| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 12.5% | - | -6.8% |
The 1851 Emerging Companies Fund declined 3.4% in July 2026, broadly in line with the Small Ordinaries Index (-3.2%), as markets faced pressure from a global AI trade unwind and Middle East tensions. Key contributors included Bravura Solutions (+26%) on strong earnings guidance, IRESS (+10%) rallying with global software stocks, Viva Energy (+38%) on robust refining margins, and Coast Entertainment (+16%) on development approval news. The main detractor was Wagners (-15%) despite solid infrastructure indicators. The domestic economy continues to soften with weak trading updates across sectors, while the housing market faces pressure from higher rates and tax changes, with prices falling over 10% annualized. However, softer inflation readings strengthen the case against further rate hikes. With Small Industrials down over 20% since October 2025, the manager sees valuations at their most attractive levels in several years despite expecting near-term volatility and downbeat reporting season newsflow. The fund maintains 13% cash.
The fund focuses on Australian small-cap companies with attractive valuations following a significant market decline, while maintaining selective positioning in financial software, energy services, and building materials companies that demonstrate strong fundamentals despite broader economic softness.
The manager expects the upcoming reporting season to deliver downbeat newsflow and volatile stock prices in the short term. However, with Small Industrials down over 20% since October 2025, general market expectations are low and valuations have reached their most attractive levels in several years. The strengthening case for no further rate hikes is viewed as a welcome development for markets.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 31 2026 | 2026 Q2 | BVS.AX, IRE.AX, VEA.AX, WGN.AX | Australia, Infrastructure Spending, rates, small caps, software, Valuations | - | Australian small-cap fund down 3.4% in July on AI unwind and Middle East tensions, with strong performance from financial software and energy holdings offset by building materials weakness. Domestic economy softening and housing under pressure, but inflation easing strengthens case against further rate hikes. Small-cap valuations at multi-year lows following 20%+ decline since October 2025, creating attractive entry points despite near-term headwinds. |
| Apr 30 2026 | 2026 Q1 | BBN.AX, DUR.AX, LGL.AX, MAF.AX, SLC.AX | Australia, defense, energy, small caps, volatility | - | Australian small cap fund outperformed during March volatility driven by Middle East war impacts. Defense contractor Duratec gained on AUKUS opportunities while financials suffered from sector-wide sell-off. Small caps now trade at 15% discount to historical averages. Fund maintains 12% cash and liquid portfolio to capitalize on emerging opportunities as volatility creates attractive entry points. |
| Dec 31 2025 | 2025 Q4 | ABB.AX, CKF.AX, COB.AX, COG.AX, FLT.AX, IRE.AX, MAF.AX, MAH.AX, PFP.AX | Australia, gold, industrials, Resources, small caps, value | - | The Fund delivered strong outperformance despite challenging conditions for small industrials, benefiting from selective stock picking including Cobram Estate's game-changing acquisition. With gold in bubble territory and competing monetary policy forces ahead, the Fund maintains defensive positioning with 11% cash while seeking to capitalize on market volatility through superior valuation discipline. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
AIThe manager notes a global unwind of the AI trade that pressured markets in July 2026. IRESS rallied alongside global software stocks that had previously sold off on AI disruption fears, suggesting the market is reassessing AI-related valuations and competitive threats. |
Software Disruption Valuations |
RatesWith the latest inflation reading softer than both Reserve Bank and market expectations, the manager believes the case for no further rate hikes is strengthening. This is characterized as a welcome development for markets, particularly given the impact of higher rates on the housing market. |
Inflation Reserve Bank Housing | |
Small CapsThe Small Industrials have declined over 20% since October 2025, bringing general market expectations low and valuations to their most attractive levels in several years. Despite expecting downbeat newsflow and volatility in the upcoming reporting season, the manager views current valuations favorably. |
Valuations Industrials Reporting Season | |
| 2026 Q1 |
Defense SpendingMining and defense contractor Duratec held an investor day confirming significant opportunities presented by the AUKUS defense spend across the next 2-5 years. |
AUKUS Defense Contractors |
OilWar in the Middle East caused shock to global energy outlook with select group of energy stocks benefitting from elevated oil prices, though markets await speedy resolution to re-open energy markets. |
Energy Geopolitical Prices | |
GoldGold retreated heavily with global benchmark exchange traded fund declining 21% in March, underlining how fundamentals and momentum for the precious metal had become dislocated in the past 12 months. |
Precious Metals Safe Haven ETF | |
| 2025 Q4 |
GoldGold delivered its best annual return since 1979, driving the Small Resources index to a 45.3% increase in the December half. The manager notes gold has entered bubble territory and expects this to influence global equity markets, particularly given the precious metal's exceptional performance. |
Gold Precious Metals Resources Bubble |
TravelFlight Centre rallied 11% following the emergence of significant challenges with a major competitor. The fund holds Flight Centre as a top 5 position, indicating confidence in the travel business despite competitive pressures in the industry. |
Travel Airlines Competition | |
Mining ServicesMacmahon Holdings gained 15% after renewing a key Queensland resources contract and announcing new wins in iron ore and renewables markets. This demonstrates strength in the mining contractor sector and diversification into renewable energy projects. |
Mining Contractors Iron Ore Renewables |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| No Elevator Pitches found | ||||||||||
| TICKER | COMMENTARY |
|---|---|
| BVS.AX | Bravura Solutions (+26%) provided an upbeat trading update, pointing to earnings –10% above previous guidance driven by a combination of strong project demand and cost control |
| IRE.AX | IRESS (+10%) rallied in line with global software stocks previously sold off on fears around AI disruption |
| VEA.AX | Viva Energy (+38%) delivered a strong quarterly update, benefiting from robust refining margins and a bottoming out of operating conditions in its convenience retail business |
| WGN.AX | Queensland building materials player Wagners (-15%) which declined despite no news flow and consistent indicators of solid infrastructure activity in key east coast markets |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
|---|---|---|---|---|---|
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| Industry | Prev Quarter % | Current Quarter % | Change |
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