| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 8.3% | 6.7% | -5% |
The Airlie Small Companies Fund returned 6.7% in Q2 2026 versus the benchmark's 3.3%, driven by strong performance from Guzman y Gomez, Dicker Data, and Data#3. For the full FY26, the Fund returned -6.0% versus the benchmark's 8.1%, with underperformance primarily attributable to the Fund's systematic avoidance of small cap resources, which returned 30.8% and drove the entire Small Ords Index return. The manager maintains conviction in this approach, noting that small cap resources have generated only 6% average ROE over 25 years with negative cumulative free cash flow. Stock-specific detractors included Gentrack, down 73% on product development issues, and EBOS, down 52% on contract losses and cost pressures. The Fund's performance relative to the Small Industrials Index has been solid since inception. The portfolio remains concentrated in quality businesses with competitive advantages, including distribution oligopolies like Dicker Data and founder-led companies like Guzman y Gomez, many trading at material discounts to intrinsic value. The manager remains optimistic about prospects given the rich opportunity set in mispriced small cap industrials.
The Fund invests in a concentrated portfolio of 20-40 quality Australian small companies with advantaged competitive positions and long runways to deploy capital, purchased at steep discounts to intrinsic value, while systematically avoiding small cap resources due to their poor long-term fundamentals and boom-bust cyclicality.
Looking to the future, we remain optimistic about the Fund's prospects. We own a concentrated portfolio of competitively advantaged businesses with long runways to deploy capital – many of which we believe are materially undervalued. The small cap universe is rich with mispriced securities, and we have an established process of identifying those opportunities.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 15 2026 | 2026 Q2 | DDR.AX, DTL.AX, EBO.AX, GTK.AX, GYG.AX, HUB.AX, JYC.AX, PWH.AX | Australia, consumer discretionary, Distribution, Quality, Resources, small caps, value |
GYG.AX DDR.AX GTK.AX EBO.AX JYC.AX |
Airlie Small Companies outperformed in Q2 2026 but lagged for the full year due to systematic avoidance of small cap resources, which posted historic gains but exhibit poor long-term fundamentals. The concentrated portfolio focuses on quality Australian small industrials with competitive advantages purchased at steep discounts. Top holdings include distribution oligopolies Dicker Data and EBOS, and founder-led restaurant chain Guzman y Gomez. Manager sees rich opportunity set ahead. |
| Sep 30 2025 | 2025 Q3 | ALV.DE, CS.PA, GEN.MI, KER.PA, SAP, ZAL.DE | insurance, private equity, SME, software, Switzerland | - | MPD Partners operates an SME-focused private equity vehicle with two portfolio companies. Main holding La Centrale de Prévoyance, a Swiss insurance broker, generated positive cash flow despite broker turnover challenges. The fund is developing proprietary lead generation software using machine learning. Operations remain lean with minimal management resources allocated to portfolio development due to funding constraints. |
| Jun 30 2025 | 2025 Q2 | BRK-B | AI, Caribbean, diversification, emerging markets, global, technology, value | - | Fortress delivered strong Q3 returns by avoiding expensive U.S. tech and investing globally in quality companies at reasonable valuations. Emerging markets led performance while Caribbean weakness created long-term opportunities. The manager rotated from Asian smaller companies into core global equities, maintaining conviction that future returns will come from reasonably valued areas rather than recent winners. |
| Mar 31 2025 | 2025 Q1 | AMD, ARM, ASML, AVGO, BABA, BIDU, GOOGL, META, MSFT, NVDA, ORCL, PLTR, SNOW, TSM | AI, China, Cloud, growth, large cap, semiconductors, technology |
AMD SNOW BABA BIDU |
WestEnd Capital doubles down on AI infrastructure through established leaders and catch-up trades, adding AMD, Alibaba, and Baidu while maintaining Palantir and Snowflake positions. Technology remains the largest allocation amid concentrated market leadership, with diversification into international growth themes. Despite Q3 underperformance, the firm positions for long-term growth driven by AI adoption and infrastructure investment. |
| Dec 31 2024 | 2024 Q4 | - | - | - | |
| Sep 30 2024 | 2024 Q3 | AAPL, AMZN, GOOGL, META, MSFT, NVDA, TSLA | AI, international, Quality, small caps, technology, Valuations, value | - | Regency Wealth advocates for disciplined value investing amid AI-driven market concentration. While mega-cap tech stocks show elevated valuations inconsistent with slowing growth expectations, significant opportunities exist in undervalued segments including small caps, international equities, and equal-weighted S&P 500 companies trading at substantial discounts to the Magnificent 7. |
| Jun 30 2024 | 2024 Q2 | BAC, JPM | Consumer Sentiment, Economic Data, Fed policy, inflation, Market Volatility, Trade Policy | - | Despite tariff-driven market volatility and negative sentiment surveys, underlying economic data shows resilience with 2.1% PCE inflation, continued earnings growth, and improving bank credit metrics. Markets recovered from initial 12% decline to finish strongly. Firm remains prudently optimistic while expecting fewer Fed rate cuts than previously anticipated due to trade policy uncertainty. |
| Mar 31 2024 | 2024 Q1 | ASML, BWXT, CHTR, CMCSA, CRM, MA, META, MU, NOW, NVDA, V | AI, Enterprise Software, growth, nuclear, semiconductors, technology, Trade Policy | - | Portfolio underperformed despite strong fundamentals as Trump's pro-growth policies create favorable environment. AI drives structural demand in semiconductors and enterprise software, while nuclear power becomes essential for data center expansion. Sold cable exposure due to subscriber headwinds, added memory exposure via Micron. Policy clarity enables focus on execution over uncertainty. |
| Dec 31 2023 | 2023 Q4 | - | ABS, CMBS, credit, Fed, fixed income, rates, RMBS, Structured Credit | - | Easterly's structured credit fund delivered 1.92% returns in Q3 2025, focusing on RMBS and CMBS while maintaining conservative positioning. Non-Agency RMBS remains strong on housing fundamentals, while CMBS shows office sector stress. ABS faced fraud-related turbulence. With 20% cash reserves and A-rated portfolio, the fund is positioned for opportunities amid Fed easing cycle. |
| Sep 30 2023 | 2023 Q3 | - | AI, Fed policy, Hedged Equity, Market Concentration, technology, volatility | - | Easterly's hedged equity strategy delivered 4.98% returns with 70% market participation and half the volatility of the S&P 500. Despite Fed rate cuts, narrow AI-driven leadership and stretched valuations at 24x earnings create vulnerability. The fund's systematic approach monetizes volatility while maintaining upside capture and downside protection, making it valuable as core equity allocation. |
| Jun 30 2023 | 2023 Q2 | - | Behavioral Finance, Due Diligence, Generalist, Investment Philosophy, value | - | Nixon Capital's Q1 letter is purely philosophical, applying Kahneman's behavioral finance principles to investment decision-making. The firm emphasizes disciplined generalist investing, independent thought, and systematic due diligence to avoid cognitive biases. They focus on identifying changing market dynamics, outsider CEOs, and high-quality businesses while maintaining flexibility and acknowledging knowledge limitations. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
Small CapsThe Fund focuses exclusively on Australian small companies, avoiding small cap resources exposure due to poor long-term fundamentals. The Small Resources Index has generated only 6% average ROE over 25 years versus 18% for large cap resources, with negative cumulative free cash flow per share. Despite the Small Resources Index posting its strongest year ever in CY25 (up 73%), the manager maintains conviction in the Small Industrials focus, which has delivered solid relative performance for the Fund since inception. |
Small Caps Australia Resources Industrials Quality |
DistributionThe Fund owns multiple distribution businesses, viewing them as natural oligopolies where scale advantages create barriers to entry. Dicker Data increased 47% in the quarter on strong earnings growth, trading at 21x forward profit. EBOS, a pharmaceutical distributor, declined 52% during FY26 due to contract losses and increased costs, but now trades at a 34% discount to its 10-year average multiple at 15x FY27 earnings. |
Distribution Oligopoly Scale Pharmaceuticals IT | |
RestaurantsGuzman y Gomez was the top contributor, up 32% in the quarter after announcing closure of its underperforming US business at minimal cost (under US$15m). The manager views this as validation of their thesis that US expansion failure was immaterial to the core Australian business valuation. Australian like-for-like sales grew 6.6% year-on-year in 3Q26, with substantial growth opportunity remaining in the core market. |
Restaurants Quick Service Australia Unit Economics Expansion | |
QualityThe Fund's investment philosophy seeks quality companies with advantaged competitive positions that can grow at attractive rates on incremental capital deployed, purchased at steep discounts to intrinsic value. The manager highlights Joyce Corporation's 51% stake in KWB, which has grown EBIT at 24% CAGR over a decade while averaging over 100% return on invested capital, yet trades at only 10x FY27 EBIT. |
Quality Competitive Advantage Returns On Capital Valuation Growth | |
| 2025 Q3 |
InsuranceThe fund's main portfolio company La Centrale de Prévoyance is a Swiss insurance broker operating in social security and healthcare insurance. The company maintained partnerships with major insurers including Groupe Mutuel, Generali, Allianz, and Axa while working to onboard new brokers following the resignation of their main broker. |
Insurance Brokers Healthcare Switzerland |
SoftwareMSCO is developing proprietary lead generation software using Big Data Analytics and machine learning algorithms to enhance marketing and sales outcomes for portfolio companies. The software is being tested with LCP and will serve as a foundation for implementation across other invested companies. |
SaaS Data & Analytics AI | |
| 2025 Q2 |
AIArtificial intelligence remained the dominant theme supporting global stocks this quarter, with renewed frenzy in technology shares from the AI buildout bringing excitement and higher valuations. AI fueled momentum in shares of companies linked to artificial intelligence, though valuations have not yet been a concern for investors. |
Technology Valuations Momentum Growth |
Emerging marketsEmerging markets stocks posted the strongest returns this quarter. Constructive trade talks, good valuations and the government's shift to supporting private enterprise lifted Chinese stocks, adding to returns in an already strong year. The Fund's core allocation to emerging equities via the Fortress Emerging Markets Fund returned 15%. |
China Valuations Trade Government Policy | |
ValueThe manager favors investing in shares of high-quality, profitable companies at reasonable valuations, believing valuations matter as the launching point for future returns. Years of weakness in Caribbean markets have set the stage for good long-term returns among profitable companies that now trade at very attractive valuations. |
Valuations Quality Caribbean Long-term | |
| 2025 Q1 |
AIWestEnd maintains concentrated exposure to AI infrastructure through both established leaders and catch-up trades. The firm holds positions in Palantir and Snowflake while adding AMD, Alibaba, and Baidu as companies positioned to gain market share in the AI arms race. These investments span the hardware and software sides of AI growth with focus on data center processors, enterprise AI tools, and autonomous mobility platforms. |
Data Centers Cloud Semiconductors Enterprise Software Autonomous Vehicles |
SemiconductorsThe portfolio includes strategic semiconductor exposure through AMD's data center processors and historical positions in Taiwan Semiconductor, ASML, and Broadcom. AMD is highlighted as approaching a strategic inflection point with its Instinct MI450 processors designed for large-scale AI workloads and partnerships with OpenAI and Oracle representing potential tens of billions in long-term revenue. |
Data Centers AI Foundries Semi Equipment GPUs | |
CloudCloud infrastructure remains a core theme through Snowflake's enterprise data platform and Alibaba's expanding cloud division. Snowflake is positioned as a leader in converting AI technology to revenue-generating tools for enterprises, while Alibaba's cloud division reported 26% year-over-year revenue gains driven by triple-digit increases in AI-related business. |
Enterprise Software Data & Analytics AI SaaS Infrastructure | |
ChinaWestEnd has opened positions in Chinese technology leaders Alibaba and Baidu as strategic infrastructure providers for Asia's digital transformation. Alibaba announced a $50 billion initiative in AI development while Baidu's Apollo Go platform operates fully driverless taxis with breakthrough economics below $30,000 per unit cost. |
Technology AI E-commerce Autonomous Vehicles Cloud | |
| 2024 Q3 |
AIAI continues to dominate the landscape with companies in the Magnificent 7 reporting significant growth in earnings where AI adoption is credited with positively influencing revenues. However, this concentrated growth has led to elevated valuations that may be inconsistent with an economy positioned for slowing growth. The risks of a potential slowdown in company capital expenditures could have severe implications on broader market sentiment. |
Technology Earnings Valuations Growth Productivity |
ValueThe firm's investment strategy remains grounded in identifying quality companies trading at a discount to their intrinsic value. They highlight significant valuation disparities, with equal-weighted S&P 500 companies trading at a 43% discount to the Magnificent 7, small caps at a 25% discount to the S&P 500, and overseas companies at a 34% discount. |
Discount Quality Intrinsic Fundamental Analysis | |
Small CapsSmall cap companies are trading at a 25% discount to the S&P 500 Index, offering compelling risk/reward characteristics. The rate-cutting environment is seen as a tailwind to smaller companies, presenting opportunities to own quality companies at attractive valuations in the small cap universe. |
Discount Valuations Rates Quality Opportunities | |
| 2024 Q2 |
Trade PolicyPresident Trump announced reciprocal tariffs with a 90-day pause for most countries while raising tariffs on Chinese imports. The tariff announcement sent shockwaves to global capital markets with the S&P 500 dropping over 12% in four trading days. Markets feared a full-blown global trade war and its negative consequences on corporate earnings and economic growth. |
Tariffs Trade War China Reciprocal Global |
InflationConsumer inflation expectations in surveys hover north of 7% with sharp drops in economic growth expectations. However, the PCE Index printed 2.1% year-over-year, one of the lowest readings in years and in line with the Fed's 2% target. Survey responses tend to be significantly higher than actual realized inflation, creating a disconnect between perception and reality. |
PCE Expectations Survey Fed Target Consumer | |
RatesThe Fed is expected to remain on hold longer than expected due to unclear economic outlook. Fed Chair Powell has reiterated they will remain data dependent and assess trade policy implications. The base case scenario shifted from 2-3 rate cuts in 2025 to just one cut this year, with potential for a second cut at year-end. |
Fed Powell Data Dependent Rate Cuts Policy | |
| 2024 Q1 |
AIAI is driving massive productivity gains and creating new business models for enterprise software companies. The debate centers on whether AI will increase adoption at higher prices or allow companies to bypass traditional software vendors. ServiceNow and Salesforce are adapting pricing models to capture AI value through consumption-based structures. |
Enterprise Software Productivity Pricing Models Data Centers Innovation |
SemiconductorsMemory chips are experiencing structural demand from AI data centers, with high bandwidth memory market growing from $8B in 2023 to expected $30B+ in 2026. ASML maintains monopoly in EUV lithography essential for advanced chip production, though faces near-term uncertainty from trade restrictions. |
Memory HBM Lithography Data Centers Cyclicality | |
NuclearNuclear power is positioned as critical solution for AI data center power demands, with BWX Technologies benefiting from massive growth in long-term backlog. The Trump administration's all-of-the-above energy approach supports nuclear expansion including small module reactors. |
Power Generation Energy Infrastructure Backlog Small Reactors Data Centers | |
Trade PolicyTrump administration has rewritten international trade terms through tariffs that have been absorbed in supply chains without materially impacting consumer prices. Massive investment commitments in US manufacturing have been secured alongside competitive corporate tax rates. |
Tariffs Manufacturing Supply Chain Tax Policy Investment | |
BroadbandCable companies face persistent broadband subscriber declines that have overwhelmed strong earnings and cash flow growth. Charter was sold due to weak subscriber trends and heavy debt, while Comcast receives temporary reprieve pending proof of bundled mobile/broadband strategy success. |
Subscribers Cable ARPU Bundling Free Cash Flow | |
| 2023 Q4 |
MortgageNon-Agency RMBS remains one of the strongest areas within structured credit, benefiting from healthy housing market, limited new supply, and attractive yields. New issuance reached $161 billion through Q3 2025, matching all of 2024. Credit performance remains stable with low loss severities at 26%. |
RMBS Housing Credit Yields Issuance |
Commercial Real EstateCMBS market shows contrasts with office properties struggling while other sectors recover. Office loan delinquencies stand at 14% with refinancing success rate only 40%. However, private CMBS issuance reached $116 billion year-to-date, up 41% from 2024. |
CMBS Office Refinancing Delinquencies Issuance | |
Credit StressABS market experienced turbulence from Tricolor Holdings bankruptcy involving large-scale fraud where 40% of auto loans were pledged multiple times. Subprime auto credit shows weakness with net losses rising to 9.33% and delinquencies reaching near record highs at 6.43%. |
ABS Fraud Subprime Auto Delinquencies | |
RatesFederal Reserve delivered first rate cut of 2025 in September, trimming rates by 0.25% as a risk-management move. Treasury yields declined with 10-year ending at 4.15%. Manager expects yield curve to flatten near-term with longer-term Treasury yields likely to decline. |
Fed Rate Cut Treasury Curve Yields | |
| 2023 Q3 |
AIArtificial intelligence continues to drive productivity gains and support corporate earnings, with AI-driven names powering the market rally alongside mega-cap technology stocks. The AI theme remains a key driver of market leadership and performance concentration. |
Productivity Technology Mega Cap Leadership |
VolatilityElevated volatility persisted alongside strong index performance, with the CBOE Volatility Index curve remaining steep. The fund's systematic approach allowed monetization of volatility opportunities while maintaining protection against potential declines. |
CBOE Monetization Protection Systematic |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 15, 2026 | Fund Letters | Airlie Small Companies Fund | GYG.AX | Guzman y Gomez | Restaurants | Restaurants | Bull | Australian Securities Exchange | Australia, brand strength, capital allocation, Consumer Discretionary, fast-casual dining, founder-led, growth, Mexican restaurant, Restaurant Chain, Unit economics | Login |
| Jul 15, 2026 | Fund Letters | Airlie Small Companies Fund | DDR.AX | Dicker Data | Electronics & Computer Distribution | Technology Distributors | Bull | Australian Securities Exchange | Australia, barriers to entry, cyclical earnings, information technology, IT distribution, market share gains, oligopoly, Returns on Capital, Scale Advantages, Technology Distributor | Login |
| Jul 15, 2026 | Fund Letters | Airlie Small Companies Fund | GTK.AX | Gentrack | Software - Infrastructure | Application Software | Neutral | Australian Securities Exchange | Application Software, customer retention, execution risk, information technology, Position Reduction, Product development issues, Software, turnaround, Valuation asymmetry | Login |
| Jul 15, 2026 | Fund Letters | Airlie Small Companies Fund | EBO.AX | EBOS | Medical Distribution | Health Care Distributors | Bull | Australian Securities Exchange | Australia, Competitive intensity, Contract Loss, Healthcare distributor, New Zealand, oligopoly, Pharmaceutical Distribution, Returns on Capital, Scale Advantages, valuation discount | Login |
| Jul 15, 2026 | Fund Letters | Airlie Small Companies Fund | JYC.AX | Joyce Corporation | Specialty Retail | Specialty Stores | Bull | Australian Securities Exchange | Australia, Consumer Discretionary, founder-led, growth runway, Kitchen renovation, niche market, Returns on Capital, Specialty retail, store rollout, valuation discount | Login |
| Oct 22, 2025 | Fund Letters | Airlie Small Companies Fund | AMD | Advanced Micro Devices | Information Technology | Semiconductors & Semiconductor Equipment | Bull | NASDAQ | AI infrastructure, Cloud computing, competitive positioning, CPU, data center, Gpu, market share gains, Partnerships, semiconductors | Login |
| Oct 22, 2025 | Fund Letters | Airlie Small Companies Fund | SNOW | Snowflake Inc. | Information Technology | Software | Bull | NYSE | Cloud Data Platform, Data Analytics, Enterprise AI, Enterprise software, machine learning, Multi Cloud, SaaS, unstructured data | Login |
| Oct 22, 2025 | Fund Letters | Airlie Small Companies Fund | BABA | Alibaba Group Holding Limited | Consumer Discretionary | Internet & Direct Marketing Retail | Bull | NYSE | AI infrastructure, Asia, Chinese Technology, Cloud computing, Digital transformation, e-commerce, high-performance computing, semiconductors | Login |
| Oct 22, 2025 | Fund Letters | Airlie Small Companies Fund | BIDU | Baidu, Inc. | Communication Services | Interactive Media & Services | Bull | NASDAQ | AI innovation, autonomous vehicles, Chinese Technology, cloud services, Enterprise software, Language Models, robotaxis, Southeast Asia Expansion | Login |
| TICKER | COMMENTARY |
|---|---|
| GYG.AX | Guzman y Gomez (GYG) increased 32%, with two material company updates released during the quarter. First, the company released its 3Q26 trading update where like-for-like sales in the Australian segment increased to 6.6% year-on-year. Furthermore, the company announced its closure of the US business, citing underperformance relative to internal financial hurdles. The total cash cost to exit the venture is not expected to exceed US$15m. Our thesis for GYG has always been that while the US expansion had a low probability of success, it was irrelevant as the cost of failure was too insignificant to have a material impact on our valuation for the core business. We believe this update validates that thesis and gives us further confidence that management are rational operators focused on the core market of Australia where substantial growth opportunity remains. GYG embodies all of the characteristics we look for in a business – best-in-class unit economics, a beloved brand, founder-led management team with a long-term mindset, a fortress balance sheet, and decades of runway to deploy capital within the business's core market of Australia. We took advantage of the negative sentiment surrounding the company's US expansion to purchase a position in the business at a price we deemed very attractive. GYG is now a top 5 position in the Fund. |
| DDR.AX | IT distributor Dicker Data (DDR) was another strong contributor, increasing 47% over the quarter following the release of its AGM trading update where year-to-date net profit before tax has increased 46%. While the majority of this earnings growth relates to margin expansion on the sale of existing supply-constrained inventory, in particular memory, we believe the current multiple of 21x forward profit somewhat compensates for any potential cyclicality in the earnings base. We like owning distribution businesses, given they tend to form natural oligopolies where scale advantages create barriers to entry. DDR is no different, with a fantastic long-term track record of earnings growth and attractive incremental returns on capital employed. IT distributor Dicker Data (DDR) was the second-strongest contributor to performance, increasing 56% in FY26 and adding 2.0% to gross performance. As mentioned in our quarterly commentary, DDR rallied following the release of its recent AGM trading update where year-to-date net profit before tax has increased 46%. To reiterate, we are attracted to distribution business given they tend to form natural oligopolies where scale advantages create barriers to entry. Typically, the lion's share of profit in these industries will accrue to the dominant player, and our analysis suggests that DDR continues to take share from rival distributors. While there is likely some cyclicality in the current earnings base for DDR, we believe we are being compensated for this in the reasonable multiple of 21x forward profit. |
| GTK.AX | Gentrack (-44%) was a weak performer during the quarter. As we flagged in our September 2025 quarterly update, we had substantially reduced our Gentrack position following concerns regarding development issues for their core product upgrade, G2, which was affecting their ability to win and retain customers. Unfortunately, these concerns proved to be valid, with Gentrack reporting a soft 1H26 result due to a delay of customer wins. In hindsight, we should have fully exited our position given the lack of downside protection in the valuation. That being said, following the substantial decline in share price during the quarter, the valuation now looks somewhat asymmetric here, so we continue to hold a small position in Gentrack. Gentrack (-73%) was the weakest performer in the portfolio during the year, costing the Fund 3.8% in gross performance. As mentioned in our quarterly commentary, we had substantially reduced our Gentrack position following concerns regarding development issues for their core product upgrade, G2. These concerns proved to be valid, with Gentrack reporting soft results over the year due to delayed customer wins. While we did cut our position materially, in hindsight, we should have exited the position earlier given the strong performance of the stock in prior years had left little downside protection in the valuation. Despite the poor performance of Gentrack in FY26, the position has still been the Fund's second-strongest contributor to performance since inception, generating 6.2% to gross returns. While ideally we look for positions we can hold for the long term, if the facts change, we will change our mind, and reduce our holding. |
| EBO.AX | EBOS (-52%) was another weak performer during the year, costing the Fund 2.4% in gross performance. EBOS operates two core divisions: a healthcare division, which primarily involves pharmaceutical distribution, and an animal care division, which owns and manufactures varies petfood brands. We are primarily attracted to the pharmaceutical distribution business, where EBOS is a leading player across Australia and New Zealand. We own several distribution businesses in the Fund, as typically these industries form natural oligopolies where high returns accrue to the scaled players. Pharmaceutical distribution is no different, with EBOS enjoying an envious long-term track record of consistent profit growth and attractive returns on tangible capital employed. Unfortunately, recent performance of the company has not reflected these attractive characteristics. It's been a torrid few years for EBOS, first losing the Chemist Warehouse contract to Sigma prior to their merger, and then more recently downgrading earnings on the back of increased costs related to their new distribution facilities and heightened industry competitive intensity. There are further issues on the horizon, with Chemist Warehouse and Sigma looking to internalise distribution in New Zealand and replace their current contract with EBOS. Fortunately, we believe these issues are now more than reflected in the current share price, with the company trading on just 15x our estimate of FY27 net profit, a 34% discount to EBOS's 10-year average multiple. |
| JYC.AX | Despite a soft consumer backdrop, Joyce Corporation (+27%) was the Fund's strongest contributor in FY26, adding 2.5% to gross performance. As a reminder, we are primarily attracted to Joyce Corporation for its 51% stake in kitchen renovation business, KWB. KWB delivered some fantastic results over the year, growing earnings before interest and tax (EBIT) at 15% in 1H26, and guidance suggesting greater than 25% growth in 2H26. The KWB business ticks a lot of Airlie boxes. The company holds a dominant position in its respective niche with a stellar track record: KWB has grown EBIT at a 24% compound annual growth rate over the past decade while averaging a return on invested capital greater than 100%. That track record has been overseen by its founder, John Bourke, who retains a 25% ownership stake as a non-executive director. The company also boasts a long-term rollout opportunity, with approximately 70% upside on the current store footprint from entering key homemaker centres across Australia. Despite these enviable qualities, the company trades on just 10x our estimate of FY27 EBIT. We continue to be happy holders in Joyce given this unique exposure to KWB. |
| HUB.AX | HUB24 (-0.5%) was one of the top three detractors from gross performance during the quarter. |
| PWH.AX | PWR Holdings (-0.3%) was one of the top three detractors from gross performance during the quarter. |
| DTL.AX | Data#3 (+1.7%) was one of the top three contributors to gross performance during the quarter. |
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