05 Dec 2014
(Full PDF Report available here)
The Cyan C3G Fund retraced a modest 0.6% after all fees in November despite the Australian market enduring a torrid month, punctuated by some disappointing outlook statements through the AGM season and free-falling commodity prices, including oil which fell 20%.
The All Ords Accumulation dropped 2.4% with the Small Ords Accumulation suffering a painful 3.8% drop.
The C3G Fund has now been invested for over 4 months and has outperformed the Small Ords Accumulation Index by 8.5% during the period.
THE CYAN C3G PORTFOLIO
Some of the investment decisions contributing to our performance through November and positioning the Fund for the months ahead.
Our IPO investment in organic baby-food producer Bellamy’s Organic (BAL) continues to be one of the C3G Fund’s top performers, rising a further 14% in November. At its AGM in late October the company reiterated its early success in respect to sales into China and further range expansion into Costco. Despite recent rise, we fully expect the broader market to further appreciate the strong pipeline of growth and continue to support the share price.
Our existing position in M2 Communications (MTU) was given a boost with the stock rising 5% in the month after the company conducted an upbeat strategy day (which Cyan attended) detailing solid trading conditions and updating the market on its plans for the expanded roll-out of the Dodo broadband and energy retail businesses.
Cloud software licensing business Rhype (RHP) successfully conducted a $25m capital raising to fund the acquisition of consulting business nSynergy that is expected to further improve both the company’s sales and margins.
Whilst we have seen many IPO’s including eCargo, Greens Foods, Godfreys, Lovisa and SurfStich, it is only fashion accessory business Lovisa that has met our stringent investment criteria.
It has been beneficial that we have taken a conservative approach to the Fund’s investments and have avoided numerous market blow-ups in the past few months.
Our “C Class” positions, which are classified as cash and highly cash generative companies, represented nearly 70% of the C3G Fund at month’s end.
November was clearly tough and December has started horrendously with the market (largely the resources sector) falling more than 4% in the first couple of trading days.
Pleasingly for us, this market route provides a cashed up fund like the C3G Fund to deploy funds at increasingly attractive levels.
As always this will be done in a diligent and considered manner in order to continue to provide our investors with solid, sustainable investment performance.
Please download our November newsletter here for further information.
Dean Fergie & Graeme Carson
Cyan Investment Management
AFSL No. 453209