| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.3% | 3.3% | 9.1% |
| 2025 | 2024 | 2023 | 2022 | 2021 | 2020 |
|---|---|---|---|---|---|
| 9.1% | 17.6% | 14.1% | 3.3% | 25.0% | -4.5% |
Harvest Lane's Absolute Return Fund delivered a 9.11% net return in 2025 through selective merger arbitrage investing in Australian special situations. The fund participated in just under two-thirds of over 80 identified opportunities, with contested deals driving outsized returns as 32% of participated transactions benefitted from price increases. Key contributors included Pointsbet Holdings, which saw an eight-month bidding contest ultimately crystallizing $1.40 per share versus the initial $1.06 offer, and New World Resources, which attracted nine total bids in the copper sector. The fund actively engaged in market structure improvements, successfully challenging unacceptable shareholder behavior in Dropsuite through Takeovers Panel intervention and advocating for deal certainty in the failed Mayne Pharma transaction. While non-binding indicative offers showed high failure rates, binding deals generally completed successfully. The managers remain optimistic about 2026 prospects given a buoyant M&A pipeline and recent legal precedents that should enhance deal certainty and shareholder protections in scheme arrangements.
The fund employs a highly selective merger arbitrage strategy focused on Australian special situations, participating in approximately two-thirds of identified opportunities while maintaining strict risk management and actively engaging in contested situations to maximize returns.
The managers remain confident about prospects for the year ahead, citing a buoyant M&A pipeline and noting that the portfolio has already benefitted from recently announced transactions. They expect improvements to the M&A framework from recent legal precedents to provide positive outcomes for the strategy longer term.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Feb 18 2026 | 2025 Q4 | ASK.AX, AUB.AX, BBT.AX, DSE.AX, MYX.AX, NWC.AX, PBH.AX, PEK.AX, SLH.AX, STO.AX, WA8.AX, XAM.AX, XF1.AX | Absolute return, activism, Australia, Merger Arbitrage, special situations, takeovers |
STO AU XF1 AU MYX AU |
The fund participated in merger arbitrage opportunities across multiple sectors, with notable activity in pharmaceutical deals including Mayne Pharma Group Limited where the bidder attempted… |
| Oct 28 2025 | 2025 Q3 | - | Corporate Actions, Event-Driven, M&A, Merger Arbitrage, Risk Arbitrage |
PBH AU PBH AU |
The fund achieved strong returns through successful merger arbitrage strategies, notably in the Pointsbet takeover, which exemplified contested deal dynamics. Management highlighted risk arbitrage as… |
| Jul 16 2025 | 2025 Q2 | - | Balance Sheets, free cash flow, small caps, Value Investing, volatility | - | The letter emphasizes disciplined value investing in small and mid-cap companies trading at significant discounts to intrinsic worth. Management highlights balance-sheet strength, free cash flow,… |
| Mar 31 2025 | 2025 Q1 | NST AU, PLS AU, POS AU, RMS AU | - | - | - |
| Feb 13 2025 | 2024 Q4 | AND AU, CE1 AU, GDC AU, NAM AU, PSQ AU | - | - | - |
| Sep 30 2024 | 2024 Q3 | - | - | - | - |
| Sep 4 2024 | 2024 Q2 | LVH AU | - | - | - |
| Apr 15 2024 | 2024 Q1 | - | - | - | - |
| Dec 31 2023 | 2023 Q4 | - | - | - | - |
| Feb 28 2023 | 2022 Q4 | NEW AU, URF AU, WGO AU | - | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
BiopharmaSector out of favor due to political factors leading to lower industry R&D spend. Manager believes society will continue to need new drugs and health innovations, expecting capital to return and R&D spend to reaccelerate. Initiated diversified basket allocation via ETFs and service-based businesses. |
Biotechnology Pharmaceuticals Drug Development Healthcare Innovation R&D |
CopperMarket shifted from deficit to surplus as Chinese demand stalled for first time in 25 years while supply expanded by 3 million tonnes since 2021. Exchange inventories reached 1.2 million tonnes, highest since 2003. Bearish outlook as China transitions from under-consuming to over-consuming copper. |
Base Metals China Inventories Surplus | |
| 2025 Q3 |
Special SituationsPortfolio heavily focused on merger arbitrage, sales processes, and corporate actions including Golden Entertainment PropCo OpCo split, Sotherly Hotels buyout with preferred conversion arbitrage, and Mount Logan Capital tender offer. |
Merger Arbitrage Sales Process Tender Offer Corporate Actions Conversion |
| 2025 Q2 |
ValueThe manager continues to find attractive value opportunities despite expensive markets, purchasing undervalued companies like Centene, GlaxoSmithKline, Carrefour and PayPal trading at low multiples with strong fundamentals. |
Undervalued Low Multiples Contrarian Opportunistic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Oct 28, 2025 | Fund Letters | Luke Cummings | PBH AU | Pointsbet Holdings Ltd | Health Care | Online Gambling | Bull | NYSE | arbitrage, bidding war, Cash offer, Exit timing, M&A, merger, Scrip, synergy, takeover | Login |
| Oct 28, 2025 | Fund Letters | Luke Cummings | PBH AU | Pointsbet Holdings Ltd | Health Care | Online Gambling | Bull | NYSE | arbitrage, bidding war, Cash offer, Exit timing, M&A, merger, Scrip, synergy, takeover | Login |
| Feb 18, 2026 | Fund Letters | Luke Cummings | STO AU | Santos Limited | Energy | Oil & Gas Exploration & Production | Bear | New York Stock Exchange | Dealrisk, LNG, merger, Nbio, takeover | Login |
| Feb 18, 2026 | Fund Letters | Luke Cummings | XF1 AU | Xref Limited | Information Technology | Application Software | Bear | New York Stock Exchange | Activism, Deal Breaker, Scheme, shareholder vote, Software | Login |
| Feb 18, 2026 | Fund Letters | Luke Cummings | MYX AU | Mayne Pharma Group Limited | Health Care | Pharmaceuticals | Bear | New York Stock Exchange | Activism, FIRB, pharmaceuticals, Regulation, Scheme | Login |
| TICKER | COMMENTARY |
|---|---|
| ASK.AX | Similar NBIOs for AUB Group (AUB.ASX, $5b) and Abacus Storage King (ASK.ASX, $2b) failed to fire, highlighting the need for caution in the non-binding stages of a deal lifecycle. |
| AUB.AX | During the quarter AUB received an 'Unsolicited Non-Binding Indicative Proposal' to acquire the business for $45.00 per share from a private equity bidder. The offer was terminated a month later and the shares have since fallen back to slightly below where they were at the start of the quarter. |
| BBT.AX | Not even an hour had passed after Pointsbet Holdings Limited (PBH.ASX, +3.45%) announced a binding deal with MIXI, Inc when Betr Entertainment (BBT.ASX) announced it had made its own competing offer, setting in motion an eight month tussle that saw multiple increased offers from both bidders. To Betr's credit, they put up one hell of a fight against the much larger MIXI despite the latter passing the control threshold. |
| DSE.AX | In Dropsuite Limited (DSE.AX) we made an application to the Takeovers Panel alleging unacceptable circumstances from a substantial shareholder. Topline held 33% of Dropsuite and flagged its support for the scheme without reserving a right to sell. Unbeknown to the market, they sold 11% from the day the deal was announced and only disclosed it a month later (blatantly breaching disclosure rules), and by the time we got our Panel Application in they revealed they had sold a further 10% (!) to be left holding only 10% of the company. |
| MYX.AX | Mayne Pharma was to be acquired by a US company Cosette Pharmaceuticals. However, the bidder got cold feet and tried to get out of closing the transaction by claiming a material adverse change. The company being acquired, Mayne Pharma, sued to close and won in court. After they won, I decided to make the brilliant decision of purchasing the shares and collect the remaining 20% spread. The bidder then announced that they would shut down a manufacturing plant in Australia they were acquiring in the deal. One week after I made the investment, word got out that FIRB would not approve the deal and the stock went down 30%. |
| NWC.AX | We thought Xanadu Mines Limited (XAM.ASX) was the most logical candidate but it was New World Resources Limited (NWC.ASX, +2.83%) that saw all the action. Much like Pointsbet, New World started as a friendly scheme with Central Asia Metals PLC (CAML) at $0.05 per share. Canadian private equity outfit Kinterra Capital subsequently bought aggressively on market and then lobbed its own offer. This one was decidedly quicker and still saw nine bids in total with Kinterra emerging victor at a final price of $0.067 per share. |
| PBH.AX | Not even an hour had passed after Pointsbet Holdings Limited (PBH.ASX, +3.45%) announced a binding deal with MIXI, Inc when Betr Entertainment (BBT.ASX) announced it had made its own competing offer, setting in motion an eight month tussle that saw multiple increased offers from both bidders. Starting at MIXI's $1.06 conditional scheme, we ultimately tendered our holding into Betr's offer and subsequent selective buyback to crystalise $1.40 per share in value. |
| PEK.AX | Notable other contributors included Warriedar Resources Limited (WA8.ASX, +3.16%) and Peak Resources Limited (PEK.ASX, +1.06%). In both instances, and despite the substantial control premiums offered, we were active in negotiations between bidders and dissenting shareholders to successfully achieve more equitable outcomes. |
| SLH.AX | As company Boards, bankers, lawyers, and advisers all familiarised themselves with the new ACCC regime introduced from Jan 2026, the regulator proved it remained commercially minded when it rubber stamped DP World's acquisition of Silk Logistics (SLH.ASX) despite two "red" lights and an "amber" in its Statement of Issues. |
| STO.AX | Had the ADNOC transaction stuck, the acquisition of Santos Limited (STO.ASX) would have been the largest cash takeover of an Australian company on record (following Blackstone's acquisition of Airtrunk in 2024 but behind Block's scrip acquisition of Afterpay in 2021). Instead, the deal failed to even get off the starting blocks when it was spectacularly withdrawn to the market's surprise. |
| WA8.AX | Notable other contributors included Warriedar Resources Limited (WA8.ASX, +3.16%) and Peak Resources Limited (PEK.ASX, +1.06%). In both instances, and despite the substantial control premiums offered, we were active in negotiations between bidders and dissenting shareholders to successfully achieve more equitable outcomes. |
| XAM.AX | May saw three deals in the copper space within a week, leading us to think that at least one was ripe for a contest. We thought Xanadu Mines Limited (XAM.ASX) was the most logical candidate but it was New World Resources Limited (NWC.ASX, +2.83%) that saw all the action. |
| XF1.AX | With the exception of Xref Limited (XF1.ASX), where shareholders voted the deal down, and Mayne Pharma (MYX.ASX, more below), deals sailed through without issue. The main detractors for the year were more limited, namely shareholders (surprisingly) voting done the Xref Limited (XF1.ASX, -0.95%) and Mayne Pharma Group Limited (MYX.ASX, -3.34%), discussed in more detail below. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
|---|---|---|---|---|---|---|
| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
|---|---|---|---|
| No industry data available | |||
