Investor Summary
Fund Strategy
FUND PERFORMANCE AS OF 30th June 2026
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.4% | 6.1% | - |
| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 10.4% | 6.1% | - |
The Ganes Focused Value Fund delivered a 6.1% return for the June 2026 quarter, outperforming the ASX300 benchmark which rose 4.1%. However, the fund underperformed over the full year with a 0.7% return versus the market's 6.2%. Since inception in 2002, the fund has generated 10.4% per annum, outperforming the benchmark by 1.3% annually after all fees. The financial year was uneven, with strong performance in the first and June quarters offset by declines in December and March. Key contributors included Dicker Data, which rose 45% on strong data centre and AI-related demand, AUB Group, and Redox which gained 85% for the year. Major detractors were ARB Corporation, down over 40% following its first profit downgrade in 25 years due to currency pressures and changing 4WD market dynamics, and Cochlear which fell 28% in the quarter. The fund maintains a concentrated portfolio of 10 core holdings with 7% cash and continues to focus on founder-led businesses with strong competitive positions despite near-term headwinds in select holdings.
The fund invests in a concentrated portfolio of largely founder-led Australian businesses trading at attractive valuations with strong competitive positions and long-term return potential.
At today's prices there remain plenty of reasons to feel confident that our portfolio of largely founder-led businesses will provide attractive returns for their shareholders in the coming years. The manager acknowledges challenging conditions for some holdings but maintains conviction in the long-term value proposition of the concentrated portfolio.
| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Jul 15 2026 | 2026 Q2 | APE.AX, ARB.AX, AUB.AX, BVS.AX, COH.AX, DDR.AX, FID.AX, LOV.AX, MFF.AX, PWH.AX, RDX.AX | Australia, Auto Dealers, Founder-led, insurance, small caps, technology, value |
DDR.AX AUB.AX APE.AX ARB.AX |
Ganes Focused Value Fund returned 6.1% in Q2 2026, outperforming the market's 4.1%, but lagged over the full year. The concentrated portfolio of founder-led Australian businesses delivered mixed results with Dicker Data rising 45% on data centre and AI demand while ARB Corporation fell 40% on its first profit downgrade in 25 years. The manager maintains conviction in long-term value despite near-term challenges. |
| Apr 14 2026 | 2026 Q1 | ARB.AX, AUB.AX, BVS.AX, LOV.AX, PWH.AX, RDX.AX | AI, Australia, retail, technology, value, volatility |
LOV.AX AUB.AX BVS.AX |
The fund fell 12.4% in a volatile quarter dominated by AI disruption fears and profit disappointments. Despite healthy underlying business performance from holdings like AUB Group, indiscriminate selling created significant price dislocations. The manager views current volatility as opportunity, maintaining concentrated positions while selectively adding to quality businesses trading below intrinsic value. |
| Jan 9 2026 | 2025 Q4 | APE.AX, ARB.AX, AUB.AX, BVS.AX, DDR.AX, FID.AX, LOV.AX, MFF.AX, NHC.AX, PWH.AX, RDX.AX | Australia, Automotive, Founders, software, value | - | Australian value fund declined 6.7% in Q4 on weakness in key holdings Lovisa, Eagers, and ARB. Manager maintains conviction in founder-led quality businesses, adding Bravura Solutions while selling New Hope Coal. Despite short-term underperformance, the fund has delivered 11.0% annualized returns since 2002, outperforming benchmark through patient capital allocation. |
| Oct 12 2025 | 2025 Q3 | APE.AX, ARB.AX, AUB.AX, DDR.AX, FID.AX, LOV.AX, MFF.AX, NHC.AX, PWH.AX, RDX.AX, REH.AX | Australia, Automotive, insurance, retail, small caps, value |
LOV AU PWH AU AUB AU REH AU |
Strong quarterly performance driven by Eagers Automotive's 68% surge and Lovisa's international expansion momentum. Fund maintains concentrated Australian value approach with selective positioning adjustments, reducing Reece exposure due to US competitive pressures while awaiting PWR Holdings' manufacturing transition benefits. Cash at 2.0% provides deployment optionality. |
| Jun 30 2025 | 2025 Q2 | ALU.AX, APE.AX, ARB.AX, AUB.AX, CBA.AX, COH.AX, DDR.AX, FID.AX, LOV.AX, MFF.AX, NHC.AX, PSI.AX, PWH.AX, RDX.AX, REH.AX, SMP.NZ | Australia, Automotive, retail, takeovers, value, volatility |
FID AU LOV AU APE AU SPY NZ PWH AU FID.AX |
Australian value fund underperformed despite 7.5% quarterly gain due to extreme volatility in four major holdings. Lovisa rebounded strongly while Eagers Automotive delivered 65% annual returns. Manager added to Fiducian Group position and views current volatility as creating long-term opportunities, with several holdings trading near 52-week lows offering better value for patient investors. |
| Mar 31 2025 | 2025 Q1 | APE.AX, ARB.AX, AUB.AX, DDR.AX, LOV.AX, MFF.AX, NHC.AX, PWH.AX, RDX.AX, REH.AX, SMP.AX | Australia, dividends, industrials, Quality, retail, value |
LOV.AX PWH.AX AUB.AX REH.AX RDX.AX |
Australian value fund suffered concentrated pain as three major holdings declined simultaneously despite operating in unrelated industries. Manager maintains conviction in quality businesses now trading at better valuations, with portfolio dividend yield at multi-year highs. Focus remains on patient ownership of founder-led companies with strong capital allocation, viewing current weakness as temporary given unchanged underlying business economics. |
| Dec 31 2024 | 2024 Q4 | AMZN, APE.AX, ARB.AX, AUB.AX, AXP, DDR.AX, DMP.AX, GOOGL, LOV.AX, MA, MFF.AX, NHC.AX, PWH.AX, RDX.AX, REH.AX, V | Australia, Concentration, long-term, Quality, retail, technology, value |
LOV.AX PWH.AX MFF.AX DMP.AX |
Ganes Focused Value Fund fell 5.3% in Q4 2024 as major holdings disappointed at AGMs, but delivered 5.9% annually and 11.3% since inception. The concentrated portfolio strategy creates short-term volatility but drives long-term outperformance through quality company selection. MFF Capital and Redox were key contributors while Lovisa and PWR Holdings detracted significantly. |
| Sep 30 2024 | 2024 Q3 | APE.AX, ARB.AX, AUB.AX, DDR.AX, LOV.AX, MFF.AX, PSI.AX, PWH.AX, RDX.AX, REH.AX, SMP.AX | Australia, Automotive, Concentration, growth, retail, value |
LOV.AX PWH.AX ARB.AX APE.AX |
Concentrated Australian value fund underperformed in Q3 due to mixed earnings reactions, particularly PWR Holdings' investment phase guidance. Lovisa remains the standout performer with exceptional five-year growth trajectory, while new addition Eagers Automotive offers attractive cyclical opportunity. Manager maintains conviction in high-quality businesses with strong capital returns during temporary consolidation phases. |
| May 7 2024 | 2024 Q2 | ALU.AX, ARB.AX, AUB.AX, COH.AX, DDR.AX, DMP.AX, LOV.AX, MFF.AX, PSI.AX, PWH.AX, REH.AX, SMP.AX | Australia, long-term, Patience, Quality, takeovers, value | - | Ganes Focused Value Fund posted -2.2% in Q2 but maintains strong long-term track record with 11.8% annualized returns since 2002. The concentrated Australian value strategy benefits from patient capital and low turnover. Two takeover offers for Altium and PSC Insurance will free up over 10% of assets for redeployment into new positions. |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2026 Q2 |
Data CentersDicker Data reported strong performance driven by data centre equipment demand and AI spending. Revenues were up 13% and profits up 45% for the first four months of the year. The company anticipates trading conditions to remain strong due to end of financial year spending and ongoing demand for data centre equipment and AI spending driving sales growth. |
Data Centers AI Technology Infrastructure |
Insurance BrokersAUB Group received an unsolicited takeover proposal at $45 per share which fell apart, causing shares to drop. The company reported 14% profit increase and acquired another broking business in the UK. Shares fell 20% on fears that AI would allow customers to bypass insurance brokers. Fellow broker Steadfast received a takeover offer 50% above its last price, suggesting AI fears may have been overstated. |
Insurance Brokers M&A AI | |
Auto DealersEagers Automotive finalized the CanadaOne investment and added Toyota and Audi dealerships. Sales to end of April were up 5% with profits expected in line or slightly ahead of last year. Revenue per employee has risen from $909,000 to $1,480,000 over five years. The company now accounts for 1 in 7 new cars sold in Australia and 1 in 3 electric vehicles through BYD dealerships. BYD sales volumes have more than doubled in the past year with 8.6% market share. |
Auto Dealers Electric Vehicles BYD Scale | |
Auto AftermarketARB Corporation experienced its first profit downgrade in 25 years, with shares down more than 40% for the financial year. Main causes were a weaker Australian dollar pressuring margins and new model releases being out of sync leading to 38% decline in OEM sales. The Australian 4WD market share is expected to drop to 27% this year from a peak of one in three in 2023. However, export sales grew 8.8% including 26% growth in the USA, which now represents 38% of company revenue. |
Auto Aftermarket 4WD Export USA | |
| 2026 Q1 |
AIAI disruption fears drove significant selling pressure across multiple holdings including AUB Group and Bravura Solutions. The manager believes these fears are overblown for specialized businesses operating in regulated environments with embedded software solutions. |
Disruption Software Automation Technology |
RetailLovisa continues international expansion with 64 new stores opened, achieving 22% revenue growth despite losses from new Jewells brand. The manager views current valuation as attractive given the successful track record and director buying. |
Expansion International Stores Growth | |
VolatilityMarkets experienced increased volatility with indiscriminate selling driven by profit disappointments, geopolitical fears, and AI concerns. The manager notes that share prices moved far more than underlying business fundamentals warranted. |
Selling Risk Markets Fundamentals | |
| 2025 Q4 |
Auto DealersEagers Automotive made a $1 billion investment in Canadian dealership CanadaOne, acquiring 65% stake. The Canadian market is less competitive with only 36 car brands versus 75 in Australia. CanadaOne covers fixed costs through service department alone, making it profitable before selling cars. |
Auto Dealers Canada Acquisition |
Specialty RetailLovisa fell 21% during the quarter after providing a weaker than expected trading update at their AGM. The company was essentially flat for the year and was the largest detractor to fund performance for the quarter. |
Specialty Retail Jewelry Trading Update | |
SoftwareBravura Solutions was added to the portfolio following disappointing full year results that caused shares to be marked down harshly. The company provides mission-critical software to financial institutions with high switching costs. Investment by Pinetree Capital and Damian Leonard has improved profitability. |
Software Financial Services Mission Critical | |
| 2025 Q3 |
Auto RetailEagers Automotive was the strongest performer, rising 68% during the quarter and contributing about 30% of fund gains. The shares are up 168% over the past year while paying 74c per share in fully-franked dividends. |
Auto Dealers Automotive Retail |
Specialty RetailLovisa reported 14% revenue growth to $800 million with 131 new stores added. The company is exploring acquisition opportunities from competitor Claire's bankruptcy filing, particularly in the USA, using a strategy successfully deployed in Europe. |
Retail International Expansion | |
Insurance BrokersAUB Group has been a quiet achiever with shares up nine-fold since 2009 investment, delivering roughly 15% per annum over 16 years. Latest results showed 17% profit increase with management expecting 10% growth next year. |
Insurance Brokers Consistent | |
| 2025 Q2 |
VolatilityThe fund experienced extreme volatility with four top 10 holdings falling more than 50% during the year, which is highly unusual when the broader market delivered positive returns. The manager views this volatility as advantageous for long-term returns, noting that having some investors willing to pay optimistic prices and others selling at depressed prices can benefit patient investors. |
Market Volatility Price Swings Opportunity Long-term Patience |
RetailLovisa's performance dominated the quarter with significant volatility, falling 20% in March then rising 32% in June. The company opened its new Jewells retail concept in the UK with seven stores and added retail veteran Mark McInnes as Executive Deputy Chairman to help manage over 1,000 stores globally. |
Retail Expansion Global Growth Store Rollout Management UK Market | |
AutomotiveEagers Automotive was the biggest contributor for the full year, rising 65% after the manager purchased it following a profit warning. The company presented an optimistic outlook aiming to add $1 billion in sales and signed a revised agreement with BYD for their Australian joint venture. |
Auto Dealers BYD Partnership Sales Growth Recovery Electric Vehicles | |
| 2025 Q1 |
ValueThe fund focuses on high quality businesses that are better value now after share price declines. The manager emphasizes that the economics of their holdings remain largely unchanged despite poor short-term performance, making them more attractive investments at current prices. |
Value Quality Undervalued |
DividendsThe current dividend yield of the portfolio is described as the most attractive it has been for many years. Several holdings like AUB Group increased dividends significantly while others like PWR Holdings and Reece cut dividends in line with reduced profits. |
Dividends Yield Income | |
| 2024 Q4 |
ConcentrationThe fund maintains a concentrated portfolio approach with top 10 holdings representing approximately 80% of the portfolio. This concentration has driven long-term outperformance but creates short-term volatility when individual holdings underperform. The manager emphasizes this concentrated strategy as their north star for finding high quality companies to own long-term. |
Concentration Portfolio Holdings Quality Long-term |
QualityThe fund focuses on identifying high quality companies that can be owned for the long-term. The manager's approach centers on finding businesses with sustainable competitive advantages and strong fundamentals that can compound returns over time. This quality focus has resulted in winners averaging 3.7 times the losses from their worst performers. |
Quality Long-term Compounding Winners Fundamentals | |
| 2024 Q3 |
Auto AftermarketARB Corporation reported strong profit growth of 18% to $102.7m with record OEM sales of $59.6m. The company is taking greater control of its US distribution through building a Seattle store and purchasing a stake in Off Road Warehouse with 11 stores. This vertical integration strategy positions ARB well for the next decade by controlling intellectual property, manufacturing, and distribution. |
Auto Parts Distribution OEM Vertical Integration US Expansion |
Auto DealersEagers Automotive is a new portfolio addition with 110-year history as Australia's largest new and used car dealer with 265 dealerships representing 13% of the new car market. Despite challenging cyclical conditions, the company offers attractive 7% dividend yield and potential 5% annual earnings growth through acquisitions. The business also benefits from a $726m property portfolio and would gain from interest rate cuts. |
Auto Retail Cyclical Dividends Property Interest Rates | |
Specialty RetailLovisa became the largest holding after five years of ownership, demonstrating exceptional growth with revenue more than doubling to $698.6m and profits growing to $82.4m. The company expanded to 900 stores across multiple markets including new entries into Ireland, China, and Vietnam. Management is taking a measured approach to expansion, particularly in China and the USA, prioritizing sustainable growth over rapid expansion. |
International Expansion Store Rollout China Sustainable Growth Retail | |
| 2024 Q2 |
ValueFund follows a value investing philosophy focused on finding good quality companies and holding them for the long term, decades if possible. The manager emphasizes patience and low portfolio turnover as key to delivering attractive returns and outperforming the market over time. |
Value Quality Long-term |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Jul 15, 2026 | Fund Letters | Ganes Focused Value Fund | DDR.AX | Dicker Data | Electronics & Computer Distribution | Technology Distributors | Bull | Australian Securities Exchange | Artificial Intelligence, Australia, Data Centre, dividend policy, Hardware, return on equity, Software, Technology Distributor, working capital | Login |
| Jul 15, 2026 | Fund Letters | Ganes Focused Value Fund | AUB.AX | AUB Group | Insurance Brokers | Insurance Brokers | Bull | Australian Securities Exchange | Artificial Intelligence Disruption, Australia, Dividend Growth, earnings resilience, Insurance Broker, takeover target, UK Expansion, underwriting | Login |
| Jul 15, 2026 | Fund Letters | Ganes Focused Value Fund | APE.AX | Eagers Automotive | Auto & Truck Dealerships | Automotive Retail | Bull | Australian Securities Exchange | Audi, Australia, Automotive Retail, BYD, Canada Expansion, Dealership Network, Electric Vehicles, market share, operational efficiency, Scale Advantages, Toyota | Login |
| Jul 15, 2026 | Fund Letters | Ganes Focused Value Fund | ARB.AX | ARB Corporation | Auto Parts | Automotive Parts & Equipment | Neutral | Australian Securities Exchange | 4WD Accessories, Australia, Automotive Aftermarket, currency headwinds, Export Growth, hybrid vehicles, manufacturing, Market Share Decline, Off Road, USA Expansion | Login |
| Apr 14, 2026 | Fund Letters | Ganes Focused Value Fund | LOV.AX | Lovisa | Specialty Retail | Specialty Retail | Bull | Australian Securities Exchange | Fashion Jewelry, insider buying, international expansion, Specialty retail, Startup Losses, store rollout, Value | Login |
| Apr 14, 2026 | Fund Letters | Ganes Focused Value Fund | AUB.AX | AUB Group | Insurance Brokers | Insurance | Bull | Australian Securities Exchange | AI disruption, Bizcover Platform, Commercial Insurance, Dividend Growth, Insurance Broking, takeover target, UK Acquisition | Login |
| Apr 14, 2026 | Fund Letters | Ganes Focused Value Fund | BVS.AX | Bravura Solutions | Software - Application | Software | Bull | Australian Securities Exchange | AI disruption, Compliance Risk, defensive, Embedded Software, financial software, Regulated Environment, Special dividend | Login |
| Oct 12, 2025 | Fund Letters | Wayne Jones | LOV AU | Lovisa Holdings Ltd. | Consumer Discretionary | Specialty Retail | Bull | Australian Securities Exchange | acquisition, expansion, Global, growth, Jewelry, Margins, retail, valuation | Login |
| Oct 12, 2025 | Fund Letters | Wayne Jones | PWH AU | PWR Holdings Ltd. | Consumer Discretionary | Auto Components | Bull | Australian Securities Exchange | Aerospace, Cooling, Defense, engineering, growth, manufacturing, Margins, recovery | Login |
| Oct 12, 2025 | Fund Letters | Wayne Jones | AUB AU | AUB Group Ltd. | Financials | Insurance Brokers | Bull | Australian Securities Exchange | Brokers, compounding, dividends, growth, Insurance, stability, valuation | Login |
| Oct 12, 2025 | Fund Letters | Wayne Jones | REH AU | Reece Ltd. | Industrials | Building Products & Equipment | Bear | Australian Securities Exchange | Competition, construction, Margins, Plumbing, restructuring, ROE, valuation | Login |
| Jun 30, 2025 | Fund Letters | Wayne Jones | FID AU | Fiducian Group Ltd. | Other | - | Bull | NYSE | Assetmanagement, compounding, dividends, platform, Wealth | Login |
| Jun 30, 2025 | Fund Letters | Wayne Jones | LOV AU | Lovisa Holdings Ltd. | Consumer Discretionary | Specialty Retail | Bull | NYSE | brands, International, Jewellery, retail, Rollout | Login |
| Jun 30, 2025 | Fund Letters | Wayne Jones | APE AU | Eagers Automotive Ltd. | Consumer Discretionary | Auto & Truck Dealerships | Bull | NYSE | Autos, consolidation, Dealerships, EVs, growth | Login |
| Jun 30, 2025 | Fund Letters | Wayne Jones | SPY NZ | Smartpay Holdings Ltd. | Other | - | Bull | NYSE | cashflow, M&A, Payments, Regulation, Terminals | Login |
| Jun 30, 2025 | Fund Letters | Wayne Jones | PWH AU | PWR Holdings Ltd. | Consumer Discretionary | Auto Parts | Bull | NYSE | Capacity, Cooling, Margins, Motorsport, Succession | Login |
| Jun 30, 2025 | Fund Letters | Ganes Focused Value Fund | FID.AX | Fiducian Group | Financials | Asset Management & Custody Banks | Bull | ASX | asset management, Australian, Capital-light, Equity, fee-based revenue, financial planning, financial services, high ROE, organic growth | Login |
| Mar 31, 2025 | Fund Letters | Ganes Focused Value Fund | LOV.AX | Lovisa | Consumer Discretionary | Specialty Retail | Bull | ASX | China market, Fashion Jewelry, global expansion, International Retail, same-store sales, Specialty retail, store expansion | Login |
| Mar 31, 2025 | Fund Letters | Ganes Focused Value Fund | PWH.AX | PWR Holdings | Industrials | Industrial Machinery | Bull | ASX | Aerospace, automotive, Cooling Solutions, Defense, manufacturing, margin compression, Tariff Protection, US Government Contract | Login |
| Mar 31, 2025 | Fund Letters | Ganes Focused Value Fund | AUB.AX | AUB Group | Financials | Insurance | Bull | ASX | Acquisitions, Dividend Growth, Insurance Broking, margin expansion, predictable revenue, small business, technology, UK Expansion | Login |
| Mar 31, 2025 | Fund Letters | Ganes Focused Value Fund | REH.AX | Reece Australia | Industrials | Trading Companies & Distributors | Bear | ASX | Branch Expansion, Competition, Cost pressures, Housing Construction, margin pressure, Mortgage Affordability, Plumbing Distribution, US Sunbelt | Login |
| Mar 31, 2025 | Fund Letters | Ganes Focused Value Fund | RDX.AX | Redox | Materials | Chemicals | Bull | ASX | Acquisitions, cash position, chemical distribution, founder-led, margin compression, Pricing power, specialty chemicals, Subdued Demand | Login |
| Dec 31, 2024 | Fund Letters | Ganes Focused Value Fund | LOV.AX | Lovisa Holdings Limited | Consumer Discretionary | Specialty Retail | Bull | ASX | Australia, Consumer Discretionary, Fashion Jewelry, global expansion, growth, International, retail, Specialty retail, store rollout | Login |
| Dec 31, 2024 | Fund Letters | Ganes Focused Value Fund | PWH.AX | PWR Holdings Limited | Industrials | Machinery | Bull | ASX | Aerospace, automotive, Cooling Solutions, Defense, EV, Formula 1, Heat Exchangers, Industrials, manufacturing, Motorsport | Login |
| Dec 31, 2024 | Fund Letters | Ganes Focused Value Fund | MFF.AX | MFF Capital Investments Limited | Financials | Asset Management & Custody Banks | Bull | ASX | asset management, concentrated portfolio, Currency Tailwind, financial services, global equities, Listed Investment Company, technology, US Markets | Login |
| Dec 31, 2024 | Fund Letters | Ganes Focused Value Fund | DMP.AX | Domino's Pizza Enterprises Limited | Consumer Discretionary | Hotels, Restaurants & Leisure | Bear | ASX | Consumer Discretionary, france, franchise, international expansion, Japan, Pizza Delivery, Restaurants, same-store sales, turnaround | Login |
| Sep 30, 2024 | Fund Letters | Ganes Focused Value Fund | LOV.AX | Lovisa Holdings Limited | Consumer Discretionary | Specialty Retail | Bull | ASX | China market, Dividend Growth, Fashion Jewelry, international expansion, same-store sales, Specialty retail, store rollout, sustainable growth, USA Market, Warehouse Infrastructure | Login |
| Sep 30, 2024 | Fund Letters | Ganes Focused Value Fund | PWH.AX | PWR Holdings Limited | Industrials | Aerospace & Defense | Bull | ASX | Aerospace, automotive, capital expenditure, Cooling Solutions, Defense, Heat Exchangers, High-performance, Manufacturing Facility, return on equity, value creation | Login |
| Sep 30, 2024 | Fund Letters | Ganes Focused Value Fund | ARB.AX | ARB Corporation Limited | Consumer Discretionary | Automobile Components | Bull | ASX | 4WD Accessories, aftermarket, Distribution Control, Export Sales, Intellectual Property, manufacturing, OEM Sales, Off Road, USA Market, vertical integration | Login |
| Sep 30, 2024 | Fund Letters | Ganes Focused Value Fund | APE.AX | Eagers Automotive Limited | Consumer Discretionary | Specialty Retail | Bull | ASX | Acquisitions, Automotive Dealerships, contrarian, cyclical business, dividend yield, economic headwinds, interest rate sensitivity, market share, property portfolio, Value Investment | Login |
| TICKER | COMMENTARY |
|---|---|
| DDR.AX | Dicker Data held its Annual General Meeting at the end of May and reported that revenues were up 13% and profits up 45% for the first four months of the year compared to last year. It also advised that it anticipated trading conditions to remain strong in the short term because of the end of the financial year spending, and demand for data centre equipment and AI spending will drive sales growth beyond that. The heady days of double-digit growth in sales and profits of the last decade have plateaued, and for the last few years sales and profits have been relatively static. Part of this is cyclical as spending was brought forward by Covid demand, and part because Dicker Data has such a large market share now it is getting more difficult to move the needle when winning new clients. But despite the stagnation this is still a good business. Return on equity remains above 30%, cash flow is strong, and profit margins have recently started to climb again. The downside, however, has been the growth in working capital leading to higher debt recent years. Working capital has risen from $60 million to over $300 million during the past four years. And because the company pays out all its profits as dividends this has meant the company has been forced to take on debt, $300 million of it as of December. Under the new Chairperson, and the company's largest shareholder, Fiona Brown, the company has decided to implement a more conservative 80% payout ratio of profits that hopefully should see debt levels reduce. After a few quiet years the company may be enjoying some tailwinds again. |
| AUB.AX | For a company that has rarely rated a mention in fund updates because its results are so consistent and without controversy, AUB has been front and centre for much of the past year. The share price started the year at $35.00 and then in the December update I wrote the company had received an unsolicited non-binding proposal to acquire the business for $45.00 per share. Within a few weeks that deal fell apart and the shares quickly dropped back to their pre-bid price of just over $30.00. Then during March quarter the company reported a 14% increase in profits, increased its dividend, and acquired another broking and underwriting business in the UK market which was all positive, but the shares fell another 20% on the back of fears that AI would allow customers to bypass insurance brokers all together. This quarter fellow insurance broker Steadfast received a takeover offer 50% above its last price in a sign that maybe the fear around AI may have been overstated. We have a small holding in Steadfast, but I believe AUB Group is a better business and offers better earnings resilience. AUB Group shares were up 17% for the quarter in response to the Steadfast news, although they are still down 20% for the year making it our third largest detractor to fund performance for the year. |
| APE.AX | Eagers held their AGM during the quarter and for a company that is more than 110 years old there was still plenty to take in. Perhaps the most important being that the CanadaOne investment has finalised which will add a new dimension to the business. The company also announced it has finally been able to add an interest in a Toyota dealership on the Gold Coast to its national network through a 49% stake in Grand Motors, along with two Audi dealerships in Melbourne that will add another $630m in revenue per annum. Not previously having had a presence on the Gold Coast this is a strong addition to the dealership network. Despite economic conditions that have seen other auto dealers deliver profit downgrades in recent months, Eagers reported that sales to the end of April were up 5% on the previous year and that the company should report profits either in line with last year, or slightly ahead of it. And it will be a record result including the CanadaOne results. During the AGM presentation the CEO highlighted that revenue per employee has risen from $909,000 to $1,480,000 per employee over the past five years, a figure far above other market participants. Eagers now account for 1 in every 7 new cars sold in Australia and 1 in every 3 electric vehicles sold in Australia through its BYD dealerships. It was only two years ago that BYD was seen as a negative part of the business and led to a profit downgrade, but that is no longer the case. BYD is now one of the reasons Eagers are doing so well as their sales volumes have more than doubled in just the past year alone and they now have an 8.6% market share of all new vehicle sales in Australia, second only to Toyota. The Eagers share price is down more than 40% from its highs late last year, but it has still been one of our best contributors to fund performance for the financial year and at current prices remains inexpensive when viewed through the prism of the growth opportunities ahead. |
| ARB.AX | ARB Corporation has been the largest detractor on fund performance for the financial year with the share price down more than 40% since last June and it has halved since its AGM in October last year. The worst of it occurred on the back of a profit downgrade in January, the first I can recall in 25 years as a shareholder. ARB has traditionally been a company that under-promised and over-delivered. The main causes given were a weaker Australian dollar putting pressure on profit margins, and new model releases being out of sync with prior years leading to a 38% decline in sales in the OEM sector. Another concern is that ARB's target market in Australia has changed. A decade ago, 4WDs and SUV's accounted for about one in five new car sales, and this rose to almost one in three at their peak in 2023. But Australians may be falling out of love with 4WD's with their market share expected to drop to around 27% this year. And the mix is changing as well with the introduction of hybrid 4WD's such as the BYD Shark which is attracting owners who aren't buying as many accessories as traditional ARB customers. The tailwinds of Covid and the booming domestic tourism market of a few years ago have shifted. But the company has an export business and in the latest half these sales grew 8.8%, including growth of 26% in the USA, to make up 38% of company revenue. The new US expansion, Off Road Warehouse, is now profitable and the company has a combined 48 stores so far, so this could become much larger and become something of a jewel in the crown. The company remains financially sound with no debt and nearly $60 million in cash and has financed $200 million of additional investment in manufacturing facilities over the past few years from retained earnings. It is quite possible there may be a few more years ahead of challenging conditions ahead as domestic conditions continue to change. But if the company can earn a reasonable return on the additional capital it has invested in its manufacturing plants, and continue to grow the USA business then the current share price is not expensive. |
| RDX.AX | Redox rose 85% during the year finishing the year at near 52-week highs despite no news since the release of its half-year results in February. |
| FID.AX | Our largest detractor to performance for the quarter came from Fiducian Group which fell 12% after posting its quarterly cashflow statement. The cashflows were fine, but overshadowing this the company announced it has reached a civil settlement of $7.3 million with ASIC surrounding breaches in the product disclosure document for one of its ESG funds, which the company had since closed due to lack of scale. The company has $33 million in cash and no debt, but this is still a significant amount. |
| COH.AX | Cochlear was another detractor to fund performance during the quarter when it released a trading update forecasting lower profits than originally planned as trading conditions have become tougher and profit margins have come under pressure. The shares were down 28% for the quarter, and nearly 60% for the past year, and even though it is no longer a major holding the fall in the share price still left its mark on our returns. |
| Ticker | Put/Call | Amount Bought | Shares Bought | % Change | Weight % |
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| No Recent Buys Data | |||||
| Ticker | Put/Call | Amount Sold | Shares Sold | % Change | Weight % | Status |
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| No Recent Sells Data | ||||||
| Industry | Prev Quarter % | Current Quarter % | Change |
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| No industry data available | |||