13 May 2015
The Cyan C3G Fund has now returned 21.1% (after all fees) in the nine months since inception to 30 April 2015.
Download the full report here: Cyan C3G Monthly April 15.
Over the same period the Small Ordinaries Accumulation Index has returned just 1.7% and the All Ordinaries Accumulation Index 7.2%. Importantly, we have verified our objective ofdelivering this above average return with significantly lower volatility than the market indices. To date it has been a true ‘win-win’ for investors in the Fund.
THE CYAN C3G PORTFOLIO
Some of our key positions within industry sectors have been getting plenty of attention of late. These have included:
Telecommunications: We hold a number of promising and proven positions at the smaller end of the information technology and telecommunications sectors which have sparked quite a bit of interest of late. No doubt this has been fuelled to some extent by the bigger companies that made headlines in April. Most relevant for Cyan has been the takeover battle for iiNet (IIN)between TPG Telecom (TPM) and M2 Communications (MTU). The C3G Fund owns both MTU and IIN and has clearly benefitted from this specific corporate activity.
Consumer: Industries reliant on consumer spending are always subject to thorough analysis and are often a topic of great debate particularly in an economic environment that is experiencing conflicting factors such as falling interest rates, weak economic growth, low inflation and a volatile currency.
Our Fund is exposed to a range of consumer businesses of both defensive and cyclical nature. That said, our favourites are Bellamy’s Organic (BAL), Lovisa (LOV), AMA Group (AMA) and Vita Group (VTG), all of which possess growth avenues beyond the vagaries of economic cycles and which have been performing particularly well in these challenging conditions.
Financial Services: The most recent market pullback has seen investor sentiment towards this sector waver somewhat. However we expect some emerging companies will offer ongoing growth through investment cycles such as Blue Sky Alternatives (BLA), Praemium (PPS) and Money3 (MNY).
We continue to hold the view that the market is expensive on a broader basis. For that reason we still have a relatively high cash balance whilst continuing to look for company specific opportunities. We reiterate our current strategy, based on the following key themes:
Invest in quality – weight the portfolio towards proven companies generating high return on equity and redeploying capital back into their own business.
Invest in companies that earn through the cycle – these include a number of positions in the financial services, telco and healthcare sectors.
Invest in companies with specific growth drivers – these include those exposed to structural changes within industries, growing market share or with significant geographic expansion plans, either organically or through acquisition.
Avoid high risk and volatile sectors – including any direct resources exposure, highly leveraged businesses or unproven business models.
Deploy a portion of our high cash balance to build opportunistic positions as we identify them – corporate activity and new IPO activity remain buoyant and we are spending much of our effort exploring and researching new investment opportunities.
We look forward to keeping our investors updated with the Fund’s progress.
Download full report here: Cyan C3G Monthly April 15
Graeme Carson and Dean Fergie
Cyan Investment Team