Top fund manager has 'never seen' ASX share price moves like we are witnessing

In over 15 years, Chris Stott has never seen ASX share prices move like this.

| More on:
A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The S&P/ASX 200 Index (ASX: XJO) is a sea of calm relative to some of the extreme volatility witnessed in the S&P/ASX Small Ordinaries Index (ASX: XSO), particularly among the smallest companies in that index.

Writing in its October 2022 monthly report, the 1851 Emerging Companies Fund says it has seen "some of the largest daily movements in our index for many years".

"In over 15 years of investing in the Australian small-cap sector, we have never seen the fast-changing macroeconomic environment driving share price moves like we are witnessing as opposed to underlying company fundamentals."

Managed by small-cap veteran Chris Stott, since inception in February 2020 the 1851 Emerging Companies Fund has returned 12.8% per annum, soundly outperforming its benchmark.

October saw the fund rise 4.4% after fees compared to its benchmark's rise of 6.5%

Contributors to performance included the XRF Scientific Limited (ASX: XRF) share price jumping 24% higher for the month after the manufacturer of equipment and chemicals largely for the mining sector reported a "strong trading period across all divisions, driven by activity in the mining sector and buoyant demand for capital equipment products".

On the flip side, the Eureka Group Holdings Ltd (ASX: EGH) share price fell 14% in October after the owner and manager of senior independent living communities announced a $28m capital raise at $0.47 to fund the purchase of two new villages. The company also announced they are in due diligence with over $20m worth of further potential acquisitions

In early November, 1851 Capital lodged a notice of initial substantial holder with the ASX, declaring it held 5.06% voting power in Eureka Group. 

The fund's five largest positions are listed as Capitol Health Ltd (ASX: CAJ), PSC Insurance Group Ltd (ASX: PSI), PeopleIn Ltd (ASX: PPE), OFX Group Ltd (ASX: OFX) and Ridley Corporation Ltd (ASX: RIC).

The OFX Group share price continued its upward trajectory into November after the foreign exchange services company reported a strong performance for the first half of FY23, including upgrading its profit guidance for the full year. In what has been a tough year for many payment companies, OFX Group shares have been a standout, gaining 57% over the past 12 months.

1851 Capital expects inflation to peak this coming quarter, saying the impact of the recent east coast rain will likely drive food prices higher once again. Despite the recent hikes in interest rates, the fund says economic activity continues to remain robust with no major slowdown evident.

"We continue researching for companies to position for an inevitable economic recovery over the medium term," concluded the fund.

Motley Fool contributor Bruce Jackson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended OzForex Group Limited, PSC Insurance Group, and Peoplein. The Motley Fool Australia has recommended OzForex Group Limited, PSC Insurance Group, and Peoplein. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Man on a laptop thinking.
Share Gainers

Here are the top 10 ASX 200 shares today

It was a Garfield-eque start to the trading week this Monday.

Read more »

A young boy with a sombre face looks down at the zip fastener at the bottom of his jacket as he concentrates on unfastening the clasp.
BNPL shares

What's happening with Zip shares on their first day back aboard the ASX 200?

After a strong eight month run, Zip shares are once again part of the ASX 200.

Read more »

Woman looks amazed and shocked as she looks at her laptop.
Healthcare Shares

If you invested $5,000 in this ASX pharmaceuticals stock a year ago, you'd have $34,711 now!

Just how lucky have investors been with this stock?

Read more »

A boy stands firm on a rocky cliff holding a rocket in each hand and looking up toward the sky, anticipating flying into space.
Share Gainers

Why these 2 ASX 200 shares are surging amid today's market meltdown

Investors are bidding up these two ASX 200 shares despite the wider market meltdown. But why?

Read more »

A woman with strawberry blonde hair has a huge smile on her face and fist pumps the air having seen good news on her phone.
Share Gainers

Why 29Metals, Immutep, Insignia, and Perenti shares are pushing higher today

These shares are avoiding the market selloff. But why?

Read more »

Modern accountant woman in a light business suit in modern green office with documents and laptop.
Share Market News

This ASX lithium stock is down 79% in 2024, and a director just bought 300,000 shares

This lithium director just bought the dip in a big way.

Read more »

A young male investor wearing a white business shirt screams in frustration with his hands grasping his hair after ASX 200 shares fell rapidly today and appear to be heading into a stock market crash
Share Fallers

Why DroneShield, South32, Whitehaven Coal, and Woodside shares are tumbling today

These shares are under pressure on Monday. But why?

Read more »

A young woman slumped in her chair while looking at her laptop.
Share Market News

Why is the ASX 200 starting the week with a whimper?

The ASX 200 is tumbling on Monday. But why?

Read more »