07 Aug 2015
The Cyan C3G Fund had a magnificent July, rising 5.1% and taking the return for the 2015 calendar year thus far to 22.3%; and the return to investors, since inception, to 28.5%. This compares extremely favourably with the Small Ordinaries Accumulation index that has returned 1.6%, 4.6% and -2.5% respectively.
Please download our newsletter here: Cyan Monthly July 15
Unit Prices available here: CyanC3GUnitPrice
JULY PERFORMANCE
The strong result this month was driven by performances in long-term holdings in the Fund including: AMA Group (AMA), Bellamy’s (BAL), Blue Sky (BLA), Freelancer (FLN) and Vita Group (VTG). All these investments contributed between 0.5% and 1% to the Fund’s monthly performance.
A couple of other positions that have contributed to the Fund’s excellent performance.
Speedcast (SDA) is a stock we have held since it floated last year at $1.96. Speedcast is now capped at over $400m and provides pan-Asian satellite communications to a wide range of industries including: resources, maritime, enterprise, telecommunication and government clients. Since listing the company has made a number of attractive bolt-on acquisitions including the $12m bargain-basement purchase of the teleport assets and satellite services from the recently delisted NewSat (NWT).
Yowie (YOW) is a stock we have held for a few months in the emerging (E Class) section of the Fund. Yowie is the producer of a children’s confectionary similar to Ferrero’s wildly successful Kinder Surprise (2bn+ units sold annually). Over the past 12 months, Yowie has been trialling and is now successfully rolling out its loveable chocolaty products through major US chains such as Wal-Mart (4300 stores), Safeway & Walgreens along with other regions such as the Middle East.
A recent capital raising has fattened the company’s balance sheet to over $10m in cash. And whilst Yowie is still in its early stages of growth, selling confectionary to Americans does not appear to be the hardest task in the world and we expect some tasty profits if the roll-out is executed effectively.
Over the month the Fund also benefited from the IPO of global lending and asset management business Pepper (PEP) that came on at the premium of 27%. We also made a small short-term investment in Kina Securities (KSL) that listed at an excellent premium of 34% to its IPO price.
Fortunately there were only two stocks that pulled back of any significance in July being radiology business Capitol Health (CAJ) and skydiving business, Skydive the Beach (SKB). Both of these stocks fell less than 6% and as such the contribution to the Fund’s overall performance was not material.
OUTLOOK
August has already started out well with one of our larger positions, Freelancer (FLN), releasing a result comprising 40%+ revenue growth in the six months to 30th June 2015. In addition, two of the company’s founders (Simon Clausen and Matt Barrie) sold down a small portion of their shares to cornerstone institutions in addition to raising a relatively small amount of capital ($10m) for potential acquisitions. In recognition of the stock-market’s growing interest in the company, the sell-down and placement were massively oversubscribed and the stock has traded strongly in the aftermarket.
Looking forward, we reiterate our current investment strategy, based on the following key themes:
Invest in companies not markets
Focus on quality
Avoid high risk and volatile sectors
Target companies that earn through the cycle
Look for companies with specific growth drivers
Deploy a portion of our high cash balance to build opportunistic positions as we identify them
We are obviously extremely pleased with how the C3G Fund has performed since inception and we look forward to keeping our investors updated with the Fund’s progress.
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Monthly Fund Performance (after all fees)
