Auscap Asset Management

Investor Summary

Tim Carleton serves as Chief Investment Officer and founder of Auscap Asset Management, having established the firm in 2012 with over 20 years of experience in financial services including previous roles at Macquarie and Goldman Sachs. The investment team includes Will Mumford as Deputy Portfolio Manager and Gavin Rogers as Investment Manager, collectively bringing over 50 years of experience from leading investment managers and global investment banks. Auscap Asset Management is entirely owned by staff with all investment team members materially co-invested in the funds they manage, ensuring strong alignment with investor interests. Since inception in December 2012, Carleton has delivered an annualized net return of 15.0% compared to 9.7% for the All Ordinaries Accumulation Index, representing a 5.2% annual outperformance versus the market over the fund's life.

Fund Strategy

Auscap follows a quality first, value focused investment approach centered on identifying and investing in high-quality, competitively advantaged, and growing businesses bought at attractive valuations. Quality first means investing in businesses that have competitive advantages, with discipline around the price they are willing to pay. The firm maintains a long-term, patient approach leveraging rigorous fundamental analysis, focusing on 70 to 80 great businesses in the domestic Australian market. Their core belief is that successful long-term investing is about having a sound process that will lead to solid results over time, emphasizing capital preservation before capital appreciation. The investment philosophy is built on the principle that good businesses tend to surprise on the upside while poor businesses constantly disappoint, with managing risk taking priority before managing money.

ANNUALIZED SINCE INCEPTION	QUARTERLY	YTD
13.3%	-14.6%	-14.6%

Executive Summary

Auscap Asset Management sees significant opportunities emerging from current market dislocations in Australian equities. The fund returned -14.6% year-to-date as markets swung from optimism to extreme pessimism, driven primarily by AI developments and Middle East conflict. Mid and small cap companies are now trading at valuations only seen during COVID-19, despite historically delivering superior earnings growth (4.9% vs 0.8% for large caps). The AI selloff has indiscriminately punished technology companies, but Auscap is selectively investing in businesses with sustainable competitive advantages including regulated markets, proprietary data, network effects, and deep client integration. Meanwhile, passive investing flows continue to distort valuations, with the largest 20 companies now representing 63.5% of the ASX200. Energy price increases from Middle East conflict raise inflation concerns, but the firm believes high-quality businesses can adapt. Auscap is actively deploying capital into what they view as exceptional value opportunities, particularly targeting businesses that can leverage AI to strengthen rather than weaken their competitive positions.

Core Thesis

Market extremes are creating exceptional value opportunities in Australian mid and small cap companies, which are trading at historically cheap valuations despite superior earnings growth, while AI-driven selloffs are indiscriminately punishing technology companies with sustainable competitive advantages.

Forward Outlook

Auscap expects the current market dislocation to create significant opportunities for active managers. They believe high-quality, competitively advantaged businesses with strong earnings growth prospects are currently on sale, particularly in mid and small cap segments. The firm anticipates this environment may provide fertile ground for strong active returns in the Australian market for years to come.

Date	Letter	Tickers	Keywords	Pitches	Quick Takes
Apr 30 2026	2026 Q1	360.AX, ARB.AX, CAR.AX, GMD.AX, HDN.AX, IEL.AX, MQG.AX, NCK.AX, NST.AX, REC.AX, RMD.AX, SHL.AX	active management, AI, Australia, Banking, inflation, small caps, technology, value	-	Australian mid and small caps are trading at extreme discounts despite superior earnings growth, while AI fears create indiscriminate technology selloffs. Auscap sees exceptional value opportunities in quality businesses with sustainable competitive advantages, actively deploying capital into companies that can leverage AI developments rather than be disrupted by them.
Jan 6 2026	2025 Q4	360.AX, APE.AX, ARB.AX, BRG.AX, CAR.AX, CQR.AX, DXS.AX, GMD.AX, HMC.AX, IEL.AX, MQG.AX, NCK.AX, NHF.AX, NST.AX, PLS.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, RMX.AX, SDF.AX, SHL.AX, WTC.AX	Australia, equities, healthcare, industrials, materials, Mining	-	Auscap's Australian equity funds outperformed benchmarks in November, driven by strong materials sector performance including PLS Group and Northern Star. Year-to-date returns of 17.8% and 20.7% significantly exceed benchmarks. Concentrated portfolios maintain full equity exposure with minimal cash, focusing on high-conviction positions across materials, healthcare, and industrials sectors.
Oct 10 2025	2025 Q3	360.AX, AMC.AX, APE.AX, ARB.AX, AUB.AX, BRG.AX, CAR.AX, CQR.AX, CSL.AX, GMD.AX, HDN.AX, IEL.AX, MQG.AX, NCK.AX, NHF.AX, NST.AX, ORG.AX, PLS.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, SHL.AX, WTC.AX	Australia, consumer, equities, healthcare, materials, real estate	-	Auscap's Australian equity funds delivered strong August performance of 6.2% and 5.9%, outperforming benchmarks through concentrated stock selection. Consumer discretionary, materials, and real estate drove returns while healthcare detracted. High equity exposure at 97% with market-neutral beta positioning. Year-to-date outperformance continues with diversified sector approach across 43-52 Australian holdings.
Jun 30 2025	2025 Q2	360.AX, ALQ.AX, AMC.AX, APE.AX, ARB.AX, AUB.AX, BRG.AX, BXB.AX, CAR.AX, CQR.AX, CSL.AX, GMD.AX, HDN.AX, MQG.AX, NCK.AX, NHF.AX, NST.AX, ORG.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, RWC.AX, SHL.AX, SIG.AX, WTC.AX	Australia, equities, Performance, portfolio	-	Auscap's two Australian equity funds delivered solid May 2025 performance with broad sector contributions. The High Conviction fund outperformed with 4.6% returns while the Ex-20 fund returned 5.2%. Both maintain strong year-to-date performance exceeding 12% with concentrated portfolios focused on technology, materials, financials and other key Australian sectors through active stock selection.
Apr 8 2025	2025 Q1	APX.AX, ARB.AX, AUB.AX, BHP.AX, BRG.AX, CAR.AX, CQR.AX, CSL.AX, DEG.AX, HDN.AX, JHX.AX, MQG.AX, NCK.AX, NHF.AX, QUB.AX, REA.AX, REH.AX, RGN.AX, RMD.AX, SHL.AX	Australia, equities, financials, healthcare, industrials, materials, technology	-	Auscap's concentrated Australian equity funds delivered modest underperformance in February but maintain strong year-to-date and long-term track records. The High Conviction fund's 14.8% annualized returns since 2012 versus 9.5% for the benchmark demonstrate effective stock selection across 39 concentrated positions, despite recent headwinds from Materials and Technology holdings.
Dec 31 2024	2024 Q4	ANZ.AX, APE.AX, ARB.AX, AUB.AX, BHP.AX, BRG.AX, CAR.AX, CBA.AX, CQR.AX, CSL.AX, HMC.AX, JHX.AX, MIN.AX, MQG.AX, NAB.AX, NCK.AX, NHF.AX, QUB.AX, REA.AX, WBC.AX	Australia, banks, private markets, risk, value, volatility	-	Auscap argues that volatility-based risk measures unfairly favor private over public markets, driving dangerous capital flows and benchmark hugging. Australia's Big 4 banks dominate indices despite zero earnings growth and record valuations, making active management difficult. The firm focuses on business fundamentals over price volatility, using market swings as opportunities.
Oct 23 2024	2024 Q3	APE.AX, ARB.AX, BRG.AX, CAR.AX, CQR.AX, CSL.AX, HDN.AX, HMC.AX, HUB.AX, JHX.AX, MQG.AX, MRL.AX, NCK.AX, NHF.AX, NWL.AX, PWH.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, SIG.AX	Australia, Building Materials, Expansion, growth, infrastructure, Logistics, Manufacturing, retail	JHX.AX NCK.AX PWH.AX QUB.AX	Auscap showcases four core holdings demonstrating their quality-focused investment approach. James Hardie dominates US fibre cement with structural growth, Nick Scali expands into the larger UK furniture market, PWR Holdings targets revenue doubling through global thermal management expansion, and Qube's logistics infrastructure reaches maturity with improving returns. All represent market leaders with clear growth catalysts.
Jul 18 2022	2024 Q2	AAPL, AMZN, ANZ.AX, BHP.AX, CBA.AX, COL.AX, CSL.AX, FMG.AX, GOOGL, META, MIN.AX, MSFT, NAB.AX, NVDA, RIO.AX, RMD, STO.AX, WBC.AX, WDS.AX, WOW.AX	active management, Australia, banks, China, Iron Ore, mid cap, Passive investing, Sleep Apnea	RMD	Auscap makes a compelling case for active management in Australia, where the index is overweight struggling banks and iron ore miners facing Chinese demand decline. The manager sees abundant mid-cap opportunities with strong growth prospects while the broader Australian economy benefits from structural tailwinds including population growth and resource demand.
Apr 15 2024	2024 Q1	APE.AX, ARB.AX, BRG.AX, CAR.AX, CQR.AX, HDN.AX, HMC.AX, HUB.AX, JHX.AX, MIN.AX, MQG.AX, NCK.AX, NHF.AX, PLS.AX, PSI.AX, PWH.AX, REA.AX, REH.AX, RMD.AX, SHL.AX	Australia, Economy, Housing, inflation, rates, RBA	-	Auscap challenges market expectations for Australian rate cuts given inflation at 3.4% above the RBA's target, driven by housing and services pressures. The economy shows resilience with low unemployment and strong household buffers. The fund returned 3.5% in March with 27.0% year-to-date performance, maintaining concentrated exposure across quality Australian equities.
Jan 23 2024	2023 Q4	APE.AX, ARB.AX, BRG.AX, CAR.AX, HDN.AX, HMC.AX, HUB.AX, JBH.AX, LOV.AX, MIN.AX, MQG.AX, NCK.AX, NHF.AX, PLS.AX, PSI.AX, REA.AX, REH.AX, RMD.AX, RWC.AX, SHL.AX	Australia, earnings, Long/Short, mid cap, Quality, value	-	Auscap targets high-quality Australian mid-cap companies that can sustainably grow earnings over time. The fund delivered 18.5% in 2023 versus 13.0% for the market by focusing on businesses with competitive advantages and growth potential. Mid-caps have historically outperformed large caps due to superior earnings growth while maintaining market leadership positions.
Oct 20 2023	2023 Q3	CAR.AX, MIN.AX, RWC.AX	Australia, growth, infrastructure, Lithium, Manufacturing, Mining, technology	-	Auscap maintains high conviction in quality Australian growth companies following extensive site visits. Mineral Resources offers multiple organic growth drivers across lithium, iron ore and mining services. Reliance Worldwide executes operational improvements while trading at attractive valuations. Carsales expands internationally with proven technology rollout. Fund focuses on internal business developments over macro conditions.
Sep 2 2023	2022 Q4	-	-	-
Sep 11 2022	2022 Q3	-	-	-
Jun 30 2022	2022 Q2	-	-	-
Mar 31 2022	2022 Q1	-	-	-

Date

Letter

Tickers

Keywords

Pitches

Quick Takes

Apr 30 2026

2026 Q1

360.AX, ARB.AX, CAR.AX, GMD.AX, HDN.AX, IEL.AX, MQG.AX, NCK.AX, NST.AX, REC.AX, RMD.AX, SHL.AX

active management, AI, Australia, Banking, inflation, small caps, technology, value

Australian mid and small caps are trading at extreme discounts despite superior earnings growth, while AI fears create indiscriminate technology selloffs. Auscap sees exceptional value opportunities in quality businesses with sustainable competitive advantages, actively deploying capital into companies that can leverage AI developments rather than be disrupted by them.

Jan 6 2026

2025 Q4

360.AX, APE.AX, ARB.AX, BRG.AX, CAR.AX, CQR.AX, DXS.AX, GMD.AX, HMC.AX, IEL.AX, MQG.AX, NCK.AX, NHF.AX, NST.AX, PLS.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, RMX.AX, SDF.AX, SHL.AX, WTC.AX

Australia, equities, healthcare, industrials, materials, Mining

Auscap's Australian equity funds outperformed benchmarks in November, driven by strong materials sector performance including PLS Group and Northern Star. Year-to-date returns of 17.8% and 20.7% significantly exceed benchmarks. Concentrated portfolios maintain full equity exposure with minimal cash, focusing on high-conviction positions across materials, healthcare, and industrials sectors.

Oct 10 2025

2025 Q3

360.AX, AMC.AX, APE.AX, ARB.AX, AUB.AX, BRG.AX, CAR.AX, CQR.AX, CSL.AX, GMD.AX, HDN.AX, IEL.AX, MQG.AX, NCK.AX, NHF.AX, NST.AX, ORG.AX, PLS.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, SHL.AX, WTC.AX

Australia, consumer, equities, healthcare, materials, real estate

Auscap's Australian equity funds delivered strong August performance of 6.2% and 5.9%, outperforming benchmarks through concentrated stock selection. Consumer discretionary, materials, and real estate drove returns while healthcare detracted. High equity exposure at 97% with market-neutral beta positioning. Year-to-date outperformance continues with diversified sector approach across 43-52 Australian holdings.

Jun 30 2025

2025 Q2

360.AX, ALQ.AX, AMC.AX, APE.AX, ARB.AX, AUB.AX, BRG.AX, BXB.AX, CAR.AX, CQR.AX, CSL.AX, GMD.AX, HDN.AX, MQG.AX, NCK.AX, NHF.AX, NST.AX, ORG.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, RWC.AX, SHL.AX, SIG.AX, WTC.AX

Australia, equities, Performance, portfolio

Auscap's two Australian equity funds delivered solid May 2025 performance with broad sector contributions. The High Conviction fund outperformed with 4.6% returns while the Ex-20 fund returned 5.2%. Both maintain strong year-to-date performance exceeding 12% with concentrated portfolios focused on technology, materials, financials and other key Australian sectors through active stock selection.

Apr 8 2025

2025 Q1

APX.AX, ARB.AX, AUB.AX, BHP.AX, BRG.AX, CAR.AX, CQR.AX, CSL.AX, DEG.AX, HDN.AX, JHX.AX, MQG.AX, NCK.AX, NHF.AX, QUB.AX, REA.AX, REH.AX, RGN.AX, RMD.AX, SHL.AX

Australia, equities, financials, healthcare, industrials, materials, technology

Auscap's concentrated Australian equity funds delivered modest underperformance in February but maintain strong year-to-date and long-term track records. The High Conviction fund's 14.8% annualized returns since 2012 versus 9.5% for the benchmark demonstrate effective stock selection across 39 concentrated positions, despite recent headwinds from Materials and Technology holdings.

Dec 31 2024

2024 Q4

ANZ.AX, APE.AX, ARB.AX, AUB.AX, BHP.AX, BRG.AX, CAR.AX, CBA.AX, CQR.AX, CSL.AX, HMC.AX, JHX.AX, MIN.AX, MQG.AX, NAB.AX, NCK.AX, NHF.AX, QUB.AX, REA.AX, WBC.AX

Australia, banks, private markets, risk, value, volatility

Auscap argues that volatility-based risk measures unfairly favor private over public markets, driving dangerous capital flows and benchmark hugging. Australia's Big 4 banks dominate indices despite zero earnings growth and record valuations, making active management difficult. The firm focuses on business fundamentals over price volatility, using market swings as opportunities.

Oct 23 2024

2024 Q3

APE.AX, ARB.AX, BRG.AX, CAR.AX, CQR.AX, CSL.AX, HDN.AX, HMC.AX, HUB.AX, JHX.AX, MQG.AX, MRL.AX, NCK.AX, NHF.AX, NWL.AX, PWH.AX, QUB.AX, REA.AX, REH.AX, RMD.AX, SIG.AX

Australia, Building Materials, Expansion, growth, infrastructure, Logistics, Manufacturing, retail

JHX.AX
NCK.AX
PWH.AX
QUB.AX

Auscap showcases four core holdings demonstrating their quality-focused investment approach. James Hardie dominates US fibre cement with structural growth, Nick Scali expands into the larger UK furniture market, PWR Holdings targets revenue doubling through global thermal management expansion, and Qube's logistics infrastructure reaches maturity with improving returns. All represent market leaders with clear growth catalysts.

Jul 18 2022

2024 Q2

AAPL, AMZN, ANZ.AX, BHP.AX, CBA.AX, COL.AX, CSL.AX, FMG.AX, GOOGL, META, MIN.AX, MSFT, NAB.AX, NVDA, RIO.AX, RMD, STO.AX, WBC.AX, WDS.AX, WOW.AX

active management, Australia, banks, China, Iron Ore, mid cap, Passive investing, Sleep Apnea

RMD

Auscap makes a compelling case for active management in Australia, where the index is overweight struggling banks and iron ore miners facing Chinese demand decline. The manager sees abundant mid-cap opportunities with strong growth prospects while the broader Australian economy benefits from structural tailwinds including population growth and resource demand.

Apr 15 2024

2024 Q1

APE.AX, ARB.AX, BRG.AX, CAR.AX, CQR.AX, HDN.AX, HMC.AX, HUB.AX, JHX.AX, MIN.AX, MQG.AX, NCK.AX, NHF.AX, PLS.AX, PSI.AX, PWH.AX, REA.AX, REH.AX, RMD.AX, SHL.AX

Australia, Economy, Housing, inflation, rates, RBA

Auscap challenges market expectations for Australian rate cuts given inflation at 3.4% above the RBA's target, driven by housing and services pressures. The economy shows resilience with low unemployment and strong household buffers. The fund returned 3.5% in March with 27.0% year-to-date performance, maintaining concentrated exposure across quality Australian equities.

Jan 23 2024

2023 Q4

APE.AX, ARB.AX, BRG.AX, CAR.AX, HDN.AX, HMC.AX, HUB.AX, JBH.AX, LOV.AX, MIN.AX, MQG.AX, NCK.AX, NHF.AX, PLS.AX, PSI.AX, REA.AX, REH.AX, RMD.AX, RWC.AX, SHL.AX

Australia, earnings, Long/Short, mid cap, Quality, value

Auscap targets high-quality Australian mid-cap companies that can sustainably grow earnings over time. The fund delivered 18.5% in 2023 versus 13.0% for the market by focusing on businesses with competitive advantages and growth potential. Mid-caps have historically outperformed large caps due to superior earnings growth while maintaining market leadership positions.

Oct 20 2023

2023 Q3

CAR.AX, MIN.AX, RWC.AX

Australia, growth, infrastructure, Lithium, Manufacturing, Mining, technology

Auscap maintains high conviction in quality Australian growth companies following extensive site visits. Mineral Resources offers multiple organic growth drivers across lithium, iron ore and mining services. Reliance Worldwide executes operational improvements while trading at attractive valuations. Carsales expands internationally with proven technology rollout. Fund focuses on internal business developments over macro conditions.

Sep 2 2023

Sep 11 2022

Jun 30 2022

Mar 31 2022

QUARTER	THEMES	TAGS
2026 Q1	AI AI developments are creating indiscriminate selloffs in technology companies, but Auscap sees opportunities in businesses with sustainable competitive advantages. They focus on companies in regulated markets, with proprietary data, network effects, deep client integration, or relationship-based models that can leverage AI to strengthen their positions rather than be disrupted by it.	Technology Disruption Competitive Advantage Network Effects Regulation
	Small Caps Mid and small cap companies are trading at extreme discounts to large caps, with valuations only seen briefly during COVID-19. Despite delivering superior earnings growth historically (4.9% vs 0.8% for ASX20), these companies are being punished by passive investing flows and market sentiment, creating significant opportunities for active managers.	Valuations Market Cap Passive Investing Earnings Growth Opportunity
	Inflation Middle East conflict is driving energy price increases, which historically correlate with inflation. The parallels to 1970s-1980s inflation periods are concerning, potentially leading to higher interest rates. However, Auscap believes high-quality businesses can adapt to changing circumstances and markets are forward-looking regarding conflict resolution.	Energy Prices Interest Rates Middle East Economic History Central Banks
	Value Current market conditions represent a classic value opportunity with quality businesses trading at attractive multiples. The extreme bifurcation between large and small caps, combined with indiscriminate selling in certain sectors, is creating opportunities for patient investors to buy high-quality companies at discounted prices.	Valuations Quality Opportunity Patient Capital Market Dislocation
2025 Q4	Materials Materials sector was the largest positive contributor to returns in November for both funds. The Ex-20 fund specifically benefited from materials exposures, with mining companies like PLS Group, Genesis Minerals, and Northern Star among the top contributors.	Mining Resources Commodities
	Industrials Industrials sector contributed positively to returns across both funds during November. Companies like Reece and Qube Holdings were among the largest positive contributors to performance.	Industrial Infrastructure Manufacturing
	Healthcare Healthcare sector contributed positively to the High Conviction fund's returns in November. Sonic Healthcare was specifically mentioned as one of the largest positive contributors to performance.	Healthcare Medical
2024 Q4	Private Credit Auscap discusses the significant increase in private credit funds and warns about their short operating history and limited experience with defaults. They note these funds have operated during relative calm with consistently rising property prices.	Private Credit Defaults Property Funds Risk
	Risk Appetite The letter extensively discusses how risk-adjusted return measures favor private markets over public markets due to volatility differences. Auscap argues this creates an illusion where private assets appear superior despite similar underlying risks.	Risk Volatility Private Markets Public Markets Returns
	Value Auscap emphasizes their value-focused approach, looking to pay fair prices or better for investments. They highlight concerns about extended multiples in major Australian banks and focus on avoiding overpaying for assets.	Value Multiples Pricing Banks Valuation
2024 Q3	Building Materials James Hardie dominates fibre cement with 90% US market share, consistently taking share from vinyl, brick and wood due to superior aesthetics and resistance properties. The company has demonstrated strong earnings growth at high returns on capital with structural growth opportunities ahead.	Fibre Cement Housing Construction Market Share Durability
	Furniture Nick Scali's UK expansion through Fabb acquisition represents a low-risk entry into a market 2.5x larger than Australia. The opportunity exists to significantly improve gross margins and sales per store compared to Fabb's historic metrics while benefiting from expected UK rate cuts.	Retail UK Expansion Made To Order Store Productivity Margins
	Thermal Management PWR Holdings is expanding manufacturing capabilities across US, UK and Australia to capitalize on growing demand for cooling systems across motorsports, aerospace, defence and electric vehicle sectors. Management targets doubling revenue within 5 years.	Cooling Systems Aerospace Defence Manufacturing Growth
	Logistics Qube's integrated logistics network across 200+ locations provides critical infrastructure with diverse end market exposure. The Moorebank facility is now cash flow breakeven and on track for $80m+ EBITDA at scale, supporting management's upgraded return targets.	Infrastructure Intermodal Supply Chain Ports Returns
2024 Q2	Iron Ore China's steel consumption peaked in 2020 and is expected to decline to levels similar to other developed countries. With China accounting for 53.9% of world steel production and 50.8% of consumption, declining demand combined with new supply from Mineral Resources (50mtpa) and Simandou deposits (120mtpa) suggests a recipe for lower iron ore prices and declining earnings for the majors.	Steel China Mining Commodities Supply
	GLP1 GLP-1 drugs pose a perceived risk to ResMed's sleep apnea device market due to weight loss benefits, but evidence suggests concerns are overblown. A study of 660,000 patients showed 10.5% increase in likelihood of initiating PAP therapy when prescribed GLP-1s, with higher resupply rates. The focus on weight and health from GLP-1 attention has increased OSA awareness.	Weight Loss Sleep Apnea Healthcare Pharmaceuticals
	Steel China's rapid industrialization drove steel consumption growth since 2000, but consumption peaked in 2020. China's steel consumption per capita growth demonstrates accelerated development, but future consumption is expected to decline toward levels of other developed countries, impacting global steel demand and iron ore requirements.	China Industrialization Iron Ore Commodities Consumption
2024 Q1	Inflation Australian inflation remains at 3.4%, above the RBA's 2-3% target band, with services inflation particularly problematic at 4.2% and rising. Housing inflation at 4.6% is driven by tight rental markets and record population growth, while wage growth continues without signs of abating.	Housing Services Wages RBA Target
	Rates Bond markets expect interest rate cuts over the next 18 months, but the manager questions this assumption given persistent inflation above target. The RBA's mandate requires inflation to return to the 2.5% midpoint before considering rate cuts.	RBA Cuts Bond Target Policy
	Australia The Australian economy shows resilience with unemployment at 3.7%, record high participation rates, and household savings buffers remaining significant. Population growth is at multi-decade highs driven by migration, supporting economic growth and housing demand.	Economy Employment Migration Growth Resilience
2023 Q4	Earnings The manager emphasizes that earnings are the ultimate driver of long-term stock price performance. They focus on finding businesses that can sustainably grow their earnings per share over time, as this is what determines total return for investors. The fund targets companies with growing earnings rather than those with flat earnings like the major Australian banks.	Earnings Growth Sustainable EPS Long Term Performance
	Quality The portfolio consists of high-quality businesses that are leaders in their field with long financial track records, competitive advantages over peers, and conservative gearing. Many holdings are in net cash positions. The manager defines risk as permanent loss of capital rather than volatility, emphasizing the quality characteristics of their holdings.	Leaders Competitive Advantages Conservative Net Cash Track Record
	Small Caps The fund focuses on mid-cap companies in the ASX300 but outside the ASX20, which have delivered superior earnings growth of 7.5% per annum versus 3.0% for the ASX20. These businesses are substantial enough to be market leaders while still having growth opportunities as they haven't saturated their markets. This is their investment sweet spot.	Mid Cap ASX300 Growth Opportunities Market Leaders Sweet Spot
2023 Q3	Lithium MIN's lithium business represents the most attractive part of their investment proposition given strong global momentum behind electric vehicle transition. Wodgina mine is ramping production with fresh ore available from December leading to step-change in production, while processing improvements should enable 1,000,000t/year potential production across three trains.	Electric Vehicles Battery Metals Mining Production Ramp Spodumene
	Iron Ore MIN's innovative Onslow iron ore project seeks to mine 35Mt/year initially using autonomous road trains and innovative small-scale port infrastructure. The project forecasts A$40/t FOB costs which would transform their iron ore business into a much lower cost operation, with potential to scale to 50mt/year within 2-3 years.	Autonomous Transport Infrastructure Cost Reduction Scalability Innovation
	Mining Services MIN's Mining Services business is set for significant growth with EBITDA expected to increase from $484m in FY23 to a run-rate of $1,100m by December 2024. These earnings have attractive annuity-like characteristics due to long-term contracts.	Annuity Income Contract Mining Growth EBITDA Long Term Contracts

QUARTER

THEMES

AI

AI developments are creating indiscriminate selloffs in technology companies, but Auscap sees opportunities in businesses with sustainable competitive advantages. They focus on companies in regulated markets, with proprietary data, network effects, deep client integration, or relationship-based models that can leverage AI to strengthen their positions rather than be disrupted by it.

Technology Disruption Competitive Advantage Network Effects Regulation

Small Caps

Mid and small cap companies are trading at extreme discounts to large caps, with valuations only seen briefly during COVID-19. Despite delivering superior earnings growth historically (4.9% vs 0.8% for ASX20), these companies are being punished by passive investing flows and market sentiment, creating significant opportunities for active managers.

Valuations Market Cap Passive Investing Earnings Growth Opportunity

Inflation

Middle East conflict is driving energy price increases, which historically correlate with inflation. The parallels to 1970s-1980s inflation periods are concerning, potentially leading to higher interest rates. However, Auscap believes high-quality businesses can adapt to changing circumstances and markets are forward-looking regarding conflict resolution.

Energy Prices Interest Rates Middle East Economic History Central Banks

Value

Current market conditions represent a classic value opportunity with quality businesses trading at attractive multiples. The extreme bifurcation between large and small caps, combined with indiscriminate selling in certain sectors, is creating opportunities for patient investors to buy high-quality companies at discounted prices.

Valuations Quality Opportunity Patient Capital Market Dislocation

2025 Q4

Materials

Materials sector was the largest positive contributor to returns in November for both funds. The Ex-20 fund specifically benefited from materials exposures, with mining companies like PLS Group, Genesis Minerals, and Northern Star among the top contributors.

Mining Resources Commodities

Industrials

Industrials sector contributed positively to returns across both funds during November. Companies like Reece and Qube Holdings were among the largest positive contributors to performance.

Industrial Infrastructure Manufacturing

Healthcare

Healthcare sector contributed positively to the High Conviction fund's returns in November. Sonic Healthcare was specifically mentioned as one of the largest positive contributors to performance.

Healthcare Medical

2024 Q4

Private Credit

Auscap discusses the significant increase in private credit funds and warns about their short operating history and limited experience with defaults. They note these funds have operated during relative calm with consistently rising property prices.

Private Credit Defaults Property Funds Risk

Risk Appetite

The letter extensively discusses how risk-adjusted return measures favor private markets over public markets due to volatility differences. Auscap argues this creates an illusion where private assets appear superior despite similar underlying risks.

Risk Volatility Private Markets Public Markets Returns

Value

Auscap emphasizes their value-focused approach, looking to pay fair prices or better for investments. They highlight concerns about extended multiples in major Australian banks and focus on avoiding overpaying for assets.

Value Multiples Pricing Banks Valuation

2024 Q3

Building Materials

James Hardie dominates fibre cement with 90% US market share, consistently taking share from vinyl, brick and wood due to superior aesthetics and resistance properties. The company has demonstrated strong earnings growth at high returns on capital with structural growth opportunities ahead.

Fibre Cement Housing Construction Market Share Durability

Furniture

Nick Scali's UK expansion through Fabb acquisition represents a low-risk entry into a market 2.5x larger than Australia. The opportunity exists to significantly improve gross margins and sales per store compared to Fabb's historic metrics while benefiting from expected UK rate cuts.

Retail UK Expansion Made To Order Store Productivity Margins

Thermal Management

PWR Holdings is expanding manufacturing capabilities across US, UK and Australia to capitalize on growing demand for cooling systems across motorsports, aerospace, defence and electric vehicle sectors. Management targets doubling revenue within 5 years.

Cooling Systems Aerospace Defence Manufacturing Growth

Logistics

Qube's integrated logistics network across 200+ locations provides critical infrastructure with diverse end market exposure. The Moorebank facility is now cash flow breakeven and on track for $80m+ EBITDA at scale, supporting management's upgraded return targets.

Infrastructure Intermodal Supply Chain Ports Returns

2024 Q2

Iron Ore

China's steel consumption peaked in 2020 and is expected to decline to levels similar to other developed countries. With China accounting for 53.9% of world steel production and 50.8% of consumption, declining demand combined with new supply from Mineral Resources (50mtpa) and Simandou deposits (120mtpa) suggests a recipe for lower iron ore prices and declining earnings for the majors.

Steel China Mining Commodities Supply

GLP1

GLP-1 drugs pose a perceived risk to ResMed's sleep apnea device market due to weight loss benefits, but evidence suggests concerns are overblown. A study of 660,000 patients showed 10.5% increase in likelihood of initiating PAP therapy when prescribed GLP-1s, with higher resupply rates. The focus on weight and health from GLP-1 attention has increased OSA awareness.

Weight Loss Sleep Apnea Healthcare Pharmaceuticals

Steel

China's rapid industrialization drove steel consumption growth since 2000, but consumption peaked in 2020. China's steel consumption per capita growth demonstrates accelerated development, but future consumption is expected to decline toward levels of other developed countries, impacting global steel demand and iron ore requirements.

China Industrialization Iron Ore Commodities Consumption

2024 Q1

Inflation

Australian inflation remains at 3.4%, above the RBA's 2-3% target band, with services inflation particularly problematic at 4.2% and rising. Housing inflation at 4.6% is driven by tight rental markets and record population growth, while wage growth continues without signs of abating.

Housing Services Wages RBA Target

Rates

Bond markets expect interest rate cuts over the next 18 months, but the manager questions this assumption given persistent inflation above target. The RBA's mandate requires inflation to return to the 2.5% midpoint before considering rate cuts.

RBA Cuts Bond Target Policy

Australia

The Australian economy shows resilience with unemployment at 3.7%, record high participation rates, and household savings buffers remaining significant. Population growth is at multi-decade highs driven by migration, supporting economic growth and housing demand.

Economy Employment Migration Growth Resilience

2023 Q4

Earnings

The manager emphasizes that earnings are the ultimate driver of long-term stock price performance. They focus on finding businesses that can sustainably grow their earnings per share over time, as this is what determines total return for investors. The fund targets companies with growing earnings rather than those with flat earnings like the major Australian banks.

Earnings Growth Sustainable EPS Long Term Performance

Quality

The portfolio consists of high-quality businesses that are leaders in their field with long financial track records, competitive advantages over peers, and conservative gearing. Many holdings are in net cash positions. The manager defines risk as permanent loss of capital rather than volatility, emphasizing the quality characteristics of their holdings.

Leaders Competitive Advantages Conservative Net Cash Track Record

Small Caps

The fund focuses on mid-cap companies in the ASX300 but outside the ASX20, which have delivered superior earnings growth of 7.5% per annum versus 3.0% for the ASX20. These businesses are substantial enough to be market leaders while still having growth opportunities as they haven't saturated their markets. This is their investment sweet spot.

Mid Cap ASX300 Growth Opportunities Market Leaders Sweet Spot

2023 Q3

Lithium

MIN's lithium business represents the most attractive part of their investment proposition given strong global momentum behind electric vehicle transition. Wodgina mine is ramping production with fresh ore available from December leading to step-change in production, while processing improvements should enable 1,000,000t/year potential production across three trains.

Electric Vehicles Battery Metals Mining Production Ramp Spodumene

Iron Ore

MIN's innovative Onslow iron ore project seeks to mine 35Mt/year initially using autonomous road trains and innovative small-scale port infrastructure. The project forecasts A$40/t FOB costs which would transform their iron ore business into a much lower cost operation, with potential to scale to 50mt/year within 2-3 years.

Autonomous Transport Infrastructure Cost Reduction Scalability Innovation

Mining Services

MIN's Mining Services business is set for significant growth with EBITDA expected to increase from $484m in FY23 to a run-rate of $1,100m by December 2024. These earnings have attractive annuity-like characteristics due to long-term contracts.

Annuity Income Contract Mining Growth EBITDA Long Term Contracts

Date	Pitch Type	Author	Ticker	Company	Industry	Sub Industry	Bull / Bear	Exchange	Keywords	Action
Oct 1, 2024	Fund Letters	Auscap Asset Management	QUB.AX	Qube Holdings	Industrials	Marine	Bull	ASX	Asset Utilization, container terminals, Defensive Infrastructure, Import Export, Logistics Infrastructure, Return on capital, valuation	Login
Oct 1, 2024	Fund Letters	Auscap Asset Management	JHX.AX	James Hardie Industries	Materials	Building Products	Bull	ASX	Building materials, fiber cement, High returns, Housing Construction, market share, Structural Growth, US market	Login
Oct 1, 2024	Fund Letters	Auscap Asset Management	NCK.AX	Nick Scali	Consumer Discretionary	Home Furnishing Retail	Bull	ASX	acquisition, Consumer Discretionary, Furniture Retail, Made-to-Order, market share, Store Productivity, UK Expansion	Login
Oct 1, 2024	Fund Letters	Auscap Asset Management	PWH.AX	PWR Holdings	Industrials	Industrial Machinery	Bull	ASX	Aerospace, Cooling Systems, Defense, Electric Vehicles, Manufacturing Expansion, Technical Expertise, thermal management	Login
Jul 1, 2024	Fund Letters	Auscap Asset Management	RMD	ResMed Inc.	Health Care Equipment & Services	Health Care Equipment	Bull	NYSE	CPAP, founder-led, Healthcare Technology, market leader, Medical devices, sleep apnea, Underdiagnosed Market, Value	Login

Date

Pitch Type

Author

Ticker

Company

Industry

Sub Industry

Bull / Bear

Exchange

Keywords

Action

Oct 1, 2024

Fund Letters

Auscap Asset Management

QUB.AX

Qube Holdings

Industrials

Marine

Bull

ASX

Asset Utilization, container terminals, Defensive Infrastructure, Import Export, Logistics Infrastructure, Return on capital, valuation

Oct 1, 2024

Fund Letters

Auscap Asset Management

JHX.AX

James Hardie Industries

Materials

Building Products

Bull

ASX

Building materials, fiber cement, High returns, Housing Construction, market share, Structural Growth, US market

Oct 1, 2024

Fund Letters

Auscap Asset Management

NCK.AX

Nick Scali

Consumer Discretionary

Home Furnishing Retail

Bull

ASX

acquisition, Consumer Discretionary, Furniture Retail, Made-to-Order, market share, Store Productivity, UK Expansion

Oct 1, 2024

Fund Letters

Auscap Asset Management

PWH.AX

PWR Holdings

Industrials

Industrial Machinery

Bull

ASX

Aerospace, Cooling Systems, Defense, Electric Vehicles, Manufacturing Expansion, Technical Expertise, thermal management

Jul 1, 2024

Fund Letters

Auscap Asset Management

RMD

ResMed Inc.

Health Care Equipment & Services

Health Care Equipment

Bull

NYSE

CPAP, founder-led, Healthcare Technology, market leader, Medical devices, sleep apnea, Underdiagnosed Market, Value

TICKER	COMMENTARY
REC.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
360.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
NCK.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
CAR.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
IEL.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
RMD.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
HDN.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
NST.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
ARB.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
MQG.AX	Macquarie, as the challenger, is in the unusual position of having a natural competitive advantage. With a modern technology stack based on one data platform, and a streamlined online-only business model with no legacy branch network costs, they have a lower cost, scalable business model compared to the majors. This is allowing them to offer considerably better value to both deposit holders and borrowers, compared to the major banks. Compelling offers to both deposit holders and borrowers have led to both sides of the ledger growing at 22% per annum for the past five years. As this business continues to scale, the entrenched profits of the big four banks are going to look increasingly at risk. Macquarie is a formidable competitor and the share losses look set to accelerate as Macquarie continues to scale this business.
GMD.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.
SHL.AX	Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.

TICKER

COMMENTARY

REC.AX

Over the month, Reece, Life360, Nick Scali, CAR Group, IDP Education, Resmed, HomeCo Daily Needs REIT, Northern Star, ARB Corporation, Macquarie Group, Genesis Minerals and Sonic Healthcare were the largest detractors from performance.

360.AX

NCK.AX

CAR.AX

IEL.AX

RMD.AX

HDN.AX

NST.AX

ARB.AX

MQG.AX

Macquarie, as the challenger, is in the unusual position of having a natural competitive advantage. With a modern technology stack based on one data platform, and a streamlined online-only business model with no legacy branch network costs, they have a lower cost, scalable business model compared to the majors. This is allowing them to offer considerably better value to both deposit holders and borrowers, compared to the major banks. Compelling offers to both deposit holders and borrowers have led to both sides of the ledger growing at 22% per annum for the past five years. As this business continues to scale, the entrenched profits of the big four banks are going to look increasingly at risk. Macquarie is a formidable competitor and the share losses look set to accelerate as Macquarie continues to scale this business.

GMD.AX

SHL.AX

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Ticker	Put/Call	Amount Sold	Shares Sold	% Change	Weight %	Status
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Industry	Prev Quarter %	Current Quarter %	Change
No industry data available

Industry

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No industry data available

Investment Summary

Investor Summary

Fund Strategy

FUND PERFORMANCE AS OF 31st March 2026

Investor Letters

Latest Executive Summary:

Executive Summary

Core Thesis

Forward Outlook

Investment Themes

AI

Small Caps

Inflation

Value

Materials

Industrials

Healthcare

Private Credit

Risk Appetite

Value

Building Materials

Furniture

Thermal Management

Logistics

Iron Ore

GLP1

Steel

Inflation

Rates

Australia

Earnings

Quality

Small Caps

Lithium

Iron Ore

Mining Services

Investor Pitches

Current Portfolio as of ( 31st March 2026 )

Key Risks identified by Manager:

Key catalysts include:

Portfolio Implications

Ticker Commentary

Tim Carleton Top Holdings

Recent Buys (13F)

Recent Sells (13F)

13F Sector Summary

Portfolio Distribution

Latest 13D & 13G Filings

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Auscap Asset Management