13 Apr 2021
After a run of positive months, the Cyan C3G Fund posted a disappointing performance of -3.1% in March. Whilst this was not at all pleasing, equity investments are longer-term propositions and, as such, our 12 month return from the depths of the COVID crisis of 56.3% (after all fees and well ahead of broader market indices) is a satisfying outcome.
The Australian market struggled early in March as global inflation fears took hold but, encouragingly, this was short-lived and equities markets had recovered strongly by month’s end.
On a stock specific basis the most high profile IPO of the year, online job outsourcing platform Airtasker (ART), put in a stellar performance to close the month 70% above its IPO price.
This was in stark contrast with two of the ASX’s more recent star IPO performers; intelligence software provider Nuix (NXL) and respiratory manufacturer Cleanspace (CSX) which had traded up on their IPO prices by over 100% and 70% respectively.
However both provided less than ideal market updates in March and their shares were punished – NXL falling 50% and CSX down by over 70% – proving to investors that these exciting new companies should never simply be a ‘buy and hold’ proposition.
Month in review
With the underlying performance of the Fund there was more red on the ledger than black this month.
Some of our longer-term holdings including Swift Media (SW1), Readcloud (RCL), Mighty Craft (MCL) and Quickstep (QHL) retraced more than 10% and a handful including Raiz (RZI), Vita Group (VTG) and Kip McGrath (KIP) experienced smaller declines. The majority of these stocks had posted significant gains in recent months so some declines were expected at some point.
We remain positive on the long-term positioning of these companies and stay committed to our investments unless, of course, there are significant negative fundamental changes.
On a positive note we had a couple of strong performers:
Alcidion (ALC +22%) – This supplier of hospital decision making, patient tracking and staff paging software remains a strong Fund performer. Alcidion continues to announce new contract wins and we have a great deal of confidence in management to execute on their growth plans in both the UK and Australasia. We expect this to result in further material contract wins in the coming months and are excited that ALC could begin to capture the broader market’s attention.
Universal Biosensors (UBI +26%) – We took our initial position in UBI in August last year. The company focuses on the development, manufacture and commercialisation of point-of-use devices for measuring chemicals. After years of R&D and a couple of onerous old contracts, new management has reinvigorated the business and secured new contract agreements in the wine industry, vet industry and in early cancer detection. John Sharman of Medical Developments (MVP) is now at the helm and appears to be steering the company towards a very exciting future.
All investors are now well-versed in the competing forces resulting in periods of volatility in the markets globally. This is likely to continue as the global economy and associated markets wrestle with a combination of the ongoing pandemic, government and central banks’ response, the impact of volatile bond markets, geopolitical risk and associated trade tensions.
That said, the markets continue to trend up, investment confidence remains strong and we are still seeing a vast number of investment opportunities. In the coming months we expect some good news from our already-committed pipeline of IPO and pre-IPO positions in companies such as the Afterpay-backed venture capital company AP Ventures and influencer marketing platform Tribe.
The Fund has enjoyed a strong start to April and we are excited about a number of company specific opportunities that should play out in the coming months.
We look forward to what could be potentially a most rewarding 2021.