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OC Funds buy into Virtus, iSelect, Ingenia & Silver Chef

Since its inception in December 2000, The OC Dynamic Equity Fund has outperformed its benchmark, the Small Ordinaries Accumulation Index, by nearly 7% per annum with a return of 12% compared with a 5.3% return from the index.

With outperformance as impressive as this, it can be worth investors keeping an eye on what the portfolio managers at OC Funds are buying and selling.

According to the recent OC Fund’s June Quarter Investment Review, the Dynamic Fund portfolio had at least 4 new positions added to it, 2 of which were added via Initial Public Offering (IPO) participation.

1)     Virtus Health (ASX: VRT) is Australia’s largest provider of in vitro fertilisation (IVF) services, with clinics spread across the Eastern states. The company listed in early June and its share price has done well, increasing from $6.20 to around $7 today. OC states that it is attracted to Virtus, given its high barriers to entry and growth in demand for services, due to an increasing number of couples postponing having children until later in life.

2)     iSelect (ASX: ISU) owns a relatively well-known comparison website of the same name. It makes most of its money selling health insurance policies. OC was attracted to iSelect because it views the firm as having the dominant market position in the health insurance category, along with technological leadership over its competitors, and the vitally important skill of being able to convert a high level of inquiries into sales.

3)     Ingenia Communities (ASX: INA) is a retirement village owner and operator that we have previously written about here. OC stated in their Review, that they had “a positive view around the growth prospects of the business and its ability to realise value for its non-core assets in the next 6-12 months.”

4)     Silver Chef (ASX: SIV) is a company engaged in the long-term rental of commercial equipment primarily to the hospitality industry. The share price has been on a tear in the past 12-months rising from $3.65 to $8.30. OC believes the company can continue to deliver compound annual growth rates around 17% for the foreseeable future. 

Foolish takeaway

All 4 of these companies which have been added to the Dynamic portfolio have appealing outlooks. What’s more, as part of its investment process, OC spends a lot of time meeting with and quizzing the management of the firms it invests in. This process helps OC not just understand the businesses better, but also identify managers that are focussed on creating shareholder value.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

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