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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Forager delivered 31.1% returns by exploiting passive fund dynamics in small-cap markets. Technology turnarounds led by Catapult and Bravura drove performance, while M&A activity provided additional returns."
The Forager Australian Shares Fund delivered exceptional returns of 31.1% in FY2025, significantly outperforming the All Ordinaries Index's 13.2% return. The fund's success stemmed from capitalizing on opportunities created by passive fund dominance, particularly in small-cap markets where forced selling and index inclusion dynamics create inefficiencies. Technology holdings led performance with Catapult tripling in value and Bravura delivering 114% gains through successful business turnarounds. The fund benefited from increased M&A activity, with several portfolio companies receiving takeover offers including PointsBet and Johns Lyng. Strong performers included MotorCycle Holdings, AMA Group, and various financial services companies that executed successful restructuring programs. Tourism-related investments faced headwinds from weak consumer sentiment, while some technology investments like ReadyTech disappointed. The manager maintains conviction in the strategy of investing in companies too small for passive giants, expecting continued opportunities as money flows out of small-cap markets toward large, liquid investments.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction demonstrated through concentrated portfolio with named, sized holdings and clear thesis explanations. Manager provides specific position sizing details, explains entry and exit decisions, and maintains strong conviction in small-cap strategy despite some individual disappointments.
Growth Outlook
Manager expresses cautious optimism about future opportunities while acknowledging market challenges. Positive about passive fund trends creating opportunities but notes weak consumer sentiment and geopolitical tensions as headwinds.
Risk Appetite
Fund maintains selective risk appetite with 8.5% cash position. Manager is actively deploying capital into new opportunities but remains disciplined about valuation and quality, showing moderate risk-on positioning.
Capital Deployment
Moderate deployment activity with 8.5% cash position and selective new additions like Johns Lyng. Manager describes adding to existing positions at attractive prices and uncovering new candidates, indicating measured deployment rather than aggressive cash reduction.
Forward Guidance
Manager indicates readiness to deploy capital into new opportunities with a long list of potential investments. Expresses confidence in continued opportunity set but maintains selective approach rather than aggressive deployment bias.
Language Signal
Language is balanced with more opportunity-focused terms than risk warnings. Uses phrases like 'excellent returns,' 'fruitful foraging,' and 'better prepared than ever' but also acknowledges challenges and maintains realistic expectations.
Perceived Risk
Manager acknowledges specific risks including weak consumer sentiment, trade wars, and geopolitical tensions. Discusses tourism sector headwinds and execution risks in individual investments, showing moderate risk awareness without being overly cautious.
Opportunity Density
Manager sees abundant opportunities from passive fund dynamics and describes having a long list of stocks they'd love to own. Emphasizes that newly unloved opportunities continue drifting into their orbit, indicating a rich opportunity set.
Time Horizon
Clear long-term orientation with 15-year track record emphasis and focus on multi-year themes like passive fund growth. Manager discusses holding through volatility and building portfolios for broad range of outcomes, indicating patient capital approach with 3-5 year investment horizons.
