One of the easiest ways to beat the market is to invest for the long-term. That's a lot easier to do when the shares you invest in are long-term growth stories.
I'm always interested in what some of the top-performing investment managers in Australia invest in.
One of those high-performing listed investment companies (LICs) is NAOS Absolute Opportunities Co Ltd (ASX: NAC). Its portfolio has returned an average of 18.5% per annum since inception and 19.34% per annum over the past three years, before fees.
Clearly, the investment team at Naos know what they're doing. Few investors can produce an average return per year like that for three years or more.
So, it was very interesting to me to see that of the NAOS Absolute Opportunities Co's 11 holdings Japara Healthcare Ltd (ASX: JHC) was named as a key holding. Japara is one of Australia's largest aged care providers.
Naos said that Japara's numerous headwinds over the past year are likely to abate. Another point was that the property exposure on the balance sheet is valued at cost. The final key point was that it's projected there is a significant undersupply of aged care beds over the next 10 years.
Japara is heavily investing for future growth, which doesn't help current profit but should help drive future profit upwards.
The management of Japara expect that the second half of FY18's earnings before interest, tax, depreciation and amortisation (EBITDA) will exceed the first half due to recovering occupancy levels, increasing contributions from completed greenfield & brownfield developments and increasing cost efficiencies.
EBITDA is expected to further increase in FY19 as the above mentioned initiatives gain traction and the government funding indexation recommences.
Foolish takeaway
I can understand why Naos is interested in Japara, I'm a shareholder in Japara too. The long-term ageing tailwinds could blow very strongly in Japara's direction if management can play their cards right with expansion and keep the balance sheet in a good condition.
