Cyan C3G Fund Newsletter – 31 December 2014

18 Jan 2015

The Cyan C3G Fund performed well in December, delivering growth of 3.8% after all fees.  This was especially pleasing given December was yet another volatile month with the Small Ords Index down 6.0% at the mid-point before recovering to close flat for the period.

The Fund has now been invested for 5 months and has outperformed the Small Ords Accumulation Index by 11.8% since inception.

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Some of the positions and investment decisions impacting our December performance include:

  • We continue to be rewarded for our core portfolio holding in telco retailer Vita Group (VTG). The company issued a trading update with increased earnings guidance for the 6 months to December, resulting in a 23% share price rise.
  • Having monitored the company in recent months, we took our first position in diagnostic imaging consolidator Capitol Health (CAJ). The company announced a substantial acquisition in NSW resulting in share price appreciation of 33% from our entry point. We believe the acquisition-led structural play in the radiology industry is still in its infancy.
  • We participated in the IPO of jewellery retailer Lovisa (LOV) and added to the position on the first day of listing. At month’s end the stock had risen 17% from its issue price.
  • After a very strong performance in November, baby food producer Bellamy’s Organic (BAL) was suffering share price weakness before it too released increased earnings guidance mid-month. The company said that its improved market share in Australia and early success in China will result in FY15 sales and profit to be 20% ahead of its prospectus forecasts.