMC The Metals Company, New Hope, Upstart Holdings, DigitalOcean Holdings and Asana. The largest detractors from performance were Resimac Group, Bed Bath and Beyond, Nitro Software, Peabody Energy, Betmakers Technology and Sofi Technologies.

Global financial markets continued their downward trend through June, with the S&P 500 and NASDAQ falling 8.4% and 8.7% respectively. The ASX ended its run of outperformance versus its international peers, falling 9.4% over the month as the big 4 banks and the major miners, which had previously been resilient, broke lower. For context, the ASX Financials and ASX Resources sectors fell 11.9% and 10.6% in June respectively. The question for markets is, how does the global economy continue to grow in the face of rising inflation, slowing demand and rising interest rates.

The portfolio’s high exposure to energy, which has delivered strong returns for the fund YTD, was a meaningful detractor from performance during the month. In the US, the energy sector fell 20.6%. Also contributing to falls was the surprise introduction by the Queensland Government of additional royalties on coal profits from 1st July.

Whilst energy companies remain fundamentally cheap, the fund has reduced exposure to these areas in line with its process and cash levels have continued to build (currently 70% cash and cash equivalents). Short positions performed well through the month and the fund’s short exposure continues to grow. In particular, the fund has added several new shorts in the resources sector and other cyclical sectors such as shipping and agriculture.

Year-end Audiocast

Over the coming weeks we will be releasing our year end audiocast which will give an update on the Company’s performance, the portfolio’s composition, its current investment themes and holdings, and the outlook for the coming year.

Fund NTA

Fund Performance

* Gross Performance: before Management and Performance Fees

Fully Franked Dividends Declared Since Listing

* Off market equal access buy back

Historic Portfolio Exposure

Portfolio Sector Analysis

Top 20 Portfolio Positions

Portfolio Market Capitalisation Analysis

Recent News

As the portfolio has changed substantially over the past 6 months we recommend that you watch the  March 2022 Quarterly Audiocast. In this audiocast Karl Siegling firstly provides an update on the Company’s performance, fully franked interim dividend, portfolio composition and the funds current cash levels. Charlie Gray and Jackson Aldridge then discuss some of the company’s investment themes and its positions held in AGL, AMP and 5 coal stocks. Karl Siegling finishes with an update on the outlook for 2022.

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 Cadence investment process. To view all previous Cadence webcasts and press articles, please visit the Media Section of the website.

10 Books To Read Before Buying Your Next Stock

10 Books To Read Before Buying Your Next Stock

Funds management involves a lot of synthesis of information and reading. Over the years we all end up reading many investment books and refer to them from time to time.

The team at Cadence has compiled a list of books that have influenced our investment style, or helped provide insight into the investment process.

Whilst not an exhaustive list, the 10 titles contained in this eBook provide a good starting point for any interested investor.

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