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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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L1 Capital Long Short Fund 2024 Q2 Investor Letter | Buyside Digest

Back to Fund Profile (L1 Capital Long Short Fund)

Primary Source Intelligence • Q2 2024 Letter Analysis

L1 Capital Long Short Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, L1 Capital Long Short Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+0.7%

Annualized+11%

Digest Analysis

Quick Take

"L1 Long Short Fund outperformed in Q2 despite seeing markets as fully priced with narrow leadership. The fund took copper profits, exited QBE after 100% gains, and positioned in AI supply chain beneficiaries."

Executive Summary

L1 Long Short Fund returned 0.7% in Q2 2024, outperforming the ASX200 by 1.8%. The fund sees equity markets as relatively fully priced with narrow leadership in both Australia and the U.S. driving gains. Key risks include weakening consumer sentiment, geopolitical tensions, and persistent Australian inflation at 4.0% versus the RBA target. The portfolio remains skewed toward low P/E, cash-generative stocks with strong earnings growth. Major moves included taking profits in copper positions during the rally and exiting QBE after a 100% return since 2020. The investment team conducted extensive global research with 200 company meetings across multiple sectors. Strong performers included AGL Energy (+30%) on upgraded guidance and SK Hynix (+29%) benefiting from AI demand. The fund is positioned in AI supply chain companies and sees continued growth from enterprise AI investment. They remain constructive on medium-term copper and gold dynamics while finding attractive opportunities in undervalued U.K. businesses. Portfolio implications include selective deployment in quality companies at compelling valuations while identifying short opportunities in expensive growth stocks.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

68%

CautiousHigh

Moderate (68%)

The fund demonstrates moderate-high conviction through specific position sizing discussions (material copper reduction, 100% QBE return), named holdings with detailed thesis explanations, and clear views on sectors like AI supply chain and gold. However, the diversified 83-position portfolio and hedged language around market conditions prevent a higher score.

Growth Outlook

38%

BearishBullish

Neutral (38%)

The fund explicitly states markets are 'relatively fully priced overall' with 'narrow market leadership' and cites multiple risk factors including weakening consumer sentiment, geopolitical tensions, and election uncertainty. While not deeply bearish, the tone is clearly cautious about current market conditions.

Risk Appetite

0%

DefensiveAggressive

Defensive (0%)

Portfolio positioning remained 'broadly consistent with the prior quarter' with some tactical moves like taking copper profits and exiting QBE. The fund is finding 'numerous attractive opportunities' but also identifying short opportunities, suggesting a balanced risk posture without clear directional bias.

Capital Deployment

43%

De-riskingDeploying

Net Neutral (43%)

The fund took profits in copper positions and exited QBE entirely, while adding some U.K. positions. The letter describes 'broadly consistent' positioning with tactical moves rather than aggressive deployment or de-risking. Net activity appears slightly toward harvesting gains.

Forward Guidance

25%

CautiousExpansionary

Cautious (25%)

The fund is 'currently finding numerous attractive opportunities in low P/E, highly cash generative companies' and will 'look to add to copper exposure at a more favourable entry point.' This suggests selective deployment bias rather than defensive positioning.

Language Signal

45%

BearishBullish

Balanced (45%)

Language is mixed with risk-focused terms like 'fully priced,' 'risks,' 'caution,' and 'over-valuation' balanced against opportunity language like 'attractive opportunities,' 'compelling valuations,' and 'constructive.' Risk language slightly outweighs bullish signals.

Perceived Risk

65%

Low RiskElevated

Elevated Risk (65%)

The fund identifies multiple specific risks including fully priced markets, narrow leadership, consumer sentiment weakness, geopolitical tensions, U.S. elections, Australian inflation persistence, and mounting U.S. debt problems. Risk discussion is substantial and specific rather than generic.

Opportunity Density

60%

ScarceAbundant

Selective (60%)

The fund states they are 'currently finding numerous attractive opportunities in low P/E, highly cash generative companies' and added quality U.K. businesses, but emphasizes selectivity and caution about broader market conditions. Opportunities exist but require careful selection.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The fund demonstrates multi-year thinking with references to medium-term dynamics for copper and gold, 5-7 year earnings expectations for Qantas, and long-term infrastructure spending benefits for CRH. The QBE position held since 2020 shows patience, though some positions have catalyst dependency.