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09 Jul 2021 - Hedge Clippings | 09 July 2021
By: Australian Fund Monitors

    

Hedge Clippings | Friday, 09 July 2021

 

If it were done when 'tis done, then 'twere well
It were done quickly:

Macbeth, Act 1, Scene 7

While the "it" referred to in the above quotation was fictitious, (namely Macbeth's murder of the King of Scotland) the underlying message has stood the test of time. It is doubly relevant today as New South Wales battles an outbreak of Covid, which, admittedly given the benefit of hindsight, would have been less of an issue if the lockdown approach taken had been "go hard and go early".

Whilst it would have been a difficult, and in some circles, unpopular decision, it might have prevented the spread, and longer term consequences, including the inevitability that once out in the community, a harder and longer lockdown would be required.

With the benefit of hindsight, however, there have been enough examples - particularly in Victoria - where letting the cat out of the bag is a dangerous strategy. More of a hope really, in spite of the best endeavours of contact tracers, given the low levels of vaccination, and public complacency.  And hope, as we know, is not a strategy.

Letting it rip and learning to live with Covid might be a strategy, but not a very smart one given NSW would then have interstate borders slammed shut until vaccination was complete, or sufficient numbers had been infected, and hopefully recovered. That would have been unlikely prior to Christmas in spite of the additional Pfizer doses due to arrive in the next week or so.

It's been a tough eighteen months or so, and as noted by Charlie Aitken in the wide ranging - video interview we had with him earlier this week, one thing he wasn't expecting since we last caught up, was to be back in lockdown, talking over Zoom. Other topics covered apart from the relative success or otherwise of pandemic responses here and overseas included inflation, interest rates, China, and what he looks for in a company to make it a good investment.

Elsewhere this week we held a webinar with Michael Tobin from Vantage Asset Management to look at opportunities in the mid-market ($300-$500 million) Private Equity space. For all but the largest investors such as family offices or industry super funds, this is a difficult market to access.

In addition to the minimum ticket size, proper due diligence on the target companies is particularly onerous (and necessary). Equally important once invested, ongoing management support is frequently required to assist and ensure that the opportunities the additional capital offers are maximised. Finally, institutional private equity funds have the hard headed - expertise to maximise value when exiting the investment.

For smaller investors wanting exposure to Private Equity, the options are limited. When investing in private companies most investors either don't have the knowledge to do the due diligence, or the necessary information is not available. Once invested, few small investors have the skills, inclination or time to then actively involve themselves to assist the company, even if invited to do so. And finally, diversification is one of the best methods of risk mitigation, a benefit Michael was keen to emphasise during the webinar.

To watch a recording of the webinar please click here. It runs for about 45 minutes all up, including questions, so whether you're in lock down or otherwise, feel free to take some time to watch.

Meanwhile enjoy the weekend and stay safe.


News & Insights


Webinar - Private Equity with Chris Gosselin and Michael Tobin of Vantage Asset Management

Video Interview with Charlie Aitken of Aitken Investment Management

What Are Central Bank Digital Currencies? by Arminius Capital


June 2021 Performance News


Bennelong Long Short Equity Fund

AIM Global High Conviction Fund

Collins St Value Fund

Premium Asia Fund

Surrey Australian Equities Fund

Bennelong Kardinia Absolute Return Fund

DS Capital Growth Fund

Montgomery Small Companies Fund


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