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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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Forager Australian Shares Fund 2026 Q3 Investor Letter | Buyside Digest

Back to Fund Profile (Forager Australian Shares Fund)

Primary Source Intelligence • Q3 2026 Letter Analysis

Forager Australian Shares Fund Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, Forager Australian Shares Fund. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+1.6%

Annualized+9.3%

Positioning StanceCONSTRUCTIVE

Market CapSmallCap

GeographyAPAC

Digest Analysis

Quick Take

"Driven by resilient idiosyncratic industrial and technology holdings, while raising cash to 11.7% following full exits in Cuscal and Bravura."

Executive Summary

Forager Australian Shares Fund gained 1.6% net of fees in the September 2026 quarter, outperforming the benchmark S&P/ASX Small Ordinaries Accumulation Index, which declined 0.5%. Over the trailing 12 months, the fund delivered -21.3% net of fees amid heavy drawdowns in smaller industrial companies and small-cap fund outflows. Portfolio cash increased to 11.7% by the end of September as the manager realized profits and exited re-rated positions like Cuscal and Bravura to bolster dry powder ahead of potential volatility. The macroeconomic landscape remains pressured by persistent domestic inflation, which drove four Reserve Bank rate hikes during the year and pushed Australian 10-year government bond yields to 5.3%. A cooling residential housing market has begun triggering distress across private credit funds with high commercial real estate exposure. Despite these domestic headwinds, the manager highlights that aggregate Australian household balance sheets retain low leverage and that the domestic equity market offers resilient corporate earnings insulated from localized consumer distress. Portfolio activity centered on taking advantage of the sharp valuation disconnect across out-of-favor software and niche industrials. The fund re-established its top position in Catapult Sports (7.2% portfolio weight) and initiated new stakes in Singaporean telecom challenger Tuas and enterprise software provider Hansen Technologies. Meanwhile, active takeover approaches have emerged across roughly 12% of portfolio holdings, including bids for OFX Group, IDP Education, and Tourism Holdings, reflecting deep intrinsic value across beaten-down small caps.

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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

72%

CautiousHigh

High Conviction (72%)

The manager maintains a concentrated portfolio of 15–50 stocks with high sizing transparency, where top holdings such as Catapult represent 7.2% of NAV. Conviction is reinforced by deliberate re-entries into preferred names during market panics and willingness to add to arbitrage situations like OFX. It is slightly tempered by acknowledged errors in select holdings like Praemium and EML Payments.

Growth Outlook

55%

BearishBullish

Neutral (55%)

The manager expresses measured constructive optimism on small-cap industrials while remaining explicitly cautious on large-cap indices and domestic consumer exposures. The commentary notes that ASX small caps trade around 12 times earnings versus 16 times for large caps, offering favorable long-term value despite macro turbulence. Elevated interest rates and bond yield spikes keep the outlook balanced rather than outright bullish.

Risk Appetite

60%

DefensiveAggressive

Balanced (60%)

While the fund holds high-beta and turnaround situations such as Tuas and IDP Education, overall risk appetite is moderated by disciplined profit-taking. The team fully liquidated winners like Cuscal and Bravura, increasing cash to 11.7% to maintain defensive optionality. The stance reflects selective risk-taking concentrated in high-moat niches rather than broad market exposure.

Capital Deployment

45%

De-riskingDeploying

Net Neutral (45%)

Capital deployment was net neutral to slightly de-risking as portfolio exits in Cuscal and Bravura exceeded new additions into Hansen and Tuas. This activity lifted the cash balance to 11.7%, establishing a liquid reserve for future market dislocations.

Forward Guidance

65%

CautiousExpansionary

Expansionary (65%)

The manager exhibits a mild deployment bias, seeking out idiosyncratic small companies and raising valuation hurdles to account for higher bond yields. Commentary emphasizes readiness to capitalize on panic if reporting season malaise deepens. The team is actively turning over rocks but holding cash until compelling risk-reward setups appear.

Language Signal

55%

BearishBullish

Balanced (55%)

Directional language balances substantial discussions of 'drawdown,' 'decline,' 'cost inflation,' and 'struggling' retail against recurring themes of 'mispriced,' 'cheap,' 'free cash flow,' and 'attractive target.' Bullish phrasing around software opportunities offsets warnings about residential property and rate headwinds.

Perceived Risk

72%

Low RiskElevated

Elevated Risk (72%)

Perceived risk is elevated due to 10-year government bond yields hitting 5.3%, sticky inflation, four Reserve Bank rate hikes, and visible fallout across private credit and property developments. The manager extensively articulates the risk of margin contraction across businesses hit by rising wage and technology costs.

Opportunity Density

70%

ScarceAbundant

Abundant (70%)

The manager notes that small caps outside the headline indices offer abundant selective opportunities, citing beaten-up tech, takeovers, and niche distributors. Screens are generating actionable situations, but strict valuation criteria and higher required return hurdles filter out lower-quality ideas.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

The fund operates with a multi-year horizon, typically evaluating rolling 3-to-5 year compounding fundamentals while maintaining patience through cyclical downturns such as IDP Education's student placement cycle. The manager stresses the futility of market timing and the benefits of long-term equity compounding.