Cadence Capital Limited returned a negative gross performance of 1.4% in November, compared to the All Ordinaries Accumulation Index which was up 6.4% for the month. Year to date the fund is up 6.3%, compared to the All Ordinaries Accumulation Index which is up 13.4% for the same period. The top contributors to performance during the month were BHP Group, AMP, Tietto Minerals, Syrah Resources, Bellevue Gold and Renascor Resources. The largest detractors from performance were Fortescue Metals Group, New Hope Corp, Taiwan Semiconductor Manufacturing, Whitehaven Coal and NVIDIA Corp.
Equity markets continued their rally into November on the back of lower-than-expected inflation data released in Australia and the US. While still at a historical high level, we saw the Australian Bureau of Statistics report CPI of 6.9% in October, down from 7.3% in September and below the expected reading of 7.4%. The fund’s performance for November was impacted by a sell-off in thermal coal equities, short positions which rallied, and its high cash balances.
The funds exposure to coal over the past 12-18 months has led to good returns for the fund, however over the last month the thermal coal price has potentially broken trend, with an intra month fall from $420 to $300. Subsequently coal equities, such as Whitehaven Coal, fell nearly 30% from their peak, and in line with our process we reduced the size of these positions. While we have partially added to these positions as the thermal coal price has partly recovered, our exposure to these companies remains significantly lower than a month ago as we assess whether the longer-term trend remains intact or is broken. The main detractors across the fund’s short positions were related to the earlier than anticipated re-opening of China, in particular iron ore equities which rallied strongly through the month. These positions have been reduced or exited.
There have been several new additions to the portfolio across both the resources and industrials sectors in recent weeks. We have added to our positions in copper and gold producers Capstone Copper and Bellevue Gold as well as investments in other specialty markets such as graphite and manganese. We are also finding opportunity in turnaround situations in consumer related sectors such as Domino’s Pizza, A2 Milk and City Chic Collective.
CDM AGM and Investor Briefing
Cadence Capital Limited 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.
* 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
Karl Siegling has recently been interviewed on the following shows, all of which all can be watched or listened to:
- Andrew Geoghagen interviews Karl Siegling on Ausbiz – 02 Dec 2022 (Click here to watch);
- Andrew Geoghagen interviews Karl Siegling on Ausbiz – 18 Nov 2022 (Click here to watch);
- Alan Kohler Interviews Karl Siegling for Eureka Report (Click here to listen);
- James Whelan interviews Karl Siegling on the BIP show (Click here to listen); and
- Lelde Smits interviews Karl Siegling at TCN’s Emerging ASX Gems Investment Conference (Click here to watch).
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.