L1 Long Short Fund Ltd. · ASX:LSF
L1 Long Short Fund — Investor Presentation (May 2024)
31 slides from L1 Long Short Fund's investor presentation, May 30, 2024
Slide 1: Investor webinar invitation
For personal use only We invite you to join L1 Capital’s Joint Managing Director and Co-Chief Investment Officer, Raphael Lamm and Head of Research, Amar Naik for a L1 Long Short Fund Limited (ASX:LSF) investor webinar on Thursday, May 30 at 11am (AEST). Please click here to register to join the web
Slide 2: L1 Long Short Fund Limited (ASX:LSF)
For personal use only L1 Long Short Fund Limited (ASX:LSF) Rafi Lamm, Joint Managing Director & Co-CIO Amar Naik, Head of Research 30 May 2024
Slide 3: Performance summary
For personal use only 1 Performance summary
Slide 4: Strong long-term performance
Performance summary Strong long-term performance For personal use only LSF Pre-tax NTA Net Performance1 L1 Long Short Fund Limited S&P/ASX 200 Accum. Index to 30 Apr 2024 (%) portfolio (AUD) Outperformance 3 months 10.6 1.0 +9.6 1 year 13.6 9.1 +4.5 2 years p.a. 6.4 5.9 +0.5 3 years p.a. 14.2 7.3 +6
Slide 5: Market observations and LSF positioning
For personal use only Market observations and LSF 2 positioning
Slide 6: Economic growth forecasts have remained resilient
Economic outlook Economic growth forecasts have remained resilient over the past year For personal use only 2024 Real GDP growth forecasts (%) 2.8% ▪ U.S. Real GDP growth forecasts have 2.4% U.S. been revised up ~100bps YTD 2.0% ▪ Australian GDP growth is below long- term trend, but is supported by
Slide 7: Inflation has remained more persistent than expectations
Economic outlook Inflation has remained more persistent than expectations but should trend lower over the coming months U.S. Core CPI (YoY % change) Owners’ equivalent rent (OER) vs. new rent inflation (YoY % change) For personal use only 10% 12% 8% 6% 8% 4% 2% 4% 0% -2% -4% 0% Core CPI 3m change 6m
Slide 8: Sharp revision in interest rate expectations
Economic outlook Stronger economic growth coupled with persistent inflation has driven a sharp revision in interest rate expectations Market pricing for number of interest rate cuts in 2024 (No.) Timing of expected interest rate cuts in 2024 (No.) For personal use only 7.0 Six 25bps cuts 3.0 6.0 2.5
Slide 9: Markets have shrugged off inflation risks
Market outlook Markets have shrugged off inflation risks and the re-basing of interest rate expectations For personal use only ASX200 1-year forward P/E ratio vs. history S&P500 1-year forward P/E ratio vs. history 24 24 20.8x 20 20 16.9x 16.5x 16 16 14.7x 12 12 8 8 ASX 200 P/E ASX 200 Average P/E S
Slide 10: Equity markets look fully priced
Market outlook Equity markets look fully priced at current levels Equities backdrop For personal use only Positive factors Negative factors ▪ Central Banks pivoting to an easing bias ▪ Inflation more persistent (albeit delayed vs. initial expectations) ▪ Valuations are full (most of ASX 20 and growt
Slide 11: Portfolio skewed to lower P/E stocks
LSF positioning The portfolio is skewed to lower P/E stocks that have strong earnings growth and robust cashflow generation For personal use only Portfolio positioning ▪ Median long: ~11x P/E, 14.5% EPS growth, 6.5% FCF yield Low P/E firms trade at a 53% discount to the market (6% below the 20-year
Slide 12: Two key areas of downside risk: consumer spending
We see two key areas of downside risk in the market Consumer discretionary spending is weakening with stocks not fully pricing in the slowdown U.S. consumer discretionary stock performance (Nov 23 – May 24)1 U.S. cumulative excess household savings (% disposable income) For personal use only +30.8%
Slide 13: Two key areas of downside risk: domestic banks
We see two key areas of downside risk in the market Domestic bank valuations look very stretched versus history CBA forward P/E and EPS revisions Banks contribution to ASX200 Returns (%) For personal use only 22x $8.00 6% 21.4x 20x $7.00 4% +4.6% 18x $6.00 2% +2.8% 17.1x 16x $5.00 0% 14x $4.00 -2% 1
Slide 14: Portfolio performance and key themes
For personal use only Portfolio performance and 3 key themes
Slide 15: Stock contributors and detractors
Stock contributors and detractors 2024 calendar year-to-date Company name Company news For personal use only Downer ✓ Increased cost out program by $75m p.a. to a total of $175m p.a. to be achieved by FY25 Qantas ✓ Changes to Loyalty Offer had a smaller earnings impact than market expectations Flutt
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 Infrastructure Global leaders Cash machines Copper & Gold Uranium ▪ Regulated assets with ▪ Number 1 players in ▪ Low P/E stocks, with ▪ Constrained supply for
Slide 17: Theme: Infrastructure
Theme: Infrastructure For personal use only ▪ Owns and operates Frankfurt Airport alongside a portfolio of ▪ Lowest cost baseload generator in key markets of VIC and NSW International airport stakes ▪ Electricity demand set to grow substantially medium term – data ▪ Frankfurt is one of the busiest a
Slide 18: Theme: Global Leaders
Theme: Global Leaders For personal use only ▪ Largest building products company in North America (~US$55b ▪ #1 player in U.S. online sports betting/iGaming (53% sports market market cap) although not well known to U.S. investors share and 26% iGaming share) ▪ Primary listing moved from LSE to NYSE i
Slide 19: Theme: Cash machines
Theme: Cash machines For personal use only ▪ #1 supermarket in the U.K. with ~27% share ▪ Steel producer operating in Asia Pacific and North America ▪ Improved market structure ▪ Resilient and diversified business, commoditised earnings streams ▪ Strong balance sheet, and valuation underpinned by £1
Slide 20: Theme: Copper
Theme: Copper We expect robust demand growth for the rest of this decade Copper demand: For personal use only ▪ Driven by electrification tailwinds, incremental data centre and A.I. related demand, improving global manufacturing activity ▪ Single most critical metal required to execute on the energy
Slide 21: Theme: Gold
Theme: Gold ▪ Rally to date driven by an acceleration in Central Bank buying as well as Asian Retail investing only ▪ U.S. fiscal sustainability remains a key concern (national debt rising by US$1 trillion every 100 days!) ▪ Potential macro tailwinds (lower interest rates, weaker USD) add support fo
Slide 22: Theme: Copper and Gold
Theme: Copper and Gold For personal use only ▪ Leading copper-zinc producer which is in the process of ▪ WA gold producer with four mines across three processing hubs completing the sale of its steelmaking coal business ▪ Significant earnings leverage from the rising A$ gold price and ▪ Strong pipel
Slide 23: Theme: Uranium
Theme: Uranium ▪ Commitment from large western nations to triple nuclear energy capacity by 2050, China expected to go even faster For personal use only ▪ Uranium contracting activity by utilities has returned to decade highs in 2023, and continues to grow ▪ Significant new mine supply needed from t
Slide 24: Theme: Uranium
Theme: Uranium For personal use only ▪ Largest uranium asset under development globally (Rook I) ▪ Differentiated project scale and quality ▪ In final stages of approvals and financing, expected to commence major works within next 6-12 months ▪ Over ~C$1b in cash and uranium assets on balance sheet
Slide 25: About L1 Capital
For personal use only I About L1 Capital
Slide 26: 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 27: 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 ▪ Founded in 2007 Since 2017 U.K. Residential Property ▪ Circa A$7.2b FUM ▪ Investment professionals in 5 locations globally
Slide 28: L1 Capital Funds: Strong performance culture
L1 Capital Funds Strong performance culture Long Short Catalyst International Equities For personal use only net returns S.I. 20.0% p.a. net return S.I. (ASX200AI 7.6% p.a.)1 13.2% p.a. (ASX200AI 6.0% p.a.) 14.4% p.a. net return S.I. (MSCI World 12.9% p.a.) Best performing long short fund High convi
Slide 29: Important information
Important information L1 Long Short Fund Limited For personal use only Information contained in this publication Equity Trustees Limited (“Equity Trustees”) (ABN 46 004 031 298), AFSL 240975, is the Responsible Entity for the L1 Capital Long Short Fund. Equity Trustees is a subsidiary of EQT Holding
Slide 30: Contact Us
Contact Us For personal use only Chris Aman Lisa Bryce Clayton Kashyap Salamon Leyden Head of Distribution Deputy Head of Distribution Investment Specialist Investment Specialist +61 (3) 9286 7021 +61 (0) 477 341 403 +61 (0) 406 585 322 +61 (0) 407 876 532 cclayton@L1.com.au akashyap@L1.com.au lsala
Slide 31: 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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