MENU
 

PRE TAX NTA |$3.53

Value as at close of business on 7 March 2025

CIO Insights - 19 July

Hi everyone
 
What a weekend for the sports lovers, with two new and very young superstars of their sports winning on their respective biggest stages. Congratulations to 24-year-old Collin Morikawa on winning his second golfing major, and first Claret Jug (in his first attempt); and also to 22-year-old Tadej Pogacar for winning his second Tour de France in such a dominant fashion (he was also crowned King of the Mountains and Best Young Rider of the Tour). To win one ‘major’ is amazing, but it is often said that winning the second is even harder than the first! Congratulations must also go to Mark Cavendish on winning the TDF Green (sprinters) jersey, given he wasn’t even picked in the team until a week before the race! Chapeau lads!
 
Anyways…
 
The fund finished the financial year with a solid month in June, delivering investment performance of 7.3% for the month, and a 28% return for the year. As mentioned in the monthly report, the share price increased by 38.9% over the financial year, and also paid a 12c dividend, bringing the total 12-month shareholder return to 42.7%.
 
In the monthly report we mentioned that we sold a poor performing core portfolio holding at a significant loss. This led to a great question by one of our readers about whether we deploy our own stop losses in the portfolio when positions go awry. I thought it was worthy of a comment to our broader audience. We regularly reference how we remain in regular contact with all of our managers. When companies make larger announcements that move the share price, I am pretty quick to check in with the recommending manager to see whether this new news changes the conviction in the thesis. This is the same for both good and bad news, because in a market where algorithmic and computer-based trading accounts for over half of each and every days turnover, share prices will over overreact to announcements. We have seen plenty of instances when a quarterly earnings announcement includes (say) a revenue ‘miss’ of a few pennies, and the share price falls by 20% on the day. A stop loss would nearly always be triggered in this (fairly common) case. Our managers have conducted deep fundamental analysis into all of the companies they recommend and they themselves are in regular contact with the company management. They live and breathe their portfolio companies. We feel it best for our shareholders that they decide when their thesis is flawed, or the sector landscape has changed such that share price appreciation is now less likely. The worst-case scenario for us would be to sell a holding when our recommending manager believed the share price had overreacted, and they were buying for their own shareholders while we were selling for ours.
 
This obviously involves strong faith in our managers. And we have that faith. You will recall that each of our core managers are invited to direct a portion of our annual donation to various medical institutes around the country. Every manager has a connection or story behind who they channel the donation toward, and the size of the donation is directly related to our investment performance. The better we perform, the bigger the donation. Simple. So our core managers want our performance to be as strong as possible.
 
Our conference managers are totally aligned to our goal also, even if they don’t get to direct any of the donation themselves. They stand in front of the audience and present a single stock recommendation at the conference. It is out there for everyone to see. They get judged by that. And they have a 12-month time frame to work with, which is shorter than most fund managers use. They have to find a stock with a catalyst for performance, which is tough! Needless to say, they work really hard to find such a company to recommend, knowing full well it can make (or break) their reputation. I can’t think of a better incentive to get it right.
 
In the three conferences we’ve conducted since HM1 came to life, we’ve had a pretty good success rate. Not 100% of course, but we’ve also had plenty of instances when positions have been cut quickly when share prices have either overreacted to the upside or the landscape has changed. Yeahka and Slack Technologies are two good examples of this – Yeahka’s share price almost tripled within 3 months with no real fundamental news, and has since retracted, while Slack was taken over by Salesforce within weeks of being pitched in November last year.
 
So, while many would say that a stop loss (or profit) policy should be a part of our risk management, our managers make the final call on when we close a position out, such is the faith we have in their expertise, and the alignment of interests we all share towards our shareholders and beneficiaries. Their stop loss is our stop loss.
 
Next week I’ll tell you about our latest meeting with one of our beneficiaries, The Black Dog Institute, and what it means to them to be a part of the HM1 family. Until then, stay safe, stay home, and get vaccinated. 

 

Rory Lucas
Chief Investment Officer
Hearts and Minds Investments Limited

Reminder: these are simply my general views and should not be taken as investment advice

 

If you would like to receive these weekly updates direct to your inbox each Monday, sign up here.

 

 

DISCLAIMER: This communication has been prepared by Hearts and Minds Investments Limited (ABN 61 628 753 220). In preparing this document the investment objectives, financial situation or particular needs of an individual have not been considered. You should not rely on the opinions, advice, recommendations and other information contained in this publication alone. This publication has been prepared to provide you with general information only. It is not intended to take the place of professional advice and you should not take action on specific issues in reliance on this information. Past performance is not a reliable indicator of future performance. This document may not be reproduced or copies circulated without prior authority from Hearts and Minds Investments Limited.

 

Recent Posts

Read the latest insights
A curated list of HM1 investor updates, portfolio news and other interesting articles.
Read More
Reporting Season Insights: HM1 Core Portfolio Holdings
We spoke to our dedicated fund managers for an update on some of our major portfolio holdings following reporting season.
The investing megatrends you can’t ignore (and some you should rethink)
James Marlay of Livewire sat down with Vihari Ross of Antipodes (HM1 Conference Fund Manager) and James Tsinidis of Munro Partners (HM1 Core Fund Manager) to discuss the biggest megatrends shaping the future.
2025: Where to Find Market Opportunities
There are opportunities abound for investors with an active management mindset in 2025. Get more insights from one of HM1's Core Fund managers, Magellan.
Significant increase in profit and increased fully franked dividend
We're pleased to declare an increased half-year fully franked dividend of 8.0 cents per share payable in April 2025.
 

Reporting Season Insights: HM1 Core Portfolio Holdings

We spoke to our dedicated fund managers for an update on some of our major portfolio holdings following reporting season.

Read More
March 10th, 2025
 

The investing megatrends you can’t ignore (and some you should rethink)

James Marlay of Livewire sat down with Vihari Ross of Antipodes (HM1 Conference Fund Manager) and James Tsinidis of Munro Partners (HM1 Core Fund Manager) to discuss the biggest megatrends shaping the future.

Read More
March 3rd, 2025
 

2025: Where to Find Market Opportunities

There are opportunities abound for investors with an active management mindset in 2025. Get more insights from one of HM1's Core Fund managers, Magellan.

Read More
February 25th, 2025
 

Significant increase in profit and increased fully franked dividend

We're pleased to declare an increased half-year fully franked dividend of 8.0 cents per share payable in April 2025.

Read More
February 20th, 2025
 

Magellan's Elisa Di Marco - 3 Trends That Will Define The Next Decade

Elisa Di Marco of Magellan (HM1 Core Fund Manager) joined Equity Mates to unpack 3 big megatrends shaping our world today (and how we can invest in them).

Read More
February 7th, 2025
 

Nine top stock picks to prepare your portfolio for 2025

Health care, ride-sharing, and the emerging world of YouTube entertainers are among the industries leading investors have picked for growth in 2025.

Read More
January 21st, 2025
 

Resources fundies reveal top picks ahead of ‘stellar’ 2025

Some of Australia’s biggest resources funds are gearing up for a bumper start to the new year.

Read More
January 6th, 2025
 

Qiao Ma: finding killer companies, surviving the GFC & why founders win

Qiao Ma, Portfolio Manager of the Munro Partners joins Owen Rask on The Australian Investors Podcast.

Read More
January 6th, 2025
 

10 top fund managers reveal their long-term stock picks

With valuations stretched and geopolitical tensions high, the new year offers plenty of potholes for investors. 

Read More
December 28th, 2024
 

Rikki Bannan – Don’t get caught up in momentum

Conference Fund Manager Rikki Bannan, Executive Director at IFM Investors, joins Equity Mates to discuss her standout 2023 stock pick, Telix, and explore what opportunities lie ahead.

Read More
December 19th, 2024
 

Professor Jane Butler: Sparking Hope for Spinal Cord Injuries

In this episode of the Hearts & Minds Podcast, we sit down with Professor Jane Butler to discuss her groundbreaking research into spinal cord injuries.

Read More
December 10th, 2024
 

Nick Griffin – The Nvidia story is not over

Nick Griffin, Founding Partner & Chief Investment Officer of Munro Partners joined the Equity Mates podcast in their Summer Series.

Read More
December 9th, 2024
 

HM1 CEO Succession

Hearts and Minds Investments Limited advises that Paul Rayson intends to retire from the position of Chief Executive Officer, effective 19 February 2025.

Read More
December 5th, 2024
 

How Trump will impact equity markets

The United States has spoken. President Trump has returned to the White House. But how can we cut through the noise to reveal the investment, economic and geopolitical ramifications?

Read More
November 26th, 2024
 

Trump unifies top investors in decade-long bullish outlook for US

Nick Moakes, CIO of the $72 billion Wellcome Trust, told the conference that too many investors were banking on a return to the ultra-low interest rates that prevailed over the past decade.

Read More
November 20th, 2024
 

These rock-star stock picks could get markets talking next year

Eleven rock stars of international and local funds management took to stage – each tasked with picking and pitching one company whose shares will take off over the next year.

Read More
November 18th, 2024
 

Is anyone brave or stupid enough to bet against America?

Stock pickers have been punished for betting against the US. The choice between consensus and contrarianism on American exceptionalism is now harder than ever.

Read More
November 17th, 2024
 

Sohn: NYSE-listed Estee Lauder’s Northcape Capital pick

Northcape Capital’s Fleur Wright this gives a rare opportunity to buy a high quality company at an attractive price.

Read More
November 15th, 2024
 

Sohn ASX stock pick: Ellerston Capital’s Chris Kourtis backs Perpetual

Chris Kourtis has put his biggest bet on embattled Perpetual – picking one of the most hated stocks on the ASX – that he believes will soon be the ‘cheapest listed asset manager of scale in the universe’.

Read More
November 15th, 2024
 

AI start-ups a threat to incumbent big companies

Paul Bassat predicts emerging artificial intelligence companies will disrupt sectors and overtake established incumbent companies just as rapidly as the seismic shifts that took place when the internet emerged in the mid-1990s.

Read More
November 15th, 2024
 

Howard Marks and Sohn’s big stars reveal seven rules for investing

Among the stock picks and stunts at the Sohh Hearts & Minds event, Howard Marks and Nick Moakes provided investors with long-term rules for playing markets.

Read More
November 15th, 2024
 

Sohn investors position for bullish but bumpy Trump ride

Australia and the rest of the world must adjust to a new Trump presidency that will deliver an expected bull market but also disruption, with the leader in waiting prepared to “create pain” to get his way.

Read More
November 15th, 2024
 

Sohn stock picker experts name best shares to invest in for year ahead

‍Don’t overlook down and out silver miners, legacy skincare brands ready for a revival and a big financial company suffering from a severe case of shareholder wealth destruction.

Read More
November 15th, 2024
 

Eleven stock tips from Sohn to get you through 2025

“There’s no finer place for the finance festival than in the festival city,” said Matthew Grounds. He, along with fellow Barrenjoey co-executive chairman Guy Fowler and investor Gary Weiss, is one of Sohn’s driving forces.

Read More
November 15th, 2024
 

Sohn Hearts & Minds Investments fund targets $1.5bn valuation

‍Hearts & Minds Investments chair Chris Cuffe is hoping for HM1 to grow to more than $1.5bn in the next five years.

Read More
November 14th, 2024
 

Galaxy Digital CEO Mike Novogratz believes bitcoin will hit $US100k

Bitcoin’s bounce to record highs in recent days is only the beginning of a fresh surge higher for cryptocurrency, says US billionaire Mike Novogratz.

Read More
November 9th, 2024
 

Why this New York hedge fund manager sees opportunity in European stocks

Influential New York-hedge fund manager Ricky Sandler will turn to Europe for his next stock pick.

Read More
November 6th, 2024
 

Antipodes’ Ross says short-term wealth hinges on US election

The portfolio manager says defensive stocks pose a bigger risk than the magnificent seven for investors that are overexposed to the American sharemarket.

Read More
November 5th, 2024
 

Concentration risk key for investors: Antipodes Partners’ Vihari Ross

The concentration risk in global stock indexes that has built up during the strong rise over the past year must now be a key consideration for global investors, according to Vihari Ross.

Read More
November 5th, 2024
 

The fundie betting big on China – with help from AI

Mr Mehta is sticking to his well-worn strategy: he’s hunting for companies across Asia that aren’t battling intense competition and have management teams focused on costs, cash generation and high payouts to shareholders.

Read More
November 5th, 2024