Pengana Capital Group Ltd. · ASX:PCG

Pengana Capital — Non-Deal Roadshow (March 2018)

48 slides from Pengana Capital's roadshow presentation, Mar 19, 2018

  1. Slide 1: Pengana Capital

    PENGANA CAPITAL Ajuo sn jeuosied JOS

  2. Slide 2: Overview

    OVERVIEW For personal use only Diversified group with FUM of over $3.5 billion Leading provider of premium products Proven long-term performance over multiple funds Focus on ‘high-end’ retail market Primary focus is to deliver superior long term returns for our investors 2

  3. Slide 3: Our Philosophy

    OUR PHILOSOPHY For personal use only GOAL OF CONSISTENT ‘GOOD’ RETURNS WITH ‘LOWER’ RISK WE AIM TO ADD VALUE TRUE TO GENERATE SUPERIOR TO CLIENT LABEL LONG TERM RETURNS, WITH A PORTFOLIOS FOCUS ON CAPITAL PRESERVATION SUSTAINABLE & REPEATABLE 3

  4. Slide 4: How We Implement This

    HOW WE IMPLEMENT THIS For personal use only ATTRACT & RETAIN EXCEPTIONAL FM TEAMS BENCHMARK- INSTITUTIONAL UNAWARE & INFRASTRUCTURE ACTIVELY & SEPARATION OF MANAGED DUTIES WE AIM TO GENERATE SUPERIOR LONG TERM RETURNS, WITH A FOCUS ON CAPITAL PRESERVATION ADVISER AND RETAIL CULTURE HNW FOCUS CAPACIT

  5. Slide 5: Fund Strategies

    FUND STRATEGIES For personal use only INTERNATIONAL AUSTRALIAN ABSOLUTE EQUITIES EQUITIES RETURNS ALL CAPS ALL CAPS MARKET NEUTRAL International Fund Australian Equities Fund PanAgora Absolute Return Global International Fund - Managed Risk Australian Equities Income Fund Equities Fund International

  6. Slide 6: Pengana International Equities Limited

    PENGANA INTERNATIONAL EQUITIES LIMITED ASX: PIA For personal use only Overview of PIA options at as 16 March 2018 Net Tangible Assets Pre-tax $1.25 Post-tax $1.23 Shares Price $1.18 Shares on issue 245,416,830 Market capitalisation $289,591,859 Options Price $0.02 Options outstanding 244,049,198 Exe

  7. Slide 7: International Equities March 2018 Investor Roadshow

    For personal use only MARCH INTERNATIONAL EQUITIES 2018 INVESTOR ROADSHOW

  8. Slide 8: Funds in Focus

    FUNDS IN FOCUS For personal use only 1. 2. 3. Pengana Pengana Pengana International International International Fund - Ethical Fund Equities Limited (PIA) 8

  9. Slide 9: Some things never change… Some things can't stay the same

    For personal use only Some things never change… Some things can’t stay the same

  10. Slide 10: Fund Overview

    FUND OVERVIEW For personal use only Evergreen - focus on value and growth Long-only - typically Typically hold invested 80-100% 30-50 stocks Global - invest in Funds under developed and management emerging markets capped at A$7b Unique Portfolio Focus on AUD-returns and Construction managing FX expo

  11. Slide 11: Who We Are

    WHO WE ARE For personal use only CORE FUND AIMS: CONSISTENTLY MAKE MONEY HOW WE DO IT PORTFOLIO ACTIVE MINIMISE LOSSES & VOLATILITY CONSTRUCTION MANAGEMENT 11

  12. Slide 12: Portfolio Construction

    For personal use only PORTFOLIO CONSTRUCTION Some things never change 12

  13. Slide 13: How we pick stocks

    PORTFOLIO CONSTRUCTION i) How we pick stocks For personal use only POSITIVE GOOD UNLIKELY TAILWINDS MANAGEMENT TO BLOW UP CASH REASONABLE GROWING GENERATION VALUATION LOGICAL, COMMON SENSE AND WIDELY PROVEN TO WORK 13

  14. Slide 14: Segmentation strategy

    PORTFOLIO CONSTRUCTION ii) Segmentation strategy For personal use only CORE CYCLICAL OPPORTUNISTIC 60–80% OF FUND 0–30% OF FUND 0–20% OF FUND Stable and growing Operating in cyclical Unique company companies with industries that are specific situations favourable tailwinds poised for an upturn with

  15. Slide 15: Core: 60-80% of Fund

    1) PORTFOLIO CONSTRUCTION iii) Core: 60-80% of Fund For personal use only Cash flow 5-15% Time 15

  16. Slide 16: Cyclical: 0-30% of Fund

    1) PORTFOLIO CONSTRUCTION iv) Cyclical: 0-30% of Fund For personal use only Cash flow Time 16

  17. Slide 17: Opportunistic: 0-20% of Fund

    1) PORTFOLIO CONSTRUCTION v) Opportunistic: 0-20% of Fund For personal use only High Growth Cash flow Turnaround Time 17

  18. Slide 18: Portfolio Construction Summary

    1) PORTFOLIO CONSTRUCTION vi) Summary For personal use only Disciplined High quality stocks – Portfolio segmentation & systematic growing & reasonable = 30-50 stocks that approach value work best together NOTHING HAS CHANGED SINCE WE LAST SPOKE BECAUSE IT WORKS 18

  19. Slide 19: Active Management

    For personal use only ACTIVE MANAGEMENT Some things can’t stay the same 19

  20. Slide 20: Industry exposure

    For personal use only 0% 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% 31/07/2015 31/08/2015 30/09/2015 31/10/2015 Real Estate Health Care i) Industry exposure 30/11/2015 31/12/2015 Consumer Discretionary 31/01/2016 29/02/2016 31/03/2016 30/04/2016 31/05/2016 2) ACTIVE MANAGEMENT Industrials 30/06/2016 3

  21. Slide 21: Geographic exposure

    For personal use only 0% 100% 10% 20% 30% 40% 50% 60% 70% 80% 90% 31/07/2015 31/08/2015 30/09/2015 31/10/2015 ii) Geographic exposure 30/11/2015 31/12/2015 31/01/2016 29/02/2016 31/03/2016 Emerging Markets 30/04/2016 2) ACTIVE MANAGEMENT 31/05/2016 30/06/2016 31/07/2016 Europe ex-UK 31/08/2016 30/09

  22. Slide 22: Portfolio insurance

    2) ACTIVE MANAGEMENT iii) Portfolio insurance For personal use only 22

  23. Slide 23: Active Management Summary

    2) ACTIVE MANAGEMENT iv) Summary For personal use only Industry, Portfolio Not hard- geographic insurance boiled eggs ACT WHEN WARRANTED 23

  24. Slide 24: Performance

    For personal use only PERFORMANCE Make money Avoid losses Minimize volatility 24

  25. Slide 25: Total return since inception

    3) PERFORMANCE i) Total return since inception For personal use only Pengana 30% Index 26% Performance since inception to 19 Feb 18 Performance from 1 Dec 17 to 19 Feb 18 35% 4% 30% 3% 25% 2% 20% 1% 15% 0% 10% -1% 5% 0% -2% -5% -3% -10% -4% 30/06/2015 31/08/2015 31/10/2015 31/12/2015 29/02/2016 30/0

  26. Slide 26: Saving money when it counts

    3) PERFORMANCE ii) Saving money when it counts For personal use only 24-Aug-15 24-Jun-16 5-Feb-18 21-Aug-15 1-Sep-15 8-Feb-18 7-Jan-16 28-Sep-15 0.0% -0.5% -1.0% -0.7% -1.1% -1.5% -1.3% -1.3% -1.4% -1.5% -2.0% -2.0% -2.5% -2.3% -2.3% -2.4% -3.0% -2.8% -2.8% -2.9% -3.1% -3.5% -4.0% -4.0% -4.5% -4.3%

  27. Slide 27: Performance Summary

    3) PERFORMANCE iii) Summary For personal use only MADE MONEY MINIMIZE SAVED MONEY 30% since inception VOLATILITY when it counts DELIVERED ON AIMS 27

  28. Slide 28: Ethical Framework

    For personal use only ETHICAL FRAMEWORK Achieve financial objectives ethically 28

  29. Slide 29: Ethical Framework

    4) ETHICAL FRAMEWORK For personal use only PENGANA RISK ENGAGE WITH SUSTAINALYTICS MANAGER UNITHOLDERS Forbidden Independent of Respond to activities investment team unitholder views Controversies Veto power 29

  30. Slide 30: Conclusion

    For personal use only CONCLUSION 30

  31. Slide 31: Summary

    5) SUMMARY For personal use only Core fund Some things never Some things cant Delivered on change stay the same financial aims, ethically THIS IS HOW WE WANT OUR MONEY TO BE MANAGED & WE ARE INVESTORS IN THE FUND 31

  32. Slide 32: Appendix

    For personal use only APPENDIX 32

  33. Slide 33: Investment Team

    INVESTMENT TEAM For personal use only JORDAN CVETANOVSKI STEVEN GLASS RONALD YU CIO & PORTFOLIO MANAGER HEAD OF RESEARCH & EQUITY ANALYST PORTFOLIO MANAGER • 16 years experience • 16 years experience • 6 years experience • Partner at Carmignac • Hunter Hall portfolio • Morphic Asset Gestion (Paris)

  34. Slide 34: Cyclical: European Banks

    PORTFOLIO CONSTRUCTION Cyclical: 0-30% of Fund – European Banks – Cycle and Stockpicking For personal use only POSITIVE MACRO BACKDROP + LEVERAGE TO RISING RATES = STRONG OUTLOOK PREFER EURO KEY METRICS OUR POSITIONS VS US BANKS 13.2x ABN Amro (Netherlands) 11.7x CaixaBank (Spain) 11.0x 11x 10x 10x

  35. Slide 35: Opportunistic: 0-20% of Fund

    PORTFOLIO CONSTRUCTION Opportunistic: 0-20% of Fund For personal use only Leading market maker EUR in ETFs (no market 35.0 risks) 30.0 CYCLE: Market volatility drives returns 25.0 20.0 TAILWINDS: ETF structural growth 15.0 Hedge against market 10.0 turmoil 31/01/17 28/02/17 31/03/17 30/04/17 31/05/1

  36. Slide 36: Core: 60-80% of Fund

    1) PORTFOLIO CONSTRUCTION iii) Core: 60-80% of Fund For personal use only USD 110.0 GROWING – good management + structural 105.0 + store roll out 100.0 95.0 90.0 VALUATION: 5% FCF yield and 16x PE 85.0 80.0 75.0 AMAZON: Don’t deliver 70.0 to core markets 65.0 Initial purchase date 60.0 30/09/16 31/1

  37. Slide 37: Company-size exposure

    2) ACTIVE MANAGEMENT iii) Company-size exposure For personal use only • Minimum market cap 1.5bn AUD 37 • Source: Pengana and Factset

  38. Slide 38: Portfolio Segmentation

    PORTFOLIO SEGMENTATION For personal use only CORE CYCLICAL OPPORTUNISTIC 60 – 80% of Fund 0 – 30% of Fund 0 – 20% of Fund 15 – 30 stocks 0 – 15 stocks 0 – 10 stocks 5 – 15% growth >10% growth Unique company specific situations with attractive FCF Yield > RFR + 3% FCF Yield (cyclically adjusted) pote

  39. Slide 39: Process Overview

    PROCESS OVERVIEW For personal use only 1. 2. 3. 4. 5. INVESTMENT IDEAS RESEARCH INVESTMENT MONITOR UNIVERSE DECISIONS 39

  40. Slide 40: Process: Investment universe

    PROCESS Investment universe For personal use only FCF METRIC NUMBER NOTES POSITIVE GROWING Listed securities 40,288 REVENUE Financials (5,976) Special case (see below) Industrials 34,312 MKT CAP >$1.5BN Market cap > (29,881) LEVERAGE A$1.5b(at entry) <4X Excluded industries (634) Tobacco, Gaming, An

  41. Slide 41: How We Pick Stocks

    HOW WE PICK STOCKS Think like industrialists and the share market doesn’t exist For personal use only REQUIREMENT BACKGROUND EXPLANATION Focus on cash not proxies like accounting Can spend cash not accounting Cash flow generation earnings earnings Returns = price paid and cash Reasonable valuation P

  42. Slide 42: How We Manage/Control Portfolio Risk

    HOW WE MANAGE/CONTROL PORTFOLIO RISK Summary For personal use only PORTFOLIO CONSTRUCTION DISCIPLINE AND AND STOCK SELECTION STRUCTURE Avoid companies –illiquid, overleveraged, Stop losses on Cyclical and Opportunistic binary outcomes, structural headwinds stocks and FX Seek companies -cash generati

  43. Slide 43: Portfolio construction – managing FX

    PROCESS Portfolio construction – managing FX For personal use only MANAGED FOR A$ WEALTH FX goal – don’t lose large amount of A$ wealth and $ achieve some gains from FX No naked currency positions Current default – unhedged Alter hedge when £ ¥ • Reason for concern • FX breaks through stop losses €

  44. Slide 44: Portfolio Guidelines and Features

    PORTFOLIO GUIDELINES AND FEATURES For personal use only GUIDELINES FIGURE FEATURE Minimum number of GICS 1.23%* (plus expense 4 Management fee industry sectors recovery of 0.104%) Maximum sector exposure 25% Performance fee Nil Pricing Daily Maximum regional exposure 20% above index MSCI ACWI (net)

  45. Slide 45: Snapshot of Fund

    SNAPSHOT OF FUND For personal use only GEOGRAPHY MARKET-CAP % % 50 43.19 50 45 44.10 45 40 40 35 31.41 35 30 30 25 25 20 20 18.50 15 10.75 12.14 12.55 12.23 12.14 15 10 10 5 2.02 0.48 5 0.48 0 0 Europe USA Emerging Australia Put Cash Under In In Over Put Cash Markets Options <5bn USD between between

  46. Slide 46: Snapshot of Fund

    SNAPSHOT OF FUND For personal use only SECTOR TOTAL INDEX Financials 16% 19% Materials 14% 5% Consumer Staples 12% 8% Information Technology 11% 19% Consumer Discretionary 10% 12% Health Care 8% 11% Telecommunication Services 5% 3% Gold 4% - Industrials 4% 11% Real Estate 2% 3% Utilities 2% 3% Energ

  47. Slide 47: Important Information and Disclaimer

    IMPORTANT INFORMATION AND DISCLAIMER For personal use only This report has been prepared by Pengana Capital Limited (ABN 30 103 800 568, AFSL 226566) is the issuer of units in the Pengana Australian Equities Fund (ARSN 146 346 929), Pengana Emerging Companies Fund (ARSN 111 894 510), Pengana Global

  48. Slide 48: For More Information

    For personal use only FOR MORE INFORMATION PENGANA CAPITAL LIMITED NSW/ACT QLD ABN 30 103 800 568 Alex Keen Rachel Elfverson AFSL 226566 M: +61 478 971 000 M: +61 434 980 561 E: alex.keen@pengana.com E: rachel.elfverson@pengana.com Level 12, 167 Macquarie Street, Sydney, NSW 2000 VIC/TAS/SA/WA CLIEN

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