| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.6% | -29.1% | -29.1% |
HMC Capital Partners Fund I reported a -29.1% quarterly return as Real Estate and Consumer Discretionary exposures were hit by consecutive RBA rate increases and Middle East conflict driving oil prices to US$120/bbl. Despite the drawdown, the Fund maintains a 10.6% annualized return since inception, outperforming the ASX 300 by 1.1% annually. The Fund concentrated on three high-conviction positions: Lendlease, trading at 40%+ discount to NTA with CRU exit progress; Baby Bunting, executing a turnaround with gross margins expanding to 41%; and Ingenia, benefiting from demographic tailwinds with visible earnings growth. The Fund exited Lifestyle Communities and now holds approximately $100 million cash with no debt, positioning it to capitalize on market dislocations. The strategy focuses on unlocking trapped value through active engagement and disciplined capital allocation in companies with real asset backing. Management expects the concentrated approach to deliver strong long-term performance despite short-term volatility.
HMC Capital Partners Fund I employs a concentrated, high-conviction strategy targeting Australian and New Zealand companies with real asset backing where trapped value can be unlocked through improved capital allocation and active engagement.
Fund remains positioned around deliberately concentrated portfolio of high-conviction investments, focusing capital where they see most compelling long-term risk-adjusted return opportunities. Strategy is underpinned by deep fundamental research, emphasis on underlying business quality and asset backing, and willingness to take differentiated positions where market is overly discounting long-term value. With substantial cash balance and no drawn debt, fund is well positioned to capitalize on ongoing market volatility or cyclical weakness.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Apr 15 2026 | 2026 Q1 | BBN.AX, INA.AX, LLC.AX | active management, Australia, Concentration, consumer discretionary, real estate, value |
LLC.AX BBN.AX INA.AX |
HMC Capital Partners Fund I fell 29.1% quarterly due to rate hikes and geopolitical tensions hitting Real Estate and Consumer Discretionary holdings. The concentrated fund maintains three core positions - Lendlease, Baby Bunting, and Ingenia - while holding $100 million cash to capitalize on market dislocations. Long-term focus on unlocking trapped value through active engagement continues despite near-term volatility. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q1 |
Real EstateFund has significant exposure to Real Estate sector through Lendlease and Ingenia Communities. Lendlease trades at 40%+ discount to NTA with focus on exiting non-core CRU segment while core IDC businesses show momentum. Ingenia represents rare combination of visible earnings growth, asset backing and exposure to favorable demographic trends largely independent of economic cycles. |
Commercial Real Estate Development Demographics NTA Asset Backing |
Consumer DiscretionaryBaby Bunting continues executing turnaround strategy despite 45% share price decline. Gross margin expanded to 41% in 1H26 with target of 42% by FY27. Store refurbishments delivering 25% sales uplifts and company well-positioned as scaled market leader to withstand consumer slowdown. |
Retail Turnaround Margins Market Leader Consumer | |
ValueFund focuses on unlocking trapped value through improved capital allocation and portfolio management. Targets companies trading at discounts to intrinsic value with potential for meaningful re-rating as catalysts materialize. Disciplined screening process identifies undervalued situations caused by management discount, conglomerate discount, or poor capital allocation. |
Trapped Value Discount Capital Allocation Re-rating Undervalued |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Apr 15, 2026 | Fund Letters | HMC Capital Partners Fund I | LLC.AX | Lendlease | Real Estate - Diversified | Real Estate Development | Bull | Australian Securities Exchange | Asset recycling, Australia, Build-to-Rent, construction, Equity, life sciences, real estate development, turnaround, Value trap | Login |
| Apr 15, 2026 | Fund Letters | HMC Capital Partners Fund I | BBN.AX | Baby Bunting | Specialty Retail | Specialty Retail | Bull | Australian Securities Exchange | Australia, Baby Products, Equity, market leader, Private-label, retail media, Specialty retail, Store Refurbishment, turnaround | Login |
| Apr 15, 2026 | Fund Letters | HMC Capital Partners Fund I | INA.AX | Ingenia Communities | REIT - Residential | Residential REITs | Bull | Australian Securities Exchange | Aging Population, Australia, Demographics, development pipeline, Equity, Holiday Parks, Lifestyle Communities, Residential REITs | Login |
| TICKER | COMMENTARY |
|---|---|
| LLC.AX | Lendlease was the key drag on Fund performance during the quarter, falling ~36.7%. It currently trades at a ~40%+ discount to NTA, with market attention focused almost entirely on the exit of the non-core CRU segment, despite continued momentum and improving outlook in its core Investments, Development and Construction (IDC) businesses. Core IDC guidance of 28-34cps for FY26 was reaffirmed. Exit from the CRU has taken longer than we and the market would have liked. We continue to monitor progress closely here with ~$700m of contracted CRU sales announced but not yet settled and a further $1.5bn targeted for recycling in the 2H. We believe appointment of a strong external candidate in the CEO seat will be a key catalyst to a recovery in the stock. |
| BBN.AX | Despite a significant retracement in the share price over the quarter (~45.3%) which was driven by the external macro and market factors, Baby Bunting continues to execute on its articulated turnaround strategy. Gross margin expanded to 41.0% in 1H26 (+124bps vs. pcp) and management continues to target ~42% by FY27. Store refurbishments continue to validate the improvement opportunity with refurbished stores delivering ~25% sales uplifts to date. Post the retracement, BBN is now trading at ~5x EBITDA compared to an average of ~10x since IPO back in 2015. As the scaled market leader in baby and maternity, Baby Bunting is better placed than many independent competitors to withstand and even benefit from a consumer slowdown. |
| INA.AX | We continue to have high conviction in the long term prospects for Ingenia, with the business representing a rare combination of visible earnings growth, asset backing and exposure to favourable demographic trends that are largely independent of shorter-term economic cycles. Similar to BBN, Ingenia experienced a material de-rate over the quarter (~23.0%) despite delivering solid 1H26 results and affirming guidance at the top end of the previously announced range. We are particularly pleased to see a growing and robust development pipeline with 16 projects under development and close to 5,000 potential new sites. We maintain our conviction in the business' long-term fundamentals with clear visibility towards INA delivering their 10-15% p.a. five-year settlement growth target. |
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