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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
|---|---|---|---|---|---|---|---|
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"Devon Funds delivered strong June performance through concentrated Australian and New Zealand equity portfolios, benefiting from mining strength and selective stock picking. Strategic moves included increasing Brambles exposure as costs ease and participating in Infratil's telecom acquisition."
Devon Funds delivered positive performance across multiple strategies in June 2023, benefiting from strong performance in mining companies like Rio Tinto and Pilbara Minerals, and successful stock selection including Brambles and AUB Group. The firm made strategic portfolio changes including increasing exposure to Brambles after cost pressures eased due to falling lumber prices, and participating in Infratil's capital raising to fund their One NZ acquisition. Their early exit from EBOS Healthcare proved prescient as the company lost a major distribution contract. The investment approach emphasizes concentrated portfolios of 10-15 select companies with absolute return objectives rather than benchmark tracking. Key risks include persistent core inflation in the US and New Zealand's technical recession, while catalysts include central bank pausing of rate hikes and improving cost dynamics for industrial companies. The managers maintain confidence in their research-driven, valuation-disciplined approach across Australian and New Zealand equity markets, with particular focus on infrastructure, healthcare, and mining opportunities.
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Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.
Market Conviction
High conviction evidenced by concentrated portfolios of 10-15 positions, specific position sizing decisions like increasing Brambles stake, and decisive moves like early EBOS exit. Named holdings with clear thesis explanations across multiple funds.
Growth Outlook
The letter shows mild optimism with positive performance across funds and constructive views on specific investments, but acknowledges economic challenges including New Zealand's recession and persistent inflation concerns.
Risk Appetite
Managers are selectively adding to positions like Brambles and participating in capital raises, showing moderate risk appetite while maintaining disciplined approach through early exits like EBOS.
Capital Deployment
Moderate deployment activity with selective position increases in Brambles and participation in Infratil capital raising, but also portfolio trimming through EBOS exit. Net activity suggests cautious deployment.
Forward Guidance
Forward guidance shows selective deployment bias with confidence in specific holdings like Infratil and Brambles, but measured approach given mixed economic signals.
Language Signal
Language is more positive than negative with terms like 'strong performance,' 'attractive,' and 'confident,' but balanced with risk acknowledgment and selective positioning.
Perceived Risk
Moderate risk acknowledgment with specific concerns about core inflation persistence, New Zealand recession, and labor market tightness. Risks are named and discussed but not central to the investment thesis.
Opportunity Density
Managers see selective opportunities across Australian and New Zealand markets, evidenced by new positions and upgrades to existing holdings, though they emphasize selectivity and research discipline.
Time Horizon
Multi-year investment horizon evidenced by focus on fundamental business improvements like Brambles cost dynamics and Infratil's long-term infrastructure assets. No urgency for near-term catalysts.
