3 top ASX small cap shares that delivered for this fund's portfolio

The 1851 Emerging Companies Fund has outlined three ASX shares that really delivered for the portfolio in March 2021.

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There are a few top-performing small cap ASX shares that delivered strong performance in March 2021 that helped the 1851 Emerging Companies Fund outperform its benchmark.

What's 1851 Emerging Companies Fund?

It's a fund that invests on small cap companies outside of the S&P/ASX 100 Index (ASX: XTO). The 1851 Capital fund typically invests in 30 to 80 small cap ASX shares to try to beat the S&P/ASX Small Ordinaries Accumulation Index.

1851 Emerging Companies Fund has been a very strong performing fund since inception after it launched just before the COVID-19 crash. Since inception in February 2020, the fund has delivered a net investment performance per annum of 28.6%. That's after all fees and expenses. Over the last year, to 31 March 2021, its net return was 100%.

At the end of March 2021, the five largest positions were Uniti Group Ltd (ASX: UWL), Capitol Health Ltd (ASX: CAJ), Frontier Digital Ventures Ltd (ASX: FDV), PSC Insurance Group Ltd (ASX: PSI) and Pinnacle Investment Management Group Ltd (ASX: PNI).

The fund's net return of 1.1% in March 2021 was able to beat its benchmark's return of 0.8%, partly thanks to these three shares:

Eureka Group Holdings Ltd (ASX: EGH)

The Eureka share price climbed 21% in March 2021. 1851 Capital explained that the business continued its rally after a strong result in February 2021.

In the result, the small cap ASX share reminded investors that its revenue streams are economically stable and highly resilient, with government pensions underpinning around 95% of revenue. It has 97% occupancy.

Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) went up 27% to $5.23 million, underlying profit before tax grew 39% to $3.57 million and net operating cashflow increased 16% to $4.05 million.  

1851's investment team are impressed with the ASX share's new board and management at the company who have sent an "impressive" platform for growth in the senior independent living sector.

People Infrastructure Ltd (ASX: PPE)

The People Infrastructure share price went up 18% last month. 1851 Capital attributed this rise to the "solid" result and return of the former CEO.

The small cap ASX share saw revenue growth of 3.1% to $201 million and normalised EBITDA rose 49.3% to $21 million. Normalised net profit after tax and before amortisation (NPATA) grew 51.5% to $13.7 million and NPATA per share grew 19% to 14.8 cents.

People Infrastructure is expecting to grow its normalised EBITDA to between $35 million to $37 million in FY21.

The business continues to look at both the opportunity to grow organically into new sectors as well use its acquisitions that would accelerate that growth.

Pentanet Ltd (ASX: 5GG)

Perth-based telecommunications business Pentanet saw its share price increase 20% over the month. 1851 Capital pointed to strong subscriber growth and optimism around the cloud gaming launch.

On 27 January 2021, the small cap ASX share commenced online registrations of interest by allowing future Australian users of GeForce NOW to reserve their usernames and register for an invitation to the beta program.

Since that announcement, over 24,300 gamers have registered. This level surpassed initial business case expectations and provided strong confidence to scale up its initial launch plans.

Pentanet has proceeded with the placement of an initial hardware order with NVIDIA in line with the cloud gaming strategy. It is buying 18 RTX game servers at an approximate capital cost of A$3.2 million. The aim is to roll out the beta offering this year, with a commercial to launch after that.

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Frontier Digital Ventures Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of People Infrastructure Ltd. The Motley Fool Australia has recommended Frontier Digital Ventures Ltd and People Infrastructure Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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