H&g High Conviction Ltd. · ASX:HCF
H&g High Conviction — Shareholder Meeting (October 2023)
20 slides from H&g High Conviction's shareholder meeting presentation, Oct 16, 2023
Slide 1: Annual General Meeting Presentation
For personal use only ASX: HCF Annual General Meeting Presentation 16 October 2023 H&G Investment Management Ltd (ACN: 125 580 305) on behalf of H&G High Conviction Limited (ACN: 660 009 165)
Slide 2: Important Information
IMPORTANT INFORMATION Status of this document This document contains general information regarding H&G High Conviction Limited (HCF) as at the date of this presentation. The information contained in this document (including this notice) (Information) is not comprehensive and subject to change. The I
Slide 3: Long-term market outperformance
Long-term market outperformance Value of $10,000 invested since inception as at 30 September 2023 $35,000 For personal use only $31,409 $30,000 $25,000 HCF Pre-Tax Total Return, net of fees $20,000 ASX Small Ords Accumulation Index $15,000 $10,000 $11,167 $5,000 $- *Performance data, as applicable t
Slide 4: A fruitful first year as a listed company
A fruitful first year as a listed company Our last twelve months in key figures For personal use only 3 10.5% Takeover bids received at Pre-tax portfolio performance significant premiums for our after all fees, compared to portfolio companies -1.9% by the ASX Small Ordinaries Accumulation Index $949
Slide 5: Three takeover bids received in the last year
Three takeover received bids in the last year M&A activity realising inherent value of microcaps For personal use only Portfolio company Bid received Acquirer HCF realised return Proptech Group (PTG) October 2022 Private equity (US) 115% Cirrus Networks (CNW) September 2023 Trade buyer 73% Ensurance
Slide 6: Where we fit in the LIC landscape
Where we fit in the LIC landscape A uniquely concentrated microcap investment company For personal use only Reported Strategy HCF Bubble size indicates last reported Micro number of holdings Micro/small Small/Mid Mid/Large Large ← Negative Positive → 1 Year Return Sources: Bell Potter Weekly LIC Rep
Slide 7: Why HCF?
Why HCF? For personal use only Only ASX-listed investment company focused solely on microcaps Exposure to an uncrowded part of the market History of long-term above-index returns Microcaps are at cyclical lows relative to large cap companies 6
Slide 8: Number of companies appearing in HCF's sweet spot
Number of companies appearing in HCF’s sweet spot Continuing increase in investment opportunities For personal use only Companies with market capitalisation < $200m and revenue > $5m p.a. 550 500 450 400 350 300 250 200 150 100 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 9: What does HCF look for?
What does HCF look for? For personal use only Depressed share prices with the potential for double-digit returns Limited downside due to a high margin of safety and robust balance sheets Companies run by an aligned board and management Catalysts for bridging gap between inherent and market value 8
Slide 10: Case study: Cirrus Networks (CNW)
Case study: Cirrus Networks (CNW) Cirrus Networks 2-Year Price Chart For personal use only ▪ First acquired shares in CNW in August 2022 $0.07 Takeover bid $0.06 ▪ CNW provides IT services to government and made by Attura at $0.053 per share enterprises $0.06 and revised up to $0.063 per share ▪ EV/
Slide 11: Case study: Kinatico (KYP)
Case study: Kinatico (KYP) Kinatico 2-Year Price Chart For personal use only $0.20 ▪ First acquired shares in KYP in May 2023 Georg Chmiel becomes $0.18 director ▪ KYP provides identity validation software to government and enterprises Announcement $0.16 of first ▪ EV/EBITDA run-rate of 5x and marke
Slide 12: Material investments during the year
Material investments during the year Investing cash in a buyer’s market For personal use only New holding Industry % of HCF Return-to- at cost date* Eildon Capital (EDC) Real estate lender 12% 1% Kinatico (KYP) Regulatory technology 8% 17% Clearview Wealth (CVW) Life insurance 5% 12% Connexion Telem
Slide 13: Team available to HCF
Team available to HCF A lifetime of experience For personal use only GOVERNANCE & INVESTMENT COMMITTEE PORTFOLIO MANAGEMENT PLUS, THE WIDER H&G GROUP JOSEPH CONSTABLE DAVID GROVES SANDY BEARD DIRECTOR & PORTFOLIO MANAGER CHAIRMAN CHAIRMAN – H&G & HGIM ARTHUR FOKSCHANER NICHOLAS ATKINSON PHILLIP CHRI
Slide 14: Why invest with HCF?
Why invest with HCF? Continuing our strong momentum in a weak market For personal use only ▪ Investing cash in a buyer’s market following 2022/23 microcap sell-off ▪ Scale as a voice for shareholder focus amongst investee companies ▪ Strong alignment between HCF manager and shareholders with 18% dir
Slide 15: Thank you for your time
Thank you for your time For personal use only Since Performance as of 30 2 years 3 years 7 years 10 years inception September 2023 3 months 12 months p.a. p.a. p.a. p.a. p.a. HCF Pre-Tax Total Return 1.4% 10.5% 8.9% 15.8% 5.1% 9.0% 7.5% (after all fees) ASX Small Ordinaries -1.9% 6.9% -8.5% 2.6% 4.5
Slide 16: Appendices
For personal use only APPENDICES 1. Portfolio characteristics 2. Points of difference & alignment 3. Shareholders of the company 4. Structure and fees
Slide 17: Portfolio characteristics
Portfolio characteristics As at 30 September 2023 For personal use only Top Holdings (Alphabetical) Primary exposures as a percentage of total equities allocation Anagenics Ltd (AN1.AX) Real Estate/Land, 29% Centrepoint Alliance Ltd (CAF.AX) Information Technology, 24% 29% Clearview Wealth Ltd (CVW.
Slide 18: Point of difference & alignment
Point of difference & alignment For personal use only UNIQUE POINT DEEP VALUE ACTIVE ENGAGEMENT PROVEN TRACK OF DIFFERENCE Concentrated portfolio of Close relationship with RECORD Access to the knowledge, overlooked and undervalued management & board Long-term superior returns experience and network
Slide 19: Shareholders of the company
Shareholders of the company Top Shareholders include managers (& family), as well as supportive investors For personal use only Investor/Group – as at 11th October 2023 % of SOI Former H&G High Conviction Fund Unit Holders 26.1 Constable Group 22.9 Perennial Value Management 14.2 Hancock & Gore Limi
Slide 20: Structure and fees
Structure and fees For personal use only ASX-listed $80m Hancock & Gore market cap diversified (“H&G”; ASX: HNG) investment group 100%-owned Investment management agreement H&G Investment ASX-Listed Private Equity H&G High Conviction Investments Investments Management Ltd Limited (ASX: HCF) (HGIM) M
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