Cadence Opportunities Fund returned a gross performance of 2.5% in April, compared to the All Ordinaries Accumulation Index which was up 3.6% for the month. The fund has had a good start to the second half of the financial year returning a gross performance of 5.0% outperforming the index by 4.8%. This 4 month period (January to April) was a highly volatile period with the All Ordinaries Accumulation Index moving in a 15% range, which unsettled investors.
As we write this newsletter CDO is trading at a pre-tax NTA discount of 17% whilst holding a high cash balance. Excluding cash the share portfolio of CDO can be bought at a 22% discount to its underlying value. The current portfolio can be purchased for 83 cents in the dollar. At these discounts the Company will be buying back its own stock in the CDO on-market buy-back program.
Recent market moves have created both trading and core investment opportunities with several new positions in the portfolio. The portfolio will be discussed in detail in the upcoming Quarterly webcast which will be released next week.
The top contributors to performance during April were Netflix, Evolution Mining, Echo IQ, Solvar, Turaco Gold and Boss Energy. The largest detractors from performance were Amplitude Energy, Regal Partners and Metals X.
Evolution Mining rose 15% during April. This was due to an increase in gold price which was up 3% during the month, as well as good operational performance. In the March quarter Evolution achieved record operating mine cash flows of $600m and provided guidance of $705m for the June quarter assuming the gold price stays around current levels. Evolution also announced that the board has approved the extension of open pit mining at Cowal which extends the operation by 10 years to 2042.
Netflix released their first quarter results during April. Revenue of USD10.5b and operating income of USD3.3b were ahead of guidance. Netflix also provided better than expected second quarter guidance for revenue of USD11.0b and operating income of USD3.7b. We continue to believe that Netflix has excellent economies of scale. As the market leader in subscription video streaming Netflix can provide a large range of quality movies and TV shows at an appealing price, which should drive continued subscriber and profit growth for many years to come.
Fully Franked Half-Year Dividend
On 30 April the Company paid its 6.5 cents per share fully franked interim dividend. This interim dividend equated to an 8.0% annualised fully franked yield or a 11.4% gross yield (grossed up for franking credits) based on the share price on the date that this dividend was paid of $1.62 per share. After paying this dividend the Company has around 13.5 cents per share of profits reserves to pay future dividends.
Fund NTA
Fund Performance
Historic Portfolio Exposure
Portfolio Sector Analysis
Portfolio Market Capitalisation Analysis
Franked Dividends Declared
After paying the recent interim dividend the company has around 13.5 cents per share of profits reserves to pay future dividends.
News
To watch CDO’s Half-Year Webcast please click here. In this half year webcast, Karl Siegling first discusses the Company’s half year results, its 6.5c fully franked interim dividend, the current composition of the portfolio and some of the Company’s recent trading investments. He then gives some feedback from the recent reporting season, where he discusses price earnings expansion in some detail, before looking into the Company’s investments in the gold sector and giving an update on some of Australia’s other main resources. Karl finishes off by giving an update on the third quarter and the outlook for the rest of the year.
To view all previous Cadence webcasts and interviews please visit the Media Section of the website.
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.
