Pinnacle Investment Management Group Limited · ASX:PNI
Pinnacle Investment Management — Pinnacle Investment Summit 2025
19 slides from Pinnacle Investment Management's conference presentation, July 2025
Slide 1: Ideas to Alpha: Spheria Smaller Companies
P i n n a c l e I n v e s t m e n t S u m m i t 2 0 2 5 Ideas to Alpha: Spheria Smaller Companies
Slide 2: John Burr Williams quote on asset value
The value of any stock, bond, or business today is determined by the cash inflows and outflows—discounted at an appropriate interest rate—that can be expected to occur during the remaining life of the asset.” John Burr Williams
Slide 3: The Facts: Cash Flow Companies Outperform
3 The Facts: Cash Flow Companies Outperform 20-year returns: positive vs negative operating cash flow 500 Positive Op Cashflow Benchmark - Small ords Negative Op Cashflow +404% 400 300 +198% 200 100 0 -61% -100 -200 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Chart Source: Bloomberg data.
Slide 4: Spheria's Investment Process
4 Spheria’s Investment Process Applicable to various market cycles 1. Applicable to different investment environments ✓ Cyclical Free ✓ Turnarounds Cashflow ✓ Growth 2. Reduces risk ✓ Avoids unsustainable hyperbolic bubbles 3. Based on fundamentals and is repeatable 4. Fact and data based not opinio
Slide 5: Idea Generation
Idea Generation Where do we find ideas? 5 It starts with being curious Global research News flow Spheria screen Conferences & Team travel Analyst ideas discussions Research Valuation Does it tick our boxes? Discussion Diversification Liquidity Does it fit in our portfolio? Risk
Slide 6: Well Resourced, Integrated Team Scouring the Globe
6 Well Resourced, Integrated Team Scouring the Globe Over the last 12 months… ~80x stocks modelled and 16 new companies added to the Fund 5x Global Trips across Europe, the US and ~300x calls and Japan, with 5 more planned meetings with companies for the next 12 months 10x Pinnacle Global A team of
Slide 7: Global Synergies With Domestics
7 Global Synergies With Domestics Global Stocks Domestic Stocks
Slide 8: Ideas to Alpha
8 Ideas to Alpha 2 consistent applications of our process Top 10 holding in the Spheria Australian Not owned/did not fit our criteria Smaller Companies Fund
Slide 9: Idea #1: Eagers Automotive – AU Small Caps (ASX:APE)
9 Idea #1: Eagers Automotive – AU Small Caps (ASX:APE) The known knowns were known Eagers Automotive Price Chart $22 $20 $18 $16 $14 $12 $10 $8 Jan-23 Apr-23 Jul-23 Oct-23 Jan-24 Apr-24 Jul-24 Oct-24 Jan-25 Apr-25 Jul-25 • Market concerns – falling margins and tough industry backdrop (ASG, PWR) • Ma
Slide 10: Idea #1: Eagers Automotive (BYD Atto)
10 Idea #1: Eagers Automotive (ASX:APE) BYD Atto 3
Slide 11: Idea #1: Eagers Automotive (BYD Shark)
11 Idea #1: Eagers Automotive (ASX:APE) BYD Shark
Slide 12: Idea #1: Eagers Automotive – Accelerating ahead
12 Idea #1: Eagers Automotive (ASX:APE) Accelerating ahead Cash Flow Conversion (EBITA) Return Metrics 600 100% 40% 87% 90% 35% 500 80% 30% 70% 400 60% 25% 22% 21% 20% 300 50% 20% 17% 17% 40% 15% 12% 200 11% 11% 11% 12% 11% 11% 30% 10% 10% 8% 20% 100 10% 5% 0 0% 0% FY11A FY12A FY13A FY14A FY15A FY16
Slide 13: Idea #2: Domino's Pizza (ASX:DMP)
13 Idea #2: Domino’s Pizza (ASX:DMP) The domino effect EV/EBITA 70x 60x • Expanded into marginal geographies 50x • Increased operational complexity 40x • Commoditised by 3rd party delivery apps 30x 20x • Franchisee economics under pressure 10x • Balance sheet gearing elevated 0x Feb-20 Feb-21 Feb-22
Slide 14: Idea #2: Domino's Pizza – The domino effect
14 Idea #2: Domino’s Pizza (ASX:DMP) The domino effect Cash Flow Conversion (EBITA) Return Metrics 350 50% 45% 47% 45% 39% 300 40% 37% 36% 40% 250 35% 32% 35% 30% 30% 28% 28% 27% 27% 27% 28% 200 30% 25% 26% 25% 23% 150 25% 20% 20% 18% 19% 100 20% 15% 15% 13% 15% 50 10% 10% 0 5% 5% 0% -50 0% 0% Free
Slide 15: Artificial Intelligence: Killer App for Active Investors
15 Artificial Intelligence: Killer App for Active Investors “Machine intelligence is the last invention that humanity will ever need to make” – Nick Bostrom
Slide 16: How AI is Making Us Better
16 How AI is Making Us Better Productivity • Daily queries • Automated note taking & summary • Deep Research – Initiations, industry overviews, contrarian AI Spheria 2.0 • Capture what is unique to Spheria • Train AI on that data • Screen for analogous companies • Search for non-obvious connections
Slide 17: Beyond The Benchmark
17 Beyond The Benchmark Spheria delivers superior alpha for lower risk Investment growth of $10,000 (net of fees) S&P/ASX Small Ordinaries Spheria Smaller 25,000 Index Companies Fund +227% Spheria Australian Smaller Companies 23,000 Returns (p.a.) 6.3% 9.3% S&P/ASX Small Ordinaries TR AUD Peer Group
Slide 18: Summary
18 Summary • ‘Ideas to Alpha’ is the essence of classic bottom-up investors • Alpha comes from avoiding stocks as well – E.g. DMP • Will own “true” growth companies, just won’t pay any price • Future investment tools including AI play into the hands of active managers • Shift to passive = Opportunit
Slide 19: Disclaimer
Disclaimer This communication has been prepared by Spheria Asset Management reliability or completeness is not guaranteed. To the extent permitted Pty Limited ABN 42 611 081 326 (‘Spheria’), Corporate Authorised by law, Spheria and Pinnacle Fund Services Limited disclaim all liability Representative
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