Katana Capital Ltd. · ASX:KAT
Katana Capital — Investor Presentation (August 2014)
28 slides from Katana Capital's investor presentation, Aug 20, 2014
Slide 1: Katana Capital Limited Investor Presentation
For personal use only Katana Capital Limited AUGUST 2014 INVESTOR PRESENTATION
Slide 2: Disclaimer
Disclaimer For personal use only The information contained in this presentation is provided to each recipient on the following basis: a. this presentation has been produced by Katana Asset Management (KAM) b. this presentation does not purport to contain all the information that the recipient may re
Slide 3: Index
Index For personal use only Personnel Investment Philosophy Portfolio Construction Performance History Dividend Yield Net Asset Backing Summary Thankyou & Additional Information
Slide 4: Personnel: Investment Staff
Personnel Investment Staff For personal use only MEMBER TITLE QUALIFICATIONS YEARS SKILLSET & ORIENTATION INVESTING Romano Portfolio B.Bus (Distinction), Grad Dip 20 Bottom-up value investing: small- Sala Tenna Manager Applied Investment Analysis, mid-large caps; fundamentally ADA 1&2, F.FINSIA driv
Slide 5: Investment Staff: Combined Experience
Personnel Investment Staff For personal use only Combined Experience The 5 Portfolio Managers have a combined direct investment experience in excess of 100 years. 4 of the Portfolio Managers have invested through at least 3 boom-bust cycles. 2 of the Managers have invested through 4+ stock market cy
Slide 6: Investment Philosophy: Overview
Investment Philosophy Overview For personal use only Think independently but act in unison with the market, by combining the best precepts of the 5 key investment disciplines: 1. Value Investing 2. Fundamental Analysis 3. Growth Investing 4. Technical Analysis 5. Market Experience and Observation Ov
Slide 7: Investment Philosophy: Key criteria
Investment Philosophy Key criteria For personal use only As a simplistic summary, some key criteria that we seek: (IN APPROXIMATE ORDER OF PREFERENCE) 1 Trustworthy, competent Ultimately, inside a company there are innumerable decisions that arise each management and an emphatic and every day. How m
Slide 8: Investment Philosophy: Key criteria (continued)
Investment Philosophy Key criteria (continued) For personal use only 6 Structurally sound sector : high gross Just like the ‘macro sector tailwinds’, a structurally sound sector makes it margin indicating pricing power, easier for a company to achieve long term out-performance. The best is the ratio
Slide 9: Portfolio Construction: Overview and Parameters
Portfolio Construction Overview and Parameters For personal use only Portfolio Overview Portfolio Parameters • Long only • 45-55 individual stock positions • ASX listed securities • Average position size 1%–5%, with a pre- • Benchmark ‘Unaware’ – ie flexibility to maximise returns without dispositio
Slide 10: Portfolio Construction: Processes
Portfolio Construction Processes For personal use only Flexibility with Accountability Our goal is to combine the contrasting investment skills and personalities to encourage freedom to act within a framework of accountability and overall control, that favors capital preservation. Flexibility Accoun
Slide 11: Portfolio Construction: Typical portfolio
Portfolio Construction Typical portfolio For personal use only Consistent Characteristics: Top 2 portfolio holdings in ASX20 Top 10 Investments Percentage of Portfolio Valuation as at 30/6/14 6 of the top 10 portfolio holdings in ASX50 National Australia Bank Ltd 6.0% Blue chip companies form the la
Slide 12: Typical portfolio: Active weightings away from index
Portfolio Construction Typical portfolio For personal use only Active ‘Weightings’ Away from Index Por olio Holdings By GICS Benchmarks Comfortable to be substantially overweight 30th June 2014 high conviction sectors Currently Financial Services Telecom Services Comfortable to substantially underwe
Slide 13: Performance History vs Benchmark
Performance History vs Benchmark For personal use only Strong performance record over ALL timeframes Short , medium and long term. Importantly, while many funds theorize about ‘potential’ returns, Katana has a proven 9-year track record that demonstrates our actual capabilities. Forged in Fire Katan
Slide 14: Performance History: Significant Out-Performance
Performance History Significant Out-Performance For personal use only Significant Out-Performance Katana Outperformance over All Ords Index 30.0% Since listing in December 2005, Katana Capital Ltd has out-performed the 25.0% general market by 8.39% per annum This is a significant level of out- 20.0%
Slide 15: Dividends: Historical & Current
Dividends Historical & Current For personal use only Dividend History Katana Capital Ltd has paid dividends every year since listing Currently paying quarterly dividends This provides added convenience and cash flow for yield conscious investors ‘Smart’ Dividend Reinvestment Plan (DPR) in place Unde
Slide 16: Dividends: Comparative Yields
Dividends Comparative Yields For personal use only Katana Dividend Yield vs 10 Largest LICs Div Yield Franking Payout Ratio Katana has a strong and growing yield with KAT 2015 the lowest payout ratio (except MFF which Forecast 6.45% 50-100% 34.0% didn’t pay a dividend for 6 years) AFI 3.53% 100% 92.
Slide 17: Net Asset Backing: Comparative Discounts / Premiums
Net Asset Backing Comparative Discounts / Premiums For personal use only Katana NTA vs 10 Largest LICs NTA as at 31/7/14 Share Price Premium / (After Tax) 31/7/2014 (Discount) (%) Katana is one of an increasingly small KAT $1.028 $0.93* (-9.5%)* number of LICs that continue to trade at a discount to
Slide 18: Summary: Company
Summary 1. Company For personal use only Katana has built its track record during one of the greatest financial crises of modern history and is the ‘right size’ to deliver meaningful performance Right Size moving forward We have a sustainable investment philosophy that does not limit your performanc
Slide 19: Summary: Pricing
Summary 2. Pricing For personal use only Katana is trading on a (forecast)dividend yield of 6.45% versus the average High Dividend Yield of the largest 10 LICs being 3.83% Low Payout Ratio Katana’s payout ratio is 34% versus 82.1% for the 10 largest LICs At 93c, Katana is at a 9.5% DISCOUNT to NTA a
Slide 20: Thank you & Additional Information
For personal use only Thank you & Additional Information (Following)
Slide 21: Long Term Equity Returns: Superior Asset Class
Long Term Equity Returns Superior Asset Class For personal use only For more than 6 decades, equities have shown themselves to be the best performing asset class 1/1/1950 – 1/1/2014 GROSS RETURN REAL RETURN CPI 5.26% Cash 6.67% 1.41% Long term, cash and bonds have barely protected against inflation
Slide 22: Long Term Equity Returns: Impact of Compounding
Long Term Equity Returns Impact of Compounding For personal use only The impact of compounding is considerably underappreciated. If we take the average cash rate of 6.67% pa and compound it for 64 years, we achieve an ‘impressive’ 5,700% return on our principal amount. However, compounding the 12.30
Slide 23: Long Term Equity Returns: The last decade in perspective
Long Term Equity Returns The last decade in perspective For personal use only 50.00% Even during the 2nd 40.00% worst period in the 30.00% history of the ASX, 20.00% equities have yielded 10.00% Accum Index an ‘average’ return 0.00% All Ords Index 2006 2007 2008 2009 2010 2011 2012 2013 of 9.06% ret
Slide 24: Personnel: Support Staff & Service Providers
Personnel Support Staff & Service Providers For personal use only General Address AMP Building, Level 16, 140 St Georges Terrace, Perth Administration Michelle Butler (Manager) Stephanie Taverniti Compliance Jacqui Stewart, GRC Essentials Custodian JP Morgan Banker JP Morgan Katana Capital Limited A
Slide 25: Portfolio Construction: Decision Making
Portfolio Construction Processes For personal use only Decision Making Decision Making Process At the core of the decision making process is the Rigorous and Confrontational recognition that there are only 2 ways to make superior Due to the inherent differences in experiences, investment styles deci
Slide 26: Portfolio Construction: Processes
Portfolio Construction Processes For personal use only
Slide 27: Advantages of a Listed Investment Company (LIC)
Performance History Advantages of a Listed Investment Company (LIC) For personal use only Advantages Ease of transacting Shares in an LIC can be bought and sold quickly and easily without the need for manually completing an extensive application or redemption notice. Additionally, settlement is with
Slide 28: Summary: Solid Foundation
Summary Solid Foundation For personal use only Whilst past performance is no guarantee of future profits, we believe that Katana’s long-term out performance has a solid foundation: People Structure Experience: 100+ years of combined experience (and Flexibility to invest irrespective of size, sector