16 Oct 2017
The Cyan C3G Fund delivered another excellent return of 3.2% in September. This latest result continues the positive start to the FY17/18 year with the Fund already having posted a 9.3% gain for investors (after all fees).
Again, The C3G Fund’s return was well ahead of both the 0.1% gain in the ASX All Ordinaries Accumulation Index and the 1.0% delivered by the ASX Small Industrials Accumulation Index. This has seen the Fund’s return exceed all comparable ASX indices by well over 15% p.a. since inception.
Full report: Cyan Monthly Sept17
September highlights included:
Kelly Partners Group (KPG) – https://kellypartnersgroup.com.au/ This recently listed accounting group has a strong corporate structure, clear growth strategy and an impressive management team that is strongly incentivised to deliver on its ambitions. The stock price rose 12% in September but the company remains attractively priced and we remain confident it will be more than twice its current size in the next few years.
Skydive the Beach (SKB) – https://www.skydive.com.au/ We have mentioned this company numerous times as it has been a holding of ours since it listed in early 2015. After a period of benign share price performance (the SKB shareprice has more-or-less not changed over 12 mths), it rose 16% in September. A further acquisition and associated capital raising has just occurred which is increasing its position as a clear leader in the adventure travel industry.
PSC Insurance (PSI) – http://www.pscinsurancegroup.com.au/ The Fund has also had a long-term investment in this insurance services business. A strong result for 2HFY17 illustrated the leverage in the business model when the insurance industry improves. Led by CEO Paul Dwyer, the company has a strong growth path ahead, driven both organically and by acquisition. PSC up 8% in September.
Afterpay Touch (APT) – https://www.afterpay.com.au/ APT continued to deliver its incredible growth metrics and is increasingly building its presence in both the retail industry and financial markets. The stock rose a further 11% in September after the market announcement that Jetstar would begin offering the Afterpay payment solution. We continue to believe it is a brilliant business, but are similarly aware of the spectacular run in the shareprice and hence are managing our position accordingly.
Family Zone (FZO) – https://www.familyzone.com/au/ This small tech company has developed a platform with the objective of providing controls relating to cyber safety for internet and mobile phone usage for kids. The tech is proven and the company has signed deals with telco’s domestically and internationally and schools in Australia and the US. If you have kids, this service may even appear as a required item on next year’s school book list. It enables customers to manage what their children can access through their phone or home internet and can even turn their mobile into a brick at 9pm! We took a small position a few months ago and have been fortunate with incredible share price performance since as the company has executed on its growth plans. FZO rose 38% in September.
Dean Fergie wrote a feature article “Strategies for selecting small caps” in the October edition of the Australian Shareholders Association Magazine, ‘Equity’. You can find the article on our website under ‘News’.
We wrote a piece for Livewire outlining the Afterpay Touch (APT) deal with Jetstar: here
In recent months the small cap market has been conducive to making money. The market has rewarded well-positioned growth portfolios, and there are no signs of it slowing at this stage. That said, one of our ongoing focal points is the risk/reward metric and we therefore retain a relatively high proportion of cash in the portfolio.
The Fund is well diversified with 20 individual holdings and no position accounting for more than 7% of the total Fund. The companies span 6 broad industry sectors including: consumer staples and discretionary; industrials; health care; technology and financials. The weighted average market cap is approximately $300m. All produce revenue, 90% are profitable and recently all have met or exceeded our expectations for business performance.
We thank all our investors for your support and look forward to keeping you all updated with the Fund’s progress.
As always we are contactable in person if investors wish to discuss any aspect of their investment in the Cyan C3G Fund.
Dean Fergie and Graeme Carson
Cyan Investment Management
AFSL No. 453209