L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (October 2024)
27 slides from L1 Long Short Fund's investor presentation, Oct 31, 2024
Slide 1: L1 Long Short Fund Limited (ASX:LSF)
L1 Long Short Fund Limited (ASX:LSF) Rafi Lamm, Joint Managing Director & Co-CIO Amar Naik, Head of Research 31 October 2024
Slide 2: Reflections on 10 years of the Long Short Strategy
Reflections on 10 years of 1 the Long Short Strategy
Slide 3: L1 Capital Long Short Fund
L1 Capital Long Short Fund Focused on the core principles of alignment and delivering value for investors Best performing Australian long short fund over the past decade1 ▪ Deep valuation and industry research to identify attractive opportunities ▪ Extensive network in Australia and overseas to gene
Slide 4: Performance track record for L1 Capital Long Short Strategy
Performance track record for L1 Capital Long Short Strategy Delivered very strong absolute and relative returns since inception Return of LSF Strategy vs. ASX200AI (since launch in September 2014) 600% LSF Strategy 19.1% p.a. 10.8% 400% outperformance p.a. (net) ASX200AI 200% 8.3% p.a. 0% L1 Capital
Slide 5: Low P/E stocks have dramatically underperformed high P/E stocks over the past decade
Low P/E stocks have dramatically underperformed high P/E stocks over the past decade LSF has delivered strong returns despite enormous factor headwind for ‘value’ investing Relative performance of ‘low valuation’ stocks vs ‘high valuation’ stocks over the past decade 0% -60% Low valuation stocks hav
Slide 6: Performance summary – L1 Long Short Fund Limited (ASX:LSF)
Performance summary – L1 Long Short Fund Limited (ASX:LSF) Strong absolute returns over all time periods Pre-tax NTA Net Performance1 L1 Long Short S&P/ to 30 September 2024 (%) Portfolio ASX200 AI Outperformance 1 year 14.0 21.8 (7.8) 2 years p.a. 17.9 17.5 +0.3 3 years p.a. 8.6 8.4 +0.1 4 years p.
Slide 7: Market observations
2 Market observations
Slide 8: Economic Trends
Economic Trends U.S. & U.K. economic activity has been more resilient than expected U.S. U.K./Europe ▪ Resilient economic data ▪ Recovery in key U.K. economic indicators ▪ Unemployment rising, but well-below historical levels ▪ Europe more challenged (mixed eco data, weak ▪ Consumers generally holdi
Slide 9: Economic Trends
Economic Trends Chinese GDP growth has been weak, with major stimulus to come. Australia growing modestly – higher interest rates persisting. China Australia ▪ Step up in fiscal and monetary stimulus ▪ Surge in migration ▪ Aim to correct housing supply, improve sentiment, ▪ Commodity prices at relat
Slide 10: Index & Sector Valuations
Index & Sector Valuations Most stock indices appear fully priced, with domestic Technology & Financials looking very stretched versus history Selected markets P/E premium vs. historical average ASX selected sector P/E premium vs. LT historical average Premium/discount to 10y average 12m fwd consensu
Slide 11: Why valuation discipline is critical
Why valuation discipline is critical Could Commonwealth Bank be the next Woolworths? Woolworth’s price chart IPO to December 2007 Woolworth’s price chart from December 2007 to today $30 $50 $28.51 p/s $40 $20 ~$33 p/s $30 $28.51 p/s $20 $10 $2.70 $10 p/s $0 $0 Market darling – strong & consistent
Slide 12: Why valuation discipline is critical
Why valuation discipline is critical We see some parallels with CBA today CBA 12m forward P/E and consensus EPS revisions CBA 90+ days overdue loans as a % of total assets 26x – starting to revert back to trend 12m fwd P/E 1.6% 24x = 24.6x 12m forward P/E (x) 1.50% 22x 12m Consensus 1.2% EPS revisio
Slide 13: Portfolio performance and key themes
Portfolio performance and 3 key themes
Slide 14: Key stock contributors and detractors
Key stock contributors and detractors 2024 calendar year-to-date (ending 30 Sep) Company name Company news Qantas Strong operational trends, additional ~$400m share buyback program, reinstatement of fully franked dividends from 1H25 Hudbay Rising copper and gold prices coupled with strong produc
Slide 15: LSF portfolio adjustments
LSF portfolio adjustments Portfolio gross and net exposure largely consistent relative to 6 months ago Change in sector positioning vs 6 months ago Geographies – key changes Added several attractive Added several new Infrastructure U.K. opportunities positions Sold down given large rally Gold Compel
Slide 16: Portfolio themes: Summary
Portfolio themes: Summary We are invested in five key themes that we believe offer compelling, asymmetric risk-reward Infrastructure Global leaders U.K. Quality Value Gold Uranium Regulated assets Number 1 players in Dominant, high- Ongoing demand for Uranium demand with significant struct
Slide 17: Theme: Infrastructure
Theme: Infrastructure Monopoly infrastructure assets with strong dividend profiles ▪ Owns and operates Frankfurt Airport alongside a portfolio of ▪ National rail operator with >5,000kms of network assets and International airport stakes largest haulage operations in Australia ▪ Frankfurt is one of t
Slide 18: Theme: Global Leaders
Theme: Global Leaders Number 1 players with outstanding management teams and an enormous runway of earnings growth ▪ Largest building products company in North America ▪ #1 player in U.S. online sports betting/iGaming ▪ Outstanding track record of EPS growth (10yr EPS CAGR of 19%) (51% sports market
Slide 19: Theme: U.K. Quality Value
Theme: U.K. Quality Value The U.K. stock market is a standout globally, with numerous high-quality companies trading at compelling prices U.K. FTSE All Share forward P/E ratio Major markets 12m forward P/E Premium/discount to 10y average 12m fwd consensus P/E +14% 16 30x 28x +20% 25x +13% +15% 22x A
Slide 20: Theme: U.K. Quality Value
Theme: U.K. Quality Value Tesco & Rightmove are high quality, fast growing businesses trading at huge discounts to Australian peers ▪ #1 supermarket in the U.K. with ~28% share Dominant U.K. real estate portal – >80% of search traffic & leads ▪ Tesco is ~50% larger than its next largest competitor
Slide 21: Theme: Gold
Theme: Gold Gold price has continued rising due to structurally higher demand and concerns over rising U.S. debt and ongoing deficits ▪ 2024 rally driven by an acceleration in buying from Central Banks and Asian consumers ▪ U.S. fiscal sustainability remains a key concern (U.S. Federal Govt debt ris
Slide 22: Theme: Gold
Theme: Gold OceanaGold and Eldorado offer strong production growth and exceptional value Production growth (Koz)* +55% 750 ▪ Long-life producing assets in U.S., Philippines & NZ 800 +32% 700 ▪ Strong cash flow growth from rising production and grades 600 530 485 ▪ Exploration upside to extend life &
Slide 23: Theme: Uranium
Theme: Uranium The outlook for uranium is bright given the world’s desire for reliable, affordable, green energy ▪ Large western nations looking to triple nuclear energy capacity by 2050. China demand expected to grow even faster. ▪ Significant new mine supply needed to meet demand and reduce sovere
Slide 24: Theme: Uranium
Theme: Uranium NexGen owns the most prospective undeveloped uranium asset globally NexGen average Annual EBITDA at different uranium prices (C$b) ▪ Largest uranium asset under development globally (Rook I) C$6b ▪ Exceptional project scale and quality C$5.2b ▪ In final stages of approvals and financi
Slide 25: Important information
Important information L1 Capital Pty Ltd Disclaimer This communication has been prepared for L1 Long Short Fund Limited (ACN 623 418 539) by its investment manager, L1 Capital Pty Ltd (ABN 21 125 378 145 and AFS Licence 314302). L1 Capital Pty Ltd has prepared this publication in good faith in relat
Slide 26: Contact Us
Contact Us Chris Aman Bryce Alejandro Clayton Kashyap Leyden Espina Head of Distribution Deputy Head of Distribution Investment Specialist Investment Specialist +61 (3) 9286 7021 +61 (0) 477 341 403 +61 (0) 407 876 532 +61 (0) 423 111 531 cclayton@L1.com.au akashyap@L1.com.au bleyden@L1.com.au aespi
Slide 27: L1 Capital contact details
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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