| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 23.5% | -9.2% | 0% |
HMC Capital Partners Fund I returned -9.2% net in Q4 2025, underperforming due to sector rotation favoring Resources stocks outside their mandate. Despite near-term weakness, the Fund has delivered 23.5% annualized returns since inception, outperforming the ASX 300 by 12.6% annually. The Fund maintains an active value creation approach, engaging directly with portfolio companies to unlock trapped value through strategic initiatives. Key holdings include Australian real estate companies Lendlease, Lifestyle Communities, and Ingenia Communities, which benefit from demographic tailwinds and are executing capital recycling strategies. The Fund added to its Lifestyle Communities position during quarter weakness, demonstrating opportunistic deployment. With Australian markets trading at elevated 18x forward earnings and interest rate uncertainty rising, the Fund maintains a $140m cash balance for flexibility. Management expects continued volatility into 2026 but sees meaningful upside across portfolio companies through ongoing strategic execution and catalyst realization.
The Fund actively engages with Australian portfolio companies to unlock trapped value through improved management, simplified structures, and better capital allocation, while maintaining significant cash reserves to capitalize on market volatility and deploy into high conviction opportunities.
The Fund expects market conditions into early 2026 to remain volatile and dominated by monetary policy decisions. Despite elevated valuations leaving little margin for error, the Fund continues to see meaningful upside to portfolio companies and remains focused on unlocking value through active engagement. The Fund is well positioned with significant cash balance to take advantage of further volatility.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jan 14 2026 | 2025 Q4 | BBN.AX, GNC.AX, INA.AX, LIC.AX, LLC.AX | active management, Australia, capital recycling, demographics, real estate, value creation |
LLC AU BBN AU LIC AU INA AU GNC AU |
HMC Capital Partners delivered -9.2% in Q4 but maintains 23.5% annualized returns since inception through active value creation in Australian companies. The Fund focuses on real estate and consumer names benefiting from demographic trends, actively engaging management to unlock value. With $140m cash and elevated market valuations, positioned defensively for volatility while targeting high-conviction opportunities. |
| Oct 8 2025 | 2025 Q3 | BBN.AX, GNC.AX, INA.AX, LIC.AX, LLC.AX | Agriculture, Australia, consumer, Engagement, real estate, turnaround, value | - | HMC Capital Partners Fund I delivered 6.8% in Q3 2025, driven by Baby Bunting's 68% surge and strong agricultural outlook for GrainCorp. The Fund's active engagement strategy continues unlocking trapped value in undervalued Australian companies while maintaining significant cash for opportunities. With elevated market valuations creating correction risk, the Fund is uniquely positioned to capitalize on disruption. |
| May 21 2025 | 2025 Q1 | BRK-A | Business Ownership, competitive advantages, Employee Empowerment, long-term, value | - | Investment manager advocates complete focus on knowable business fundamentals while avoiding all macro/geopolitical predictions. Emphasizes Ben Graham's Mr. Market principles and Warren Buffett's insulated approach. Specializes in employee empowerment companies as both societal good and reliable compounding strategy. After 40+ years of refinement, expresses highest confidence ever in their disciplined, noise-free investment process. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
E-commerceCarvana was the top performer as a vertically integrated e-commerce platform for used cars. The company eliminates traditional dealerships and provides a haggle-free experience with vast nationwide inventory. With less than 2% market share, Carvana has a long runway of profitable growth ahead. |
Used Cars Vertical Integration Digital Platform Market Share |
Energy TransitionTalen Energy was a major contributor for the third consecutive year as an independent power producer owning nuclear facilities. The company expanded its relationship with Amazon Web Services to provide carbon-free energy for data centers and acquired gas-fired power plants for $3.8 billion. |
Nuclear Power Data Centers Carbon-Free Energy Power Generation | |
AIThe AI boom benefited South Korea's semiconductor industry, with the KOSPI Index surging 76%. Big tech led markets with AI as a central theme, though the manager notes market crowding around the tech/AI theme as a challenge for active managers. |
Semiconductors Big Tech Market Leadership | |
Data CentersTalen Energy expanded its relationship with Amazon Web Services to provide carbon-free energy for data centers. Rising electricity demand from data centers could benefit Talen going forward, though there is growing public backlash over utility bills. |
Electricity Demand Carbon-Free Energy Utility Bills | |
| 2025 Q3 |
ValueThe Fund focuses on unlocking trapped value through active engagement with portfolio companies, targeting undervalued situations caused by management discount, conglomerate discount, cyclical factors or poor capital allocation. The disciplined screening process identifies diamonds in the rough where the Fund can drive real change and unlock significant value. |
Undervalued Discount Turnaround Engagement Capital allocation |
AustraliaThe Fund invests in Australian equities with performance having low correlation to the broader Australian equity market dominated by banks and large miners. Australian equity markets ended the quarter up approximately 5% despite some volatility, with the domestic economy in relatively good shape compared to uncertain global backdrop. |
ASX Domestic Economy Equities Market | |
| 2025 Q1 |
ValueThe letter emphasizes buying ownership interests in businesses at attractive prices based on understanding their economics and competitive advantages. The manager focuses on identifying outstanding businesses trading below fair value rather than making predictions based on macro events. |
Business ownership Fair value Competitive advantages Economics Attractive prices |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jan 14, 2026 | Fund Letters | Victoria Hardie | LLC AU | Lendlease Group | Real Estate | Real Estate Development | Bull | New York Stock Exchange | buybacks, Capitalrecycling, development, Gearing, Nta | Login |
| Jan 14, 2026 | Fund Letters | Victoria Hardie | BBN AU | Baby Bunting Group Limited | Consumer Discretionary | Specialty Retail | Bull | New York Stock Exchange | Comps, Margins, Refurbishments, retail, turnaround | Login |
| Jan 14, 2026 | Fund Letters | Victoria Hardie | LIC AU | Lifestyle Communities Limited | Real Estate | Residential | Bull | New York Stock Exchange | deleveraging, Demographics, Housing, Retirement, settlements | Login |
| Jan 14, 2026 | Fund Letters | Victoria Hardie | INA AU | Ingenia Communities Group | Real Estate | Residential | Bull | New York Stock Exchange | Demographics, growth, Housing, Landlease, settlements | Login |
| Jan 14, 2026 | Fund Letters | Victoria Hardie | GNC AU | GrainCorp Limited | Consumer Staples | Agricultural Products | Bear | New York Stock Exchange | agriculture, Cyclicality, Grains, Margins, Volumes | Login |
| TICKER | COMMENTARY |
|---|---|
| BBN.AX | Baby Bunting (ASX BBN: -17.4%) reaffirmed FY26 NPAT guidance ($17-20m) during the quarter as part of their AGM update. The business continues to execute well against the refreshed strategy announced in June 2024, maintaining positive trading momentum: Comparable sales (adjusted for refurbishment closures) up +5.6% YTD; Gross margin continued to improve to ~40.6%, up from 40.2% at the FY25 result; and First 3 Refurbished Store of the Future sites are delivering ~30% sales uplifts, well ahead of initial expectations. We view the AGM update as reinforcing our turnaround thesis, with tangible progress across comparable sales, margins and store productivity. Despite ongoing macro driven volatility, particularly around interest rates and the flow on effect to consumer confidence, we remain focused on the improving fundamentals of the business and continue to engage with management to deliver on the significant upside we see through execution of the refreshed strategy: Continued rollout of the Store of the Future refurbishment program across the network (targeting 15-25% sales uplift); Expansion of the store network, with the potential to double the store network over time with long term plans for ~80 additional stores (40 large format and up to 40 small format stores subject to pilot site results); Operating leverage as scale builds across the network; Growth in the retail media business; and Positive earnings contribution from New Zealand from FY27. |
| GNC.AX | GrainCorp (ASX: GNC -17.6%, incl. div) was a negative contributor over the quarter following the release of FY25 results and a subsequent trading update in mid-December. The trading update highlighted continued margin pressure and a softer volume outlook for FY26 with management's preliminary estimate for FY26 receival volumes of 11.0–12.0mt. This represents a material decline from the 13.3mt received in FY25, despite continued strong crop conditions, with signs that low grain prices are leading domestic farmers to hold volumes from the market. GrainCorp also announced the sale of its GrainsConnect Canada joint venture following a strategic review of underperforming assets and $52m of operating losses in this business over the past three years. The transaction values GrainsConnect at C$150m on a cash-free, debt-free basis, with GrainCorp expecting to recognise a loss on sale of approximately $5-10m. We had previously reduced our holding in GrainCorp which mitigated the impact of the share price decline on the Fund's performance. The next catalyst for the stock is expected to be the provision of guidance at the AGM in mid-February. |
| INA.AX | Ingenia Communities (ASX: INA -5.0%) affirmed solid FY26 momentum at its AGM, reiterating guidance for 10–15% EBIT growth and underlying EPS of 32.5–34.0 cents. With the Board and management refresh that we have supported during the period of our shareholding delivering, we continue to see a strong outlook supported by: Structural tailwinds from the ageing population, baby boomer downsizing and persistent housing undersupply; Accelerating land lease development activity, with new community commencements (7 planned for FY26) supporting a targeted 5-year settlements CAGR of 10–15%; and Operating leverage and improved efficiency driving development returns. Our holdings in Ingenia Communities alongside Lifestyle Communities, reflect our conviction in the attractive long-term fundamentals of Australia's land lease community sector. LIC trading at a ~16% discount to NTA per share (ex-deferred tax) vs. peers trading at a substantial premium (ASX: INA ~+32% to NTA, ASX: GLF ~+103% to NTA). |
| LIC.AX | Lifestyle Communities (ASX: LIC -12.0%) provided an update at their AGM, building on the steady start to FY26 reported in the Q1 trading update released in October. The business has now completed 93 settlements year-to-date, and the updated contract position (150 available for settlement) implies ~30 additional potential FY26 settlements versus the October update. Inventory continues to trend lower (202 unsold homes as of Nov-25, down 14 from October), which combined with the completion of its non-core land divestments, has resulted in a material improvement in the net debt position ($338.3m, down from $460.5m as of 30-Jun-25. Separately, in late December, LIC refinanced its debt facilities, securing a $300m note purchase and a $125m revolving bank facility. The refinancing extends debt tenor and resets the ICR covenant to nil through 30-Jun-28). LIC also announced it will offer all existing homeowners the option to transition to the new DMF model once the VCAT appeal is determined, irrespective of the appeal outcome. We view this as a logical step that increases transparency and strengthens the brand and reputation of Lifestyle Communities following a challenging period. We remain constructive on the outlook, supported by: Structural tailwinds from the ageing population, baby boomer downsizing and persistent housing undersupply; Continued balance sheet de-leveraging following non-core land divestments; Improving visibility on FY26 settlements as inventory declines; Optionality from the VCAT appeal, which remains a key swing factor; and LIC trading at a ~16% discount to NTA per share (ex-deferred tax) vs. peers trading at a substantial premium (ASX: INA ~+32% to NTA, ASX: GLF ~+103% to NTA). We saw the price weakness during the quarter as an opportunity to add to our position, increasing our holding to 10.4%. Following month-end, the stock has traded well, up 14.7% month-to-date as at close on 12 January 2026. The fund took advantage of volatility by adding to our high conviction position in LIC. |
| LLC.AX | Lendlease traded down over the quarter (ASX: LLC -5.5%), with interest rate dynamics continuing to weigh on rate-sensitive real estate stocks. Towards the end of the quarter, LLC announced progress on the $2bn of planned capital recycling during FY26 with a binding agreement exchanged for the ~$400m sell down of The Exchange TRX retail mall, a full divestment of LLC's 60% interest in the adjacent office tower in Malaysia and affirmation that the sale of their ~25% remaining stake in the Keyton retirement business is progressing with exclusive negotiations underway. Whilst gearing is expected to be elevated at the 1H FY26 result (a function of transaction timing), the ~$1bn in proceeds from settlement of the TRX and Keyton selldowns, in addition to ~$300m in proceeds from settlement of the Crown Estates transaction, and a further $1bn of capital recycling initiatives underway, provide a clear line of sight to significantly reduced gearing and commencement of the up to ~$500m buyback during 2H FY26. We see this as a key catalyst for a re-rate of LLC. In late December, LLC announced it had secured a $2.2bn prime over station office development in Hunter Street, Sydney, a project that is targeted to commence in FY27 and complete in 2032. In conjunction with the luxury residential development site at 175 Liverpool Street secured in July and large developments at One Circular Quay and Comcentre in Singapore currently underway, the win adds to the medium-term earnings visibility in the development segment. Despite progress on execution across the simplification strategy, the stock has continued to drift and trades at a ~30% discount to NTA, implying limited value being attributed to the Group's core operating businesses. We continue to engage with the Board and management team and look forward to further progress on execution of the strategy. We remain of the view that Lendlease is well positioned for a re-rate, as further progress is made on the simplification strategy, including: Further capital recycling enabling the $500m buyback (~14% of the market cap); Continued replenishment of the Australian development pipeline ($25bn of opportunities identified for the next 12 months, $10bn targeted to convert); Return to historical double digit ROIC performance in the development segment from FY27 driven by settlements of One Circular Quay and Vic Harbour residential projects; and Growth in new investment mandates, with ~$4bn of new FUM already underway through its international platform, alongside the UK Crown Estate JV providing optionality over a further ~$24bn pipeline across build to-rent, life sciences and sustainable office. |
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