Julian Beaumont, Bennelong; Quan Nguyen, Zenith. Photo: Matt Fatches
Category: Australian equities – small/mid/micro cap
Winner: Bennelong Australian Equity Partners
Analyst: Quan Nguyen
Sector overview:
For the first time since 2011, the smaller capitalisation segment of the Australian equity market outperformed their large capitalisation peers over a 12 month period. The catalyst behind this revival has been the reversal in fortunes for resources related stocks. The small cap sector remains an area in which active managers continue to deliver strong excess returns.
Zenith says …
Bennelong Australian Equity Partners (BAEP), via the Bennelong Ex-20 Australian Equities Fund, has continued to produce strong results. Mark East remains BAEP’s key investor, and in Zenith’s opinion, he has been instrumental in the success of BAEP. Through a logical and robust investment process that aims to identify quality companies that exhibit mispriced earnings growth, BAEP has consistently produced strong benchmark outperformance over multiple periods of assessment.
Interview
Julian Beamont
Investment director
Bennelong Australian Equity Partners
The general approach is very much the same, right across all our strategies, including the large cap and the mid-cap small-cap orientated funds. The one difference is that once you get down into the lower parts of the market, you need to be a lot more diligent and aware of some of the issues that occur in smaller companies. You’re less institutionalised in terms of the companies; there’s a lot more risk, but there are a lot more return opportunities. And down in the lower levels of the market, there are real opportunities to find those stocks that were underestimated by the market, and that’s where we can do a lot of good work in pushing our process and finding those that are overlooked, misdiagnosed, missed entirely or just underappreciated generally. We’ve had some stocks like BWX, a recent float from November. We were able to get into the company pre-IPO and we took a reasonable stake in the company in the order of 13 per cent, which has built up to 15 per cent as we’ve increased our holding. It IPOd at $1.50 in November, and it’s now around $5. It’s the company that owns the Sukin range of skincare creams. It goes to our emphasis on looking for what has been missed by the market – and that’s the general theme across all the stocks we’re looking for.
