| ANNUALIZED SINCE INCEPTION | QUARTERLY | YTD |
|---|---|---|
| 9.04% | -1.11% | -1.11% |
Harvest Lane Asset Management's Absolute Return Fund delivered a -1.11% return in Q1 2026, bringing year-to-date performance to 6.64%. Since inception in July 2013, the fund has generated 9.04% annualized returns net of fees, significantly outperforming the RBA Cash Rate by 6.90% annually. The fund employs a high-conviction absolute return strategy focused on merger arbitrage and corporate events, investing selectively in special situations with limited capital loss risk and positive return skew. With low correlation to traditional asset classes (0.445 correlation with ASX200), the fund serves as either a defensive portfolio allocation or standalone lower-risk alternative to growth investments. The strategy maintains a conservative approach while remaining nimble, taking advantage of select opportunities only when they represent strong return-to-risk trade-offs. Performance fees are charged only on returns above the RBA Cash Rate, aligning manager interests with investors. The fund's principals and their networks are heavily invested alongside external investors.
The fund employs a conservative merger arbitrage and corporate events strategy, investing selectively in special situations with limited downside risk and positive return skew, maintaining low correlation with traditional asset classes while targeting absolute returns above the RBA Cash Rate.
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| Date | Letter | Tickers | Keywords | Pitches | Quick Takes |
|---|---|---|---|---|---|
| Mar 31 2026 | 2026 Q1 | - | Absolute return, capital preservation, Corporate Events, Merger Arbitrage | - | Harvest Lane's Absolute Return Fund posted -1.11% in Q1 2026 but maintains strong long-term performance with 9.04% annualized returns since 2013. The fund employs selective merger arbitrage and corporate events strategies, targeting absolute returns with capital preservation focus and low correlation to traditional markets. |
| Feb 18 2026 | 2025 Q4 | ASK.AX, AUB.AX, BBT.AX, DSE.AX, MYX.AX, NWC.AX, PBH.AX, PEK.AX, SLH.AX, STO.AX, WA8.AX, XAM.AX, XF1.AX | Absolute return, activism, Australia, Merger Arbitrage, special situations, takeovers |
STO AU XF1 AU MYX AU |
Harvest Lane delivered 9.11% returns through selective Australian merger arbitrage, participating in two-thirds of 80+ opportunities. Contested situations like Pointsbet and New World Resources drove outperformance, while active engagement improved market structure. Despite NBIO failures and regulatory intervention in Mayne Pharma, the buoyant M&A pipeline and enhanced deal certainty from recent precedents support optimistic 2026 outlook. |
| Oct 28 2025 | 2025 Q3 | PBH.AX | Absolute return, Australia, Merger Arbitrage, Risk Arbitrage, takeovers |
PBH AU PBH AU |
Harvest Lane's merger arbitrage fund delivered 1.36% in September, driven by successful takeover plays like Pointsbet. The fund capitalizes on announced corporate events with competing bidders, preferring contested situations where extended timelines drive higher final prices. This selective, low-correlation strategy has generated 9.23% annualized returns since 2013. |
| Jul 16 2025 | 2025 Q2 | MYX.AX | Absolute Returns, Australia, Merger Arbitrage, Pharmaceuticals, Risk Arbitrage, risk management | MYX.AX | Risk arbitrage fund returned 3.40% in June despite challenges from Mayne Pharma deal dispute. US private equity firm Cosette attempting to walk away from binding $7.40 takeover lacks legal grounds. Fund reduced position as risk management measure while maintaining deal should be enforced. Strategy focuses on selective merger arbitrage with strong risk discipline. |
| Mar 31 2025 | 2025 Q1 | DCN.AX, DEG.AX, GMD.AX, HRZ.AX, LRS.AX, NST.AX, PLS.AX, POS.AX, RMS.AX, SPR.AX | arbitrage, Australia, commodities, Consolidation, gold, M&A, materials, Mining | - | Harvest Lane's merger arbitrage fund delivered strong Q1 performance by capitalizing on M&A clustering in Australian mining sectors. The fund focuses on hot sectors like gold and distressed-but-stabilizing commodities like lithium and nickel. Recent major deals include Ramelius-Spartan ($2.4bn) and Northern Star-De Grey Mining ($5bn), demonstrating the fund's ability to capture arbitrage premiums in consolidating sectors. |
| Feb 13 2025 | 2024 Q4 | AND.AX, AVJ.AX, BFG.AX, CE1.AX, GDC.AX, NAM.AX, ORR.AX, PBP.AX, PRU.AX, PSQ.AX, QHL.AX, SGF.AX, SVM.TO, SVW.AX, SWF.AX, TIE.AX | Absolute return, arbitrage, Australia, Corporate Events, M&A, takeovers | - | Harvest Lane delivered 17.64% returns in 2024 through disciplined merger arbitrage in Australian corporate events. The fund participated in 58 of 98 opportunities, with standout performances from contested takeovers like Namoi Cotton and special situations like Global Data Centre Group. Strong M&A pipeline and predicted 2025 rebound support continued opportunity flow. |
| Sep 30 2024 | 2024 Q3 | - | Absolute return, Australia, capital preservation, Corporate Events, Merger Arbitrage | - | Harvest Lane's absolute return strategy delivered 3.85% in Q3 2024, maintaining strong long-term performance through selective merger arbitrage and corporate events investing. The fund's conservative approach has generated 9.19% annualized returns since 2013 with low correlation to traditional assets, focusing on capital preservation while targeting opportunities with limited downside risk and positive return asymmetry. |
| Sep 4 2024 | 2024 Q2 | - | - | - | |
| Apr 15 2024 | 2024 Q1 | - | Absolute return, Australia, capital preservation, Corporate Events, Merger Arbitrage | - | Harvest Lane's Absolute Return Fund targets selective merger arbitrage and corporate events with strong capital preservation focus. The strategy delivered 3.74% quarterly returns with low correlation to traditional assets. Conservative approach emphasizes limited downside risk while capturing positive return opportunities in special situations. |
| Dec 31 2023 | 2023 Q4 | - | Absolute return, Australia, capital preservation, Corporate Events, Merger Arbitrage | - | Harvest Lane's Absolute Return Fund delivered 4.85% in Q4 2023 through selective merger arbitrage. The strategy targets special situations with limited downside and positive return skew. Since 2013 inception, the fund achieved 8.59% annualized returns with low volatility and minimal market correlation, making it an effective defensive allocation. |
| Feb 28 2023 | 2022 Q4 | NEW AU, URF AU, WGO AU | - | - |
| QUARTER | THEMES | TAGS |
|---|---|---|
| 2025 Q4 |
AIArtificial intelligence enthusiasm supported large-cap growth companies and drove technology earnings. Long-term capital investment in AI reflects demographic pressures and labor scarcity, supporting multi-year growth trends that may help reduce traditional recession likelihood. |
Technology Investment Growth |
ValuationsEquity valuations remain elevated with S&P 500 trading near 23x forward earnings, well above long-term average of 15.6x. Elevated valuations constrain longer-term returns and increase market sensitivity to earnings disappointments, reinforcing importance of selectivity. |
Multiples Risk Selectivity | |
EarningsStrong corporate earnings drove market gains, particularly in technology and communication services. Current valuation levels suggest returns will depend more on earnings durability and cash-flow generation than further multiple expansion. |
Corporate Technology Growth | |
RatesFederal Reserve cut rates three times in 2025 bringing policy rate to 3.5%-3.75%. Fed expects one more cut in 2026 while markets price in roughly two additional cuts. Higher yields have improved income potential with 10-year Treasury at 4.18%. |
Federal Reserve Policy Income | |
| 2025 Q3 |
Biopharma M&AThe fund focuses on merger arbitrage opportunities, particularly highlighting the successful Pointsbet takeover which involved competing offers and transformed from cash to scrip deals. Risk arbitrage strategy has evolved since WWII to capitalize on announced corporate events including mergers, acquisitions, and reorganizations. |
Merger arbitrage Takeovers Corporate events Synergies Risk arbitrage |
| 2025 Q2 |
Risk ArbitrageThe fund employs risk arbitrage as its core investment strategy, focusing on merger arbitrage opportunities and corporate events. The manager emphasizes that risk arbitrage should display strong absolute returns, low drawdowns, and low volatility when executed with skill. The strategy involves selective participation in only 71% of opportunities that fit their mandate. |
Merger arbitrage Corporate events Special situations Absolute returns Capital protection |
Biopharma M&AThe fund's largest position was in Mayne Pharma Group, subject to a takeover by US private equity backed Cosette Pharmaceuticals at $7.40 per share. The manager argues that Cosette cannot legally walk away from the binding scheme of arrangement despite their attempts to invoke a Material Adverse Change clause. The position resulted in the fund's highest monthly drawdown in 63 months. |
Scheme of arrangement Material Adverse Change Private equity Takeover Contract law | |
Risk ManagementThe manager emphasizes stringent risk management as the difference between professional investing and gambling. They reference the brutal math of losses, noting that a 50% loss requires a 100% gain to recover. The fund cut a significant portion of their Mayne Pharma position as part of best-in-class risk management, crystallizing a loss to prevent further damage. |
Capital preservation Drawdown management Position sizing Loss recovery Professional investing | |
| 2025 Q1 |
GoldThe gold sector is considered hot with over 50% of materials sector M&A deals occurring in gold. This represents disproportionate clustering of M&A activity, with major deals including Ramelius acquiring Spartan for $2.4bn and Northern Star acquiring De Grey Mining for $5bn. |
Gold Miners M&A Consolidation Premium Hot Sector |
LithiumLithium has faced tough times recently but is showing signs of stabilization, creating M&A opportunities. Pilbara Minerals acquired Latin Resources for $560m at a 57% premium, demonstrating how bombed out sectors can attract consolidation activity when they begin to stabilize. |
Battery Metals M&A Consolidation Bombed Out Stabilizing | |
NickelNickel has suffered significantly, creating opportunities for consolidation. Horizon Minerals acquired Poseidon Nickel for AUD 30.6m, with the bombing out of nickel being a major factor in infrastructure becoming stranded and making takeovers attractive. |
Battery Metals M&A Consolidation Stranded Assets Infrastructure | |
| 2024 Q4 |
Biopharma M&AThe fund participated in multiple merger arbitrage opportunities throughout 2024, including Perseus's takeover of Orecorp, Probiotec's scheme with Pyridam, and the contested battle for Namoi Cotton between Olam Agri and Louis Dreyfus Company. The manager emphasizes the importance of competitive auctions and diligent screening processes for deal breaks aversion and capital preservation. |
Takeovers Schemes Arbitrage Competitive Auctions |
Capital MarketsAustralian M&A and corporate activity remained strong in 2024, with public market deal volume nearly matching the blockbuster 2023 levels. The fund identified 98 new opportunities during the year, with 20 seeing multiple offers, though this was slightly below the long-run average of 25%. |
M&A Corporate Deals Volume Activity |
| Date | Pitch Type | Author | Ticker | Company | Industry | Sub Industry | Bull / Bear | Exchange | Keywords | Action |
|---|---|---|---|---|---|---|---|---|---|---|
| Feb 18, 2026 | Fund Letters | Luke Cummings | STO AU | Santos Limited | Energy | Oil & Gas Exploration & Production | Bear | New York Stock Exchange | Dealrisk, LNG, merger, Nbio, takeover | Login |
| Feb 18, 2026 | Fund Letters | Luke Cummings | XF1 AU | Xref Limited | Information Technology | Application Software | Bear | New York Stock Exchange | Activism, Deal Breaker, Scheme, shareholder vote, Software | Login |
| Feb 18, 2026 | Fund Letters | Luke Cummings | MYX AU | Mayne Pharma Group Limited | Health Care | Pharmaceuticals | Bear | New York Stock Exchange | Activism, FIRB, pharmaceuticals, Regulation, Scheme | Login |
| Oct 28, 2025 | Fund Letters | Luke Cummings | PBH AU | Pointsbet Holdings Ltd | Health Care | Online Gambling | Bull | NYSE | arbitrage, bidding war, Cash offer, Exit timing, M&A, merger, Scrip, synergy, takeover | Login |
| Oct 28, 2025 | Fund Letters | Luke Cummings | PBH AU | Pointsbet Holdings Ltd | Health Care | Online Gambling | Bull | NYSE | arbitrage, bidding war, Cash offer, Exit timing, M&A, merger, Scrip, synergy, takeover | Login |
| Jun 30, 2025 | Fund Letters | Harvest Lane Asset Management | MYX.AX | Mayne Pharma Group | Health Care | Pharmaceuticals | Bull | ASX | Australia, Legal Enforcement, Material Adverse Change, Merger Arbitrage, pharmaceuticals, private equity, Risk Arbitrage, Scheme of Arrangement, takeover | Login |
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