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It has been a tough 12 months for many fund managers, especially for growth focused investors in the small and microcap end of the ASX.
Although the S&P/ASX Emerging Companies Index has "only" fallen around 10% over the past year, that has masked some catastrophic sell-offs in non-mining stocks.
Particularly hard-hit have been a host of recent IPOs, including Booktopia Group Ltd (ASX: BKG) shares plunging over 90%, Hipages Group Holdings Ltd (ASX: HPG) shares sinking over 66% and the Airtasker Ltd (ASX: ART) share price having tanked 56%, all over the past 12 months.
Headed by Graeme Carson & Dean Fergie, the Cyan C3G Fund admits its recent performance has been disappointing, but feels "there are presently a number of emerging market trends that could result in markedly improved short to medium term performance."
Writing in the August update, the fund managers named the trends as…
- Continued takeover activity in the domestic market
- Further appreciation of underlying company performance
- Increased market liquidity
- Renewed opportunities through IPO and other corporate activity
The fund managers go on to say they feel their "investee companies have been, on the whole, trading well, and are firmly of the view that from present levels upside price appreciation far exceeds downside."
Building products manufacturer and distributor Big River Industries Ltd (ASX: BRI) was one fund holding that the managers said produced impressive financial results with FY22 revenues rising 45% to $409m and underlying profitability up 191% to $22.7m. The company announced a final dividend of 10 cents per share, and trades on a fully franked dividend yield of around 7%. The Big River share price is flat over the past 12 months.
The fund named Silk Logistics Holdings Ltd (ASX: SLH) as providing one of the highlights of the results season. The warehousing and logistics company delivered FY22 revenue up 22% to $394m and net profit after tax up 45% to $15.8m. The fund went on to say that "with further acquisitions and greenfield sites already confirmed, FY23 is forecast to be another record year. Given the impressive financials it was both surprising and disappointing the shares closed the month slightly weaker." The Silk Logistics share price has fallen around 7% over the past 12 months.
