09 Dec 2025
| Click here for a PDF of this newsletter November 2025 proved a challenging month for Australian equities with widespread selling pressure across banking, technology and materials stocks dragging the index lower. The overall returns – the S&P/ASX All Ords Accumulation down 2.5% and S&P/ASX Small Industrials Indices down 3.5% – belied the volatility. At the worst point in the month, these indices had posted falls of 5.1% and 7.9% respectively. Given the challenging market conditions, the Cyan C3G Fund delivered a commendable result, delivering +0.1% in the month to be up 26.7% over one year, well ahead of the 5.8% gain in the S&P/ASX All Ords Accumulation Index. S&P/ASX All Ordinaries Jul 25 – Nov 25 There were significant losses on many of the headline industrial growth stocks. CommBank (CBA-11%), Life360 (360 -19%), Technology One (TNE -18%), Temple and Webster (TPW -35%) and Xero (XRO -16%) highlighted the selling pressure. Former market darling Droneshield (DRO -49%) was decimated after huge insider selling, totalling more than A$60m, quite rightly, spooked investors. That said, it wasn’t all doom and gloom. By late November, the market showed signs of stabilising, with a recovery rally driven by miners, healthcare and selected tech names, as investors weighed up hopes of a US rate cut against ongoing domestic inflation and economic uncertainty. Domestically, persistent high inflation readings and a resilient labour market led investors to push back expectations for an RBA rate cut well into 2026, a development that saw 10yr bonds rise 50bp over the month.
Click here for a PDF of this newsletter Month in Review
Importantly the Fund’s monthly return was driven by some outstanding underlying results by the Fund’s core investment companies. Chief among these was the return of hospital software business Alcidion (ALC +12.9%) which announced a material $12.3m contract expansion with Leidos Australia to provide electronic health records to the Commonwealth of Australia. This uptick comes shortly after the company posted record Q126 revenues of $12.0m and sets the business up for a promising FY26. We continue to believe the company offers an exceptional investment opportunity given its deployment of IT products across geographies, forecast profitability in FY26, strong net cash balance of $16m and modest market cap of $130m.
The Fund initiated a small position in engineering and infrastructure services company, Verbrec (VBC +26%) back in September 2025 given its expected turnaround and remarkably attractive valuation (EV/EBITDA ~3x). Verbrec designs, builds and maintains assets such as gas pipelines, water treatment infrastructure, transport facilities and electrical control systems for government and private sector. The stock rerated during November after announcing it had agreed to acquire Alliance Automation for just $5.5m adding over $60m in annualised revenues. At the same time, VBC completed the sale of Competency Training for A$11.2m in cash, bolstering its balance sheet. These transactions are likely to see the company deliver EBITDA of ~$9m in FY26, making the sub $50m mkt cap an attractive entry point, despite the significant rise in the month. Credit risk software and short-term lender Beforepay (B4P +18%) pushed higher as its Carrington Labs cashflow modelling software gains ongoing traction in the US while their domestic lending business is showing ongoing growth in active customers (+12%) and declining net default rates (1%). In the weak market the Fund did sustain a number of pullbacks, although nothing driven by stock specific news. The main detractor was smart traffic camera company Acusensus (ACE -11%) which gave back some of its recent gains despite announcing a ~5% upgrade to its FY26 revenue guidance at its AGM. Although the Fund has reduced its exposure over the past 8 weeks, the volatility is hard to manage perfectly given the circa 100% rise in the past quarter on the back of large domestic and international contract wins. With further US jurisdictions being targeted and a roll out of its new road worker safety technology (Forsite) we fully expect the company’s fortunes to expand further over the course of the financial year.
Other stocks to experience declines included Locate Technologies (LOC -15%) ahead of its listing on the NZX, which has since commenced trading at a significant premium to the ASX price. Debt management business Credit Clear (CCR – 11%) was another company that unwound some recent strong gains after its UK acquisition and capital raising in October – even though 1Q26 revenue numbers already point to a promising FY26.
Media There were a number of media pieces done during the month as listed on our website and Linkedin. Outlook Currently, overall sentiment remains cautious with the key macro risk factors centered on inflation and the RBA’s tight monetary stance. This has flowed through to a jittery stock market with many high-growth names experiencing selling pressure and a local IPO market that has seen most new industrial names trade underwater including: 6K Additive (6KA -18%), Advanced Innergy (AIH -1%), Black Pearl Group (BPG -15%), Carma (CMA -29%), Epiminder (EPI -28%), Nexsen Limited (NXN -20%), Sea Forest (SEA +43%). Fortunately, the only IPO the Cyan C3G Fund subscribed to was the successful NZX listing of current Fund holding Locate Technologies (NZX:LOC +5%). Whilst the market is coming into a somewhat quiet holiday period, this is often the time we see heightened volatility with market moves exacerbated with fewer market participants. We believe the Fund is supported by strong underlying fundamental momentum in individual stocks, as opposed to spurious price momentum (previously positive and now negative) that we have seen in broad sectors of the large-cap market. As our investee companies continue to improve their outlooks for FY26 through new contracts and other growth initiatives, we’re confident the momentum we’ve seen of late and the ongoing valuation gap between small and large caps stocks will generate further strong Fund performance. Please stay in touch with our intra-month commentary via Linkedin or feel free to contact us at any time. Dean Fergie and Graeme Carson
Cyan Investment Management AFSL No. 453209 An investment in the Cyan C3G Fund can be made by clicking here |
