Ever since it listed in April 2018 as one of the hottest listed investment company raisings in Australian history the L1 Capital Long Short Fund (ASX: LSF) has proven past performance is no guide to future returns.
The L1 Capital raising was so popular with retail investors in early 2018 that the board decided to increase the scale of the company by issuing an additional 55% more shares than originally planned to take shares on issue from 300 million to 675 million.
Fuelling the popularity of the offer was the incredible performance of the L1 Long Short Fund prior to its listing on the ASX.
In fact the fund returned an eye-watering 36.8% annualised per year between September 2014 and the time of its April 2018 IPO.
At that rate of return investors would double their money every two years, but of course it was never going to be sustainable.
Still you can hardly blame the management team of L1 Capital for striking while the iron was hot, it's just that since the IPO at $2 per share the fund has fallen nearly 25% in value to have a $1.53 per share value before tax implications today.
After tax the value is higher at $1.67, but either way the steep losses will have hurt its many retail investors.
Some of its ASX holdings to have struggled include WorleyParsons Limited (ASX: WOR), Boral Limited (ASX: BLD) and Nufarm Limited (ASX: NUF).
I'm surprised at the disappointing returns having met Mark Landau as one of the co-managers to talk stocks and been impressed by his investing philosophy.
Overall then I expect the fund will come back, even if its 'value investing' style of buying cheap, cyclical (i.e. oil) or undervalued stocks is not my cup of tea.
