L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (November 2023)
40 slides from L1 Long Short Fund's investor presentation, Nov 2, 2023
Slide 1: Investor webinar invitation
For personal use only We invite you to join L1 Capital’s Joint Managing Director & Co-Chief Investment Officer, Mark Landau and Senior Investment Analyst, Amar Naik for a L1 Long Short Fund Limited (ASX:LSF) investor webinar on Thursday, Nov 2 at 11am (AEDT). Please click here to register to join th
Slide 2: L1 Long Short Fund Limited Investor Webinar
For personal use only L1 Long Short Fund Limited Investor Webinar Mark Landau, Joint Managing Director and Co-CIO Amar Naik, Senior Investment Analyst November 2, 2023
Slide 3: Performance summary
For personal use only 1 Performance summary
Slide 4: Performance summary: Strong long-term performance
Performance summary Strong long-term performance For personal use only Pre-tax NTA Net Performance1 L1 Long Short Fund S&P ASX 200 Accum. MSCI World Accum. HFRX Global Hedge 30 Sep 2023 (%) portfolio Index (A$) Index (US$) Fund Index (US$) 3 months 1.0 (0.8) (3.5) 0.7 1 year 21.9 13.5 22.0 1.6 2 yea
Slide 5: Capital protection in falling markets
Capital protection in falling markets The strategy has protected 87% of investors' capital when the market has fallen For personal use only Performance in ‘ASX down market’ months Performance in ‘ASX up market’ months (Average of 43 months) (Average of 66 months) 5.0% 3.0% 3.1% 2.5% 0.0% -0.4% -2.5%
Slide 6: Stock contributors and detractors
Stock contributors and detractors Calendar year to date For personal use only Company name Company news Cenovus Sharp rally in oil prices to ~US$90/bbl, as well as tailwinds from higher refinery margins Strong momentum in the U.S. business with the division moving to profitability faster than mark
Slide 7: Market observations
For personal use only 2 Market observations
Slide 8: Market outlook
Market outlook Equities backdrop For personal use only Positive factors Negative factors Inflation pressures moderating Full valuations Interest rates peaking Geopolitical tensions rising China fiscal & monetary stimulus Likely economic downturn in Australia & U.S. in 2024 Surge in mig
Slide 9: Equity market trends
Equity market trends Despite bond market volatility, equity markets continue to trade in line with historic averages The ASX200 1-year forward P/E ratio – Nothing to see here? only 20x ▪ ASX200 currently trades on use 18x 14.2x P/E which is in line 16x +1SD with the 20-year average For personal Avg
Slide 10: Industrials look expensive, Resources look undervalued
Equity market trends Industrials look expensive, Resources look undervalued Industrials are trading well above historical averages Resources are trading below historical averages For personal use only 32x 11.5 26x 9.5 EV/EBITDA NTM +1SD +1SD PE NTM 21.1x Avg 20x 7.5 Avg 7.2x 17.9x -1SD 14x -1SD 5.5
Slide 11: Low P/E firms trade at a 56% discount
Equity market trends Low P/E firms trade at a 56% discount to the market (9% below the 20-year average) Low P/E firms (1-year forward P/E) For personal use only -30 ▪ Once in a decade opportunity to buy low P/E stocks -40 Relative PE vs Market ▪ Low P/E stocks have only ever traded this -50 cheap ve
Slide 12: High P/E firms trade at a 73% premium
Equity market trends High P/E firms trade at an 73% premium to the market (30% above 20-year average) High P/E firms (1-year forward P/E) For personal use only 100 Now ▪ Surge in high P/E stocks was caused by Dot com bubble Covid, zero interest rates and flows into 80 growth funds Relative PE vs Mar
Slide 13: P/E multiples versus 10-year history
Equity market trends P/E multiples versus 10-year history ASX 200 valuation premium of selected sectors/factors relative to historical ranges For personal use only 12m forward P/E vs. 10-year range (percentile rank versus history) 50% = historical average P/E ▪ Multiples for Defensives, Staples and
Slide 14: LSF positioning
For personal use only 3 LSF positioning
Slide 15: LSF positioning: portfolio skewed to lower P/E stocks
LSF positioning The portfolio is skewed to lower P/E stocks that have strong earnings growth and large cashflow generation Market observations Portfolio metrics For personal use only ▪ Top 20 stocks in the ASX200 appear fully priced FY23 Consensus forecast Portfolio longs Portfolio shorts (ASX20 rep
Slide 16: Portfolio themes: Summary
Portfolio themes: Summary We are invested in five key themes that we believe offer compelling, asymmetric risk-reward For personal use only Energy Global leaders Gold Hidden tech Infrastructure Outlook for oil & LNG Number 1 players in Valuable hedge Underappreciated Monopoly, regulated se
Slide 17: Theme: Energy - Ongoing demand growth
Theme: Energy Ongoing demand growth Oil demand: Growing strongly For personal use only ▪ Chinese aviation activity bouncing back (+ continued rise of Asian demand) ▪ Strategic Petroleum Reserve (SPR) has been drained and is now being replenished Civil aviation traffic in China U.S. oil inventories (
Slide 18: Theme: Energy - Ongoing supply constraints
Theme: Energy Ongoing supply constraints (OPEC+, shale, ESG) Oil supply: Structural underinvestment For personal use only ▪ Oil majors – multi-year under-investment in capex = no production growth ▪ OPEC+ – Saudis constraining supply, little OPEC spare capacity ex Saudi ▪ Shale – Well productivity d
Slide 19: Theme: Energy - Extreme negative sentiment and positioning
Theme: Energy Extreme negative sentiment and positioning For personal use only ▪ Investor positioning and sentiment to the Energy U.S. Energy long/short ratio (MV) vs. oil price sector is as bearish today as it was in mid 2020. At 2.6 140 that time, Covid fears were extreme, driving/flying WTI oil p
Slide 20: Theme: Energy - Santos
Theme: Energy Santos Extremely undervalued despite stronger growth outlook Share price – 1 year For personal use only than peers + significant capital invested $9 L1 recently proposed a demerger of the domestic oil and gas assets, leaving Santos as a pure play LNG company $8 40%+ share price u
Slide 21: Theme: Energy - Cenovus
Theme: Energy Cenovus ▪ Integrated energy company operating mainly in Canada Share price – 3 years For personal use only ▪ Low cost of production – break-even oil price ~US$40/bbl $25 ▪ Expecting better downstream performance after a series $20 of refinery outages $15 ▪ On track to hit $4b net debt
Slide 22: Theme: Global champions - CRH
Theme: Global champions CRH ▪ Largest building products company in North America Share price – 1 year For personal use only (~US$38b mkt cap) $60 ▪ Primary listing has just moved from LSE to NYSE ▪ Significant beneficiary of US infra spend – Roads & highway $50 funding +50%, water, energy & tech $20
Slide 23: Theme: Global champions - Flutter
Theme: Global champions Flutter ▪ #1 player in U.S. online sports betting Share price – 1 year For personal use only $180 ▪ Industry set to more than triple from ~US$12b in 2022 to over ~US$40b in 2030 $150 ▪ Major inflection points upcoming: $120 − Surge in U.S. profitability and U.S. listing ▪ Out
Slide 24: Theme: Gold - Newmont
Theme: Gold Newmont Share price – 1 year For personal use only Largest gold producer in the world with tier-1, long-life assets $60 L1 built position in Newcrest 1 year ago – shares up 30%+ since Newmont has since acquired Newcrest $50 Leading set of development-ready growth assets $40 Str
Slide 25: Theme: Gold - Westgold
Theme: Gold Westgold Share price – 1 year For personal use only WA gold producer with four mines across three processing hubs $2.00 Significant earnings leverage from the rising A$ gold price $1.50 and production growth to 300k oz in CY25 $1.00 New management delivering an outstanding turnarou
Slide 26: Theme: Hidden Tech - Nufarm
Theme: Hidden Tech Nufarm Share price – 1 year For personal use only Global crop protection and seed technologies business $6.50 Recent trading impacted by weaker U.S. rainfall and $6.00 transitory farmer de-stocking impacts $5.50 World’s leading Omega-3 seed technology with potential step cha
Slide 27: Theme: Hidden Tech - Imdex
Theme: Hidden Tech Imdex ▪ Global leader in mining exploration drilling technology Share price – 1 year For personal use only $3.00 ▪ Leveraged to increased mining exploration spend which has recently started recovering $2.50 ▪ Announced acquisition of #2 player (Devico) to accelerate $2.00 global g
Slide 28: Theme: Infrastructure - Chorus
Theme: Infrastructure Chorus Share price – 1 year For personal use only ▪ Long-term LSF portfolio position $8.50 (since September 2014 – $1.60 share price) $8.00 ▪ High-speed fibre broadband infrastructure owner (NZ) $7.50 ▪ Protected from higher inflation and higher interest rates. $7.00 WACC and R
Slide 29: Theme: Infrastructure - Aurizon
Theme: Infrastructure Aurizon Share price – 1 year For personal use only National rail operator with >5,000kms of network assets and largest haulage operations in Australia $4.00 Earnings growth underpinned by regulated network step-up, improved haulage volumes, and operational $3.50 efficiencie
Slide 30: Summary
For personal use only 5 Summary
Slide 31: Summary
Summary For personal use only 1 The portfolio has performed very strongly over the past year (21.9%) and past 3 years (26.0% p.a.1). 2 We believe equity indices are currently fully priced and only offer a modest positive return. 3 We believe the current market backdrop is very conducive to finding m
Slide 32: Appendix: Overview of L1 Capital
For personal use only I Appendix Overview of L1 Capital
Slide 33: L1 Capital: Business overview
L1 Capital Business overview For personal use only L1 Capital is a specialist investment manager founded in 2007 by Mark Landau and Rafi Lamm ▪ ‘L’ – Derived from the surnames of the founders (Lamm & Landau) ▪ ‘1’ – Genuine firm-wide aspiration to be the “best”, not just “good” ▪ Reputation for inve
Slide 34: Global Investment Manager
Global Investment Manager Well-resourced and experienced team across investments, operations, compliance and investor relations Business Overview London For personal use only Since 2017 Founded in 2007 UK Residential Property Circa A$6.0b FUM Investment professionals in 5 locations globally Ne
Slide 35: L1 Capital Funds: Strong performance culture
L1 Capital Funds Strong performance culture Long Short Fund Global Opportunities Catalyst For personal use only 19.6% p.a. net return S.I. (ASX200AI 6.9% p.a.)1 29.5% p.a. net return S.I. 8.3% p.a. net outperformance of ASX200AI S.I. Best performing long short fund One of the best performing High co
Slide 36: Competitive Edge
Competitive Edge A proven team that delivers alpha from high quality, independent research & sound judgment For personal use only Quality Research Track Record Independent Thinking Reputation for differentiated Best performing long short fund Low correlation with other company, industry in Australia
Slide 37: Monthly performance, strategy returns (Net, %)
L1 Long Short Fund Limited Monthly performance, strategy returns (Net, %) Period Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year For personal use only 2014 - - - - - - - - (2.42) 3.03 2.85 1.61 5.17 2015 0.59 9.14 2.42 1.71 3.73 (0.86) 3.30 2.06 5.51 8.49 8.11 4.62 60.52 Best performing long sh
Slide 38: Contact Us
Contact Us For personal use only Chris Alexander Aman Clayton Ordon Kashyap Head of Distribution Investment Specialist Investment Specialist +61 (3) 9286 7021 +61 (0) 413 615 224 +61 (0) 477 341 403 cclayton@L1.com.au aordon@L1.com.au akashyap@L1.com.au Alejandro Lisa Espina Salamon Investment Speci
Slide 39: Important information
Important information L1 Long Short Fund Limited For personal use only L1 Long Short Fund Limited has been established to invest in a portfolio of predominantly Australian and New Zealand securities, with up to 30% invested in global securities. The Company has the ability to both buy and short-sell
Slide 40: For personal use only
For personal use only ABN 21 125 378 145 | AFSL 314 302 Level 45, 101 Collins Street Melbourne Victoria 3000 Australia Phone +61 3 9286 7000 Fax +61 3 9286 7099 Web L1LongShort.com.au
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