Cadence Opportunities Fund Ltd. · ASX:CDO
Cadence Opportunities Fund — Shareholder Meeting (November 2023)
33 slides from Cadence Opportunities Fund's shareholder meeting presentation, Nov 23, 2023
Slide 1: AGM Investor Briefing
AGM Investor Briefing For personal use only Cadence Capital Limited (CDM) & Cadence Opportunities Fund Limited (CDO)
Slide 2: Cadence Capital Limited (CDM)
Cadence Capital Limited (CDM) For personal use only Gross Performance* to 31st October 2023 CDM All Ords Accum Outperformance 1 Month 0.9% -3.9% +4.8% YTD 0.7% -4.5% +5.1% 3 Years (per annum) 4.9% 8.6% -3.7% 5 Years (per annum) 2.7% 7.4% -4.7% 10 Years (per annum) 3.8% 6.8% -3.0% Since Inception (18
Slide 3: Cadence Opportunities Fund Limited
Cadence Opportunities Fund Limited For personal use only Gross Performance* to 31st October 2023 CDO 1 Month 1.2% YTD 0.3% 3 Years (per annum) 12.4% Since Inception (per annum) 25.6% Since Inception (4.8 years) (total return) 200.6% * Gross Performance: before M anagement and Performance Fees Cadenc
Slide 4: CDM 2023 Year-End Results
CDM 2023 Year-End Results ▪ Fund down 4.2% in FY23 underperforming index. For personal use only ▪ Past 3 years fund up 9.9% p.a. ▪ The top contributors to performance during the financial year were Whitehaven Coal, New Hope, Patriot Battery Metals, Meta Platforms, BHP, Capstone Copper and Terracom.
Slide 5: CDM Historical Exposure
CDM Historical Exposure 160% For personal use only 140% 120% 100% 80% 60% 40% Long 20% Exposure 0% Short Exposure -20% Net Exposure -40% -60% ▪ CDM has been conservatively positioned over the past year holding high levels of cash (on average 50%) 5
Slide 6: CDM Portfolio (31 October 2023)
CDM Portfolio (31 October 2023) For personal use only Top 20 Positions Code Position* AMP AMP Ltd Sector Exposure BHP BHP Group Ltd Sector Long Short Net BLD Boral Ltd Energy 17.6% 17.6% CS CN Capstone Copper Corp Basic Materials 13.2% -0.2% 13.0% CGF Challlenger Ltd Financial 7.8% -0.8% 7.0% GNW US
Slide 7: CDO 2023 Year-End Results
CDO 2023 Year-End Results ▪ Fund down 5.8% in FY23 underperforming index. For personal use only ▪ Past 3 years fund up 23.8% p.a. ▪ The top contributors to performance during the financial year were Whitehaven Coal, Patriot Battery Metals, New Hope, Terracom, Meta Platforms, BHP and Stanmore Coal. ▪
Slide 8: CDO Historical Exposure
CDO Historical Exposure 120% For personal use only 110% 100% 90% 80% 70% 60% Long 50% Exposure 40% Short 30% Exposure 20% Net Exposure 10% 0% -10% -20% -30% ▪ CDO has been conservatively positioned over the past year holding high levels of cash (on average 40% over past 12 month) 8
Slide 9: CDO Portfolio (31 October 2023)
CDO Portfolio (31 October 2023) For personal use only Top 20 Positions Sector Exposure 9
Slide 10: Interest Rates (Revisited)
Interest Rates (Revisited) For personal use only Currently 5.25% to 5.50% 2022 (3.75% to 4%) 2021 (0% to 0.25%) 10
Slide 11: Interest rate trends
Interest rate trends ▪ Trends are long in nature – Interest rate trends are 40 years + For personal use only ▪ Interest rates went up from 1945 until the mid 1980’s and then fell from the mid 1980’s until around 2020 ▪ Since ‘bottoming out’ interest rates have been going up for the last three years
Slide 12: The Australian Dollar
The Australian Dollar For personal use only ▪ A weakening Australian dollar benefits Australian exporters and Australian tourism industry and negatively impacts Australian importers 12
Slide 13: The Gold Price
For personal use only 13 The Gold Price
Slide 14: Fossil Fuel Prices
Fossil Fuel Prices For personal use only ▪ Energy prices continue to be high 14
Slide 15: Energy Positions
Energy Positions For personal use only ▪ Whitehaven Coal (WHC), Stanmore Resources (SMR) and New Hope (NHC) are all Core Long Positions. We re-entered these positions having sold out of them last year ▪ WHC is trading on a PE of 3.6x 2025e earnings and operating cashflow yield will be around 50% at
Slide 16: Whitehaven Coal Ltd (WHC) - Long (Core)
Whitehaven Coal Ltd (WHC) - Long (Core) Fundamental Analysis For personal use only Stock Profile WHC ▪ After selling out of our WHC position completely in FY23 when the coal price rolled over, we have entered a new position at lower levels Long Position (FY25e) ▪ Looking at future earnings and inclu
Slide 17: Whitehaven Coal Ltd.(WHC)
Whitehaven Coal Ltd.(WHC) For personal use only 17
Slide 18: Stanmore Resources (SMR) - Long (Core)
Stanmore Resources (SMR) - Long (Core) Fundamental Analysis For personal use only Stock Profile SMR ▪ SMR purchased coal assets off BHP several years ago. ▪ Even though the SMR share price has moved from below Long Position (CY24) $1 to around $3.70, SMR is still trading at attractive multiples EPS
Slide 19: SMR Resources Ltd (SMR)
SMR Resources Ltd (SMR) For personal use only 19
Slide 20: Gold Positions
Gold Positions For personal use only ▪ Westgold Resources (WGX) and Tietto Minerals (TIE) are Core Long Positions ▪ Newmont/ Newcrest merger (NEM) and Red 5 (RED) are Trading positions ▪ Newmont bid 0.4 NEM US shares per NCM share as well as a USD$1.10 fully franked dividend ▪ International investor
Slide 21: Westgold Resources (WGX) - Long (Core)
Westgold Resources (WGX) - Long (Core) Fundamental Analysis For personal use only Stock Profile WGX ▪ Opened position in June 2023 ▪ WGX management have successfully turned the gold operations around and 2024e looks set to deliver much improved earnings Long Position (FY24e) ▪ WGX has also announced
Slide 22: Westgold Resources Ltd (WGX)
Westgold Resources Ltd (WGX) For personal use only 22
Slide 23: Tietto Minerals (TIE) - Long (Core)
Tietto Minerals (TIE) - Long (Core) For personal use only Stock Profile TIE Fundamental Analysis ▪ Opened position in placement in Nov 21 ▪ In October, Tietto announced a new Life of Mine Plan Long Position (FY 24e) for the Abujar Gold Mine which detailed a post-tax NPV of US$853M (A$1.35B) at USD 1
Slide 24: Tietto Minerals (TIE)
Tietto Minerals (TIE) For personal use only 24
Slide 25: Inflation and Pricing Power
Inflation and Pricing Power For personal use only ▪ Looking for stocks that perform well in periods of higher interest rates and inflation ▪ What has performed well in previous cycles are companies with pricing power, precious metals companies and energy companies. The funds hold a significant numbe
Slide 26: Boral Limited (BLD) - Long (Trade - Core)
Boral Limited (BLD) - Long (Trade - Core) Fundamental Analysis For personal use only Stock Profile BLD ▪ The high amount of residential property development over recent years and the number of infrastructure projects announced in Australia is well reported Long Position (FY24e) ▪ In fact, the Intern
Slide 27: Boral Limited (BLD)
Boral Limited (BLD) For personal use only 27
Slide 28: Stock Specific Turnaround Positions
Stock Specific Turnaround Positions For personal use only ▪ Netflix (NFLX US) is a turnaround position • Netflix suffered a setback in subscriber growth a year and a half ago and the share price fell from around US$700 to US$200 • This fall and subsequent recovery was an opportunity to own a high-qu
Slide 29: Meta Platforms (META US) – Long (Core)
Meta Platforms (META US) – Long (Core) For personal use only Fundamental Analysis Stock Profile META US ▪ Meta’s main apps are Facebook, Instagram, Threads and WhatsApp. ▪ Meta is also heavily involved in AI, with work progressing on their Long Position (FY23) ChatGPT like large language model calle
Slide 30: Meta Platforms (META US)
Meta Platforms (META US) For personal use only 30
Slide 31: Outlook
Outlook For personal use only ▪ As outlined at our AGM in 2021 and 2022 and again this year the falling interest rate trend that lasted for around 40 years ended several years ago. ▪ We are now living in a world of higher interest rates and ‘more expensive money’. The 40- year period of falling inte
Slide 32: Outlook Continued
Outlook Continued For personal use only ▪ We are starting to see trading opportunities in which shares are trading at a discount to underlying assets and, subject to detailed due diligence, these tend to be good risk adjusted long term investments ▪ Nonetheless cash and liquidity levels remain high.
Slide 33: Disclaimer
Disclaimer For personal use only The information contained in this report has been prepared with all reasonable care by Cadence Asset Management Pty Ltd and is of a general nature only. It is provided for information purposes only and should not be construed as an offer or solicitation. Nothing cont
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