The L1 Long Short Fund Ltd (ASX: LSF) is one of the most successful ASX stocks on the Australian share market.
Since duplicating its managed fund into a listed investment company (LIC) back in 2018, this LIC's portfolio has generated an average return of 12.7% per annum. That stretches to 23.1% per annum over the past five years.
Now, the L1 Long Short Fund is primarily an Australia-focused investment, with ASX stocks making up at least 70% of the fund at any given moment. It is a rather unusual LIC in that it uses a long-short strategy. This involves traditional investing in other shares in hopes of future returns (long investing). But also short-selling companies that it thinks are in for rough times ahead.
This long-short strategy has clearly been effective at generating returns for its investors on the Australian market. But L1 Capital has just launched a new ASX fund that it hopes can replicate the success of its ASX-focused cousin on the international stage.
ASX veterans might find a bell ringing when we mention Platinum Asset Management. Platinum used to be one of the ASX's most sought-after stock pickers. But a recent run of underperformance has left it struggling. As a consequence, Platinum Asset Management's Platinum Capital Ltd listed investment company was approached by L1 Capital with a takeover offer. The offer was accepted, and, earlier this month, was merged into a new LIC that will take L1's long-short strategy to global markets.
That LIC is now known as L1 Global Long Short Fund Ltd (ASX: GLS), and it might be worth a closer look.
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An ASX stock that has banked 70% since January?
We've already touched on the ASX-focused L1 Long Short Fund's previous success. Even though the L1 Global Long Short Fund has only been on the ASX in its new form for a few days, stock investors have a preview of its potential success.
In a merger presentation, L1 fund managers Raphael Lamm and Mark Landau seeded an initial version of what has now become the L1 Global Long Short Fund back in January in a trial run of sorts. Between 1 January and 31 October, that trial run returned a whopping 67.5%.
Past performance is never a guarantee of future success, of course. But no one can deny that this new ASX stock is off to a flying start.
Some of the long positions that can currently be found in the L1 Global Long Short Fund's portfolio include Alcoa, ING and Zillow. Meanwhile, the fund has shorted US electric car maker Lucid Motors.
L1 will have to keep up its outperformance for new investors to get bang for their buck, though. After an initial grace period, this new ASX stock will charge a management fee of 1.4% per annum. That's in addition to a performance fee.
