Cadence Capital Limited · ASX:CDM
Cadence Capital — Shareholder Meeting (November 2024)
38 slides from Cadence Capital's shareholder meeting presentation, Nov 26, 2024
Slide 1: Cadence Capital & Cadence Opportunities Fund AGM and Investor Briefing
Cadence Capital Limited & Cadence Opportunities Fund Limited AGM and Investor Briefing 26 November 2024
Slide 2: Agenda
Agenda 1. Welcome 2. Investor Briefing Presentation (Cadence Capital Limited and Cadence Opportunities Fund Limited) 3. Questions 4. Cadence Capital Limited (CDM) Resolutions 5. Tea 2
Slide 3: CDM 2024 Year-End Results
CDM 2024 Year-End Results ▪ Fund up 10.4% for the 2024 financial year ▪ Profit after tax of $21.6m ▪ Last financial year the fund displayed significantly lower than market volatility resulting in good risk adjusted returns. ▪ The top contributors to performance last financial year were Meta Platform
Slide 4: Cadence Capital Limited (CDM)
Cadence Capital Limited (CDM) ▪ Fund up 1.5% in October outperforming ▪ CDM has a liquid and diversified portfolio index by 2.8%. ▪ The company holds around 35 positions with ▪ Past 19 years fund up +10.7% p.a. the largest position around 6% of the fund. outperforming index by 3.1% p.a. ▪ Approx. 81
Slide 5: CDM Top 20 Holdings (19th Nov 2024)
CDM Top 20 Holdings (19th Nov 2024) ▪ Exposure to gold stocks has reduced around 5% in November through both a reduction of gold stock share prices and selling of holdings. 5
Slide 6: CDO 2024 Year-End Results
CDO 2024 Year-End Results ▪ Fund up 10.8% for the 2024 financial year ▪ Profit after tax of $2.3m ▪ Last financial year the fund displayed significantly lower than market volatility resulting in good risk adjusted returns. ▪ The top contributors to performance last financial year were Meta Platforms
Slide 7: Cadence Opportunities Fund Limited
Cadence Opportunities Fund Limited ▪ CDO is an active trading version of the ▪ CDO has a liquid and diversified Cadence Capital process, using shorter portfolio duration trends to produce alpha opportunities. ▪ The company holds around 45 positions with the largest position 7% of the ▪ Fund up 1.8%
Slide 8: CDO Top 20 Holdings (19th Nov 2024)
CDO Top 20 Holdings (19th Nov 2024) ▪ Exposure to gold stocks has reduced around 7% in November through both a reduction of gold stock share prices and selling of holdings. 8
Slide 9: Fund update/ reporting season feedback
Fund update/ reporting season feedback 22.5 4.0% 3.0% 20 2.0% 1.0% PE 17.5 0.0% EPS Ratio Growth -1.0% 15 -2.0% -3.0% 12.5 -4.0% PE Ratio of All Ordinaries Accumulation Index (LHS) 2 Year Rolling Average EPS Growth (RHS) ▪ A large number of stocks are not meeting our fundamental investment criteria.
Slide 10: Long term interest rates
Long term interest rates We showed this chart at the 2022 AGM. US interest rates rose very quickly from 0.25% in March 2022 to 5.5% in July 2023. Rates have since been cut to 4.75% but it is too early to make a call that interest rates are now trending down. 10
Slide 11: Short term interest rates
Short term interest rates ▪ The Reserve Bank has kept the official interest rate steady in Australia over the past year. It can be seen on the above chart that 10-year bond rates (which give us an indication of where the market thinks interest rates are headed) have recently moved upwards. Despite t
Slide 12: Gold vs Gold stocks
Gold vs Gold stocks 10,000 4,300 9,500 4,100 3,900 9,000 The AUD gold 3,700 8,500 price has been Gold 3,500 AUD$ steadily rising Index 8,000 Gold since the start of 3,300 Price 7,500 last financial year, 3,100 but ASX listed gold 7,000 miners have not 2,900 6,500 performed as 2,700 well. 6,000 2,500
Slide 13: Evolution Mining (EVN) – Long (Core)
Evolution Mining (EVN) – Long (Core) Stock Profile EVN Fundamental Analysis ▪ EVN has successfully integrated the Northparkes asset into the portfolio following its acquisition in Dec 2023. Long Position (FY25e) ▪ A combination of strong operating performance and gold price tailwinds resulted in EVN
Slide 14: Evolution Mining (EVN)
Evolution Mining (EVN) $5.50 $5.00 $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 14
Slide 15: WestGold Resources (WGX) – Long (Core)
WestGold Resources (WGX) – Long (Core) Fundamental Analysis Stock Profile WGX ▪ We have been adding to our WGX position following management’s successful turnaround of the gold operations, delivering improved earnings. Long Position (FY25e) ▪ WGX has recently completed its merger with Karora Resourc
Slide 16: WestGold Resources (WGX)
WestGold Resources (WGX) $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 $0.50 16
Slide 17: Other gold positions
Other gold positions Resolute Mining (RSG) The RSG share price more than doubled in the first 10 months of 2024 due to gold price rises and good operational performance. The share price has now fallen back to where it was at the start of the year after the company announced that its CEO had been det
Slide 18: Turnaround Situations
Turnaround Situations ▪ Meta, Netflix and Block all had large share price falls in late 2021 and early 2022. ▪ This was part of a broader market sell off, with the S&P 500 falling 25% and the NASDAQ falling 35%. ▪ Meta and Netflix became cheap fundamentally, and when the share price began trending u
Slide 19: Meta Platforms (META US) – Long (Core)
Meta Platforms (META US) – Long (Core) Fundamental Analysis Stock Profile META US ▪ Meta Platforms shares were up over 75% during the last financial year. Long Position (FY24e) ▪ The benefits from Mark Zuckerberg’s “year of efficiency” as well as improved revenue from advertisers drove net income of
Slide 20: Meta Platforms (META US)
Meta Platforms (META US) USD 700 USD 600 USD 500 USD 400 USD 300 USD 200 USD 100 USD 0 20
Slide 21: Netflix (NFLX US) – Long (Core)
Netflix (NFLX US) – Long (Core) Fundamental Analysis Stock Profile NFLX US ▪ Netflix continues to perform well. Over the past year Netflix has benefited from a focus on reducing password sharing, as Long Position (FY24e) well as the introduction of ad supported plans that are cheaper for subscribers
Slide 22: Netflix (NFLX US)
Netflix (NFLX US) USD 900 USD 800 USD 700 USD 600 USD 500 USD 400 USD 300 USD 200 USD 100 22
Slide 23: Block (SQ US) – Long (Core)
Block (SQ US) – Long (Core) Fundamental Analysis Stock Profile SQ US ▪ Block has two divisions. Square provides point of sale systems for businesses, and Cash App is an app that allows users in the US to send and receive money easily with low fees. Long Position (FY25e) ▪ Block is targeting “Rule of
Slide 24: Block (SQ US)
Block(SQ US) USD 300 USD 250 USD 200 USD 150 USD 100 USD 50 USD 0 24
Slide 25: Energy Positions – Whitehaven Coal
Energy Positions Whitehaven Coal (WHC) ▪ In April Whitehaven completed the acquisition of the Daunia and Blackwater metallurgical coal mines. This roughly doubled its production base and created a dual-pronged revenue stream in metallurgical coal (65%) and thermal coal (35%). ▪ In August Whitehaven
Slide 26: Energy Positions – Yancoal and Stanmore
Energy Positions Yancoal Australia (YAL) ▪ YAL produces a combination of metallurgical and thermal coal primarily from NSW & QLD operations. ▪ YAL generates a substantial amount of free cash flow - $430m in Sept 2024 quarter ($1.7bn annualised). ▪ Expected FY25 free cash flow yield of 17% and a PEG
Slide 27: PE Expansion Positions
PE Expansion Positions ▪ We have been invested in Suncorp (SUN), QBE Insurance (QBE) and Origin Energy (ORG) for a number of years. ▪ When we invested in these positions all three companies were on a low PE ratio and had good growth prospects. Suncorp and QBE were able to increase premiums in an inf
Slide 28: Some CDO Trading Positions
Some CDO Trading Positions Trading opportunities have started to present and CDO has been taking on new trading positions. In cases where the stocks have enough liquidity, the trades are also done in CDM. IperionX (IPX) IPX is a US based company that has developed technology to produce titanium at a
Slide 29: Outlook
Outlook ▪ We expect asset and commodity price volatility to remain high in the coming months. ▪ Growth in China / Asia appears to be slowing with the property sector dragging on the economy and causing weak consumer and investor confidence. China is continuing to stimulate and re-stimulate until the
Slide 30: Outlook (Continued)
Outlook (Continued) ▪ Interest rates have been rising since 2020. We continue to believe that the current uptrend in interest rates is one of the most important trends to monitor in determining the direction of future asset prices. ▪ There was media speculation the Reserve Bank would cut rates, but
Slide 31: Outlook (Continued)
Outlook (Continued) ▪ Demand for electric vehicles has collapsed in Europe and other western countries. Electric vehicle growth in China remains strong. China is largely ‘dominating’ EV’s globally after adopting the strategy a long time ago. ▪ Stock markets are still rising despite interest rate exp
Slide 32: Questions
IG Questions Any Questions? ne
Slide 33: Financial Report and Voting
Financial Report and Voting Financial Report and Voting: ▪ June 2024 Financial Report ▪ Resolution 1 ▪ Resolution 2 ▪ Resolution 3 33
Slide 34: Resolution 1
Resolution 1 To adopt the Remuneration Report. Votes for 45,546,470 Votes against 3,235,278 Open Proxy Votes : Non-Chairman 338,977 Abstain 740,848 Any Questions? 34
Slide 35: Resolution 2
Resolution 2 To re-elect Mr Karl Siegling as a Director. Votes for 48,765,387 Votes against 2,136,718 Open Proxy Votes : Non-Chairman 338,977 Abstain 131,998 Any Questions? 35
Slide 36: Resolution 3
Resolution 3 To re-elect Ms Jenelle Webster as a Director. Votes for 48,022,455 Votes against 2,270,372 Open Proxy Votes : Non-Chairman 338,977 Abstain 741,276 Any Questions? 36
Slide 37: Tea
Tea Please join us for tea 37
Slide 38: Disclaimer
Disclaimer 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 contained in this document
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