Glennon Small Companies Ltd · ASX:GC1
Glennon Small Companies — Investor Presentation (October 2017)
34 slides from Glennon Small Companies's investor presentation, Oct 31, 2017
Slide 1: Glennon Capital
For personal use only Glennon Capital Chief Investment Officer, Michael Glennon
Slide 2: Disclaimer
Disclaimer For personal use only The information provided in this presentation has been prepared by Glennon Capital (ABN 84 137 219 866, AFSL 338567). The information herein is general information only and should not be construed as an offer for sale, nor does the information provided constitute inv
Slide 3: About Glennon Capital
About Glennon Capital For personal use only Glennon Capital is a boutique investment manager based in Sydney, Australia. We invest in, micro, small, mid-cap companies. We have been doing this since the we were established in 2008. We are long term investors, with the core investments in our portfoli
Slide 4: Small Cap Market Performance – Last Years
Small Cap Market Performance – Last 2 Years For personal use only 4
Slide 5: Small Cap Market Performance – Last Years
Small Cap Market Performance – Last 5 Years For personal use only 5
Slide 6: Small Cap Market Performance – Last Years
Small Cap Market Performance – Last 20 Years For personal use only 6
Slide 7: GC1 Performance
GC1 Performance For personal use only $14,000 Highwater Mark $13,500 $13,000 $12,500 GROSS PORTFOLIO RETURN $12,000 $11,500 $11,000 $10,500 $10,000 7
Slide 8: Cumulative Dividends
Cumulative Dividends For personal use only 8 7 6 5 4 7.75 3 4.75 2 3.75 1 0.75 0 Interim 2016 Final 2016 Interim 2017 Final 2017 Cumulative Dividends 8
Slide 9: GC1 NTA + Dividends Paid
GC1 NTA + Dividends Paid For personal use only 110.00 3.75 7.75 108.00 7.75 106.00 4.75 104.00 0.75 102.00 100.00 98.00 96.00 94.00 101.88 104.10 99.90 98.01 100.40 92.00 December 2015 June 2016 December 2016 June 2017 September 2017 NTA after tax cumulative dividends 9
Slide 10: Where to from here?
For personal use only Where to from here?
Slide 11: Where to from here?
Where to from here? For personal use only ▪ We have returned to a stock pickers market ▪ No obvious mispriced sectors ▪ Resources have rallied ▪ Mining service have rallied ▪ Retail is appearing cheap ▪ Momentum and trying to anticipate economic trends will not work Valuations & Stock picking will p
Slide 12: Characteristics Of A Quality Company
For personal use only Characteristics Of A Quality Company
Slide 13: Quality Companies
Quality Companies For personal use only Superior Undervalued Management Barriers To Growth Entry Prospects Sustainable Businesses 13
Slide 14: Our Portfolio
Our Portfolio Portfolio Characteristics Top Portfolio Holdings For personal use only ▪34 Companies National Veterinary Care Limited 6.73% ▪Top 10 positions represent 50% of the portfolio Macmahon Holdings Ltd 6.29% Apollo Tourism & Leisure Limited 5.41% ▪Cash at ~10% Emeco Holdings Limited 5.29% The
Slide 15: GC1 Top Holdings
For personal use only GC1 Top 5 Holdings
Slide 16: National Veterinary Care
National Veterinary Care For personal use only Valuation Metrics $2.65 Earnings Drivers Key Risks • The wellness program • Key man risk M.Cap ($m) 156 • Further geographic expansion • Private equity entrants EV ($m) 176 Profit FY18 ($m) 7.7 • Buying group rebates • Funding and cost of debt PE X 20.2
Slide 17: Macmahon Holdings Ltd
Macmahon Holdings Ltd For personal use only Valuation Metrics $0.245 Earnings Drivers Key Risks • Telfer breaking even • Weakening in resources demand M.Cap ($m) 506 • Stage 2 of Batu Hiai starting early • Project risk EV ($m) 452 Profit ($m) 40 • Tropicana extensions • Time delays PE X 11 • Byerwen
Slide 18: Apollo Tourism & Leisure
Apollo Tourism & Leisure For personal use only Valuation Metrics $1.635 Earnings Drivers Key Risks • Further penetration in the US • Australia is relatively mature which will M.Cap ($m) 296 force the company to find new markets • Consolidation and acquisition in EV ($m) 458 domestic market • Operati
Slide 19: Emeco Holdings Ltd
Emeco Holdings Ltd For personal use only Valuation Metrics $0.42 Earnings Drivers Key Risks • recapitalisation and merger with EHL’’s • Execution risk M.Cap ($m) 585 two largest competitors, Andy’s • Coal is 55% of domestic earnings EV ($m) 998 Earthmoving and Orionstone. Profit FY19 ($m) 13.9 • WA
Slide 20: A2 Milk Co Ltd
A2 Milk Co Ltd For personal use only Valuation Metrics $7.76 Earnings Drivers Key Risks • Infant food sales grew 84% last year M.Cap ($b) 5.5 • Potential to access a 4,000t market in EV ($m) 5.4 China Profit ($m) 146 • Launch in UK PE X 37.7 EV/EBITDA X 24.8 • Improvement in supply constraints DCF $
Slide 21: New Investments Characteristics
New Investments Characteristics For personal use only Superior Growth Sustainable Barriers To Entry Undervalued Management Prospects Businesses Investment #1 Investment #2 Investment #3 Investment #4 21
Slide 22: Small-Cap Success Story
Small-Cap Success Story For personal use only 22
Slide 23: Small-Cap Success Story
Small-Cap Success Story For personal use only Superior Growth Sustainable Barriers To Undervalued Management Prospects Businesses Entry X X 23
Slide 24: Important Investment Themes
For personal use only Important Investment Themes
Slide 25: Investment Themes
Investment Themes For personal use only ROLL UPS DISRUPTION OWNER-OPERATORS DEEP VALUE MICROCAPS 25
Slide 26: Examples: Roll Ups
For personal use only Examples Roll Ups 26
Slide 27: Investment Themes
Investment Themes For personal use only ROLL UPS DISRUPTION OWNER-OPERATORS DEEP VALUE MICROCAPS 27
Slide 28: Examples: Disruption
For personal use only Examples Disruption 28
Slide 29: Investment Themes
Investment Themes For personal use only ROLL UPS DISRUPTION OWNER-OPERATORS DEEP VALUE MICROCAPS 29
Slide 30: Owner-Operators
Owner-Operators For personal use only Examples Indy Singh 33% Trouchet family 53% Anthony Boucaut 30% 30
Slide 31: Investment Themes
Investment Themes For personal use only ROLL UPS DISRUPTION OWNER-OPERATORS DEEP VALUE MICROCAPS 31
Slide 32: Examples: Deep Value
For personal use only Examples Deep Value 32
Slide 33: Investment Themes
Investment Themes For personal use only ROLL UPS DISRUPTION OWNER-OPERATORS DEEP VALUE MICROCAPS 33
Slide 34: Microcaps
Microcaps For personal use only Examples $64m now $40 when bought M.Cap $28m when bought M.Cap $35 now Page 34
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