NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — NAOS Asset Management — ASA Webinar 'Does Value Investing Still Make Sense?' (June 2020)
27 slides from NAOS Ex-50 Opportunities's conference presentation, Jun 23, 2020
Slide 1: ASA Webinar 'Does Value Investing Still Make Sense?'
NAOS Asset Management Limited ASA Webinar ‘Does Value Investing Still Make Sense?’ 1pm 23rd June 2020 CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Management Limited 1
Slide 2: Important Information
Important Information This material has been prepared by NAOS Asset Management Limited (ABN 23 107 624 126, AFSL 273529) (NAOS) for general information purposes only and must not be construed as investment advice. It does not constitute an offer to purchase any security or financial product or servi
Slide 3: NAOS investment beliefs provide a competitive advantage
NAOS investment beliefs provide a competitive advantage Value with Long Quality over Invest for the Term Growth Quantity Long Term 5+ years Performance v Ignore the Pure Exposure Liquidity Focus Index to Industrials The closed end LIC structure removes application and redemption risk. Environmental,
Slide 4: What is value investing?
What is value investing? Value investing can be described as a style of investing that involves acquiring securities in a business that appears underpriced when analysed through fundamental analysis. The following table highlights some of the key fundamental attributes of ASX listed ‘value’ versus ‘
Slide 5: What is value investing?
What is value investing? Is value investing and the expectation of long term profit growth mutually exclusive? * 1 Year 1 Year Total Company ASX Stock Code Share Price Market Cap ($’000) Price Earnings Ratio Revenue Growth Shareholder Return Xero Limited XRO $85.26 $11,802,000 421 18.1% 44.4% Cochle
Slide 6: What is value investing? Xero Limited example
What is value investing? Is value investing and the expectation of long term profit growth mutually exclusive? Stock example Xero Limited (ASX: XRO)* • As XRO expands, the overseas adoption rates are accelerating. • XRO is now free cash flow (FCF) positive, an improvement of close to NZD$90m in FCF
Slide 7: The recent underperformance of value v growth investing
The recent underperformance of value v growth investing What has caused the recent underperformance of ‘value’ investing*? 1. Low interest rates leading to increased risk tolerance. 2. Significant change in consumer and business habits. 3. Many value type investments have been unable to grow revenue
Slide 8: How NAOS approach value investing
How NAOS approach value investing Consider sector Identify companies which headwinds/tailwinds, Watch for ‘value traps’ represent fair value but invest in businesses where also have the potential to positive long-term trends grow over the long term are sustainable Focus on long-term Consider balance
Slide 9: Key quantitative considerations for long term investing
Key quantitative considerations for long term investing Organic long term revenue Margin expansion growth Balance sheet flexibility Valuation multiple expansion CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Management Limited 9
Slide 10: NAOS core investment | MNF Group Limited (ASX: MNF)
NAOS core investment | MNF Group Limited (ASX: MNF) • Increased number of voice applications used over the internet and Organic revenue growth mobile applications e.g. Video calls, webinars, calling from computers. • MNF charges customers using its phone numbers on a recurring Margin expansion basis
Slide 11: Zoom customer growth
Zoom customer growth* 300,000 +354% YOY 250,000 200,000 150,000 100,000 50,000 0 Apr-19 Apr-20 Zoom customers with more than 10 employees * Zoom Video Communications, Inc. First Quarter Results for Fiscal Year 2020 and Fiscal Year 2021 CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Manag
Slide 12: NAOS core investment | Eureka Group Limited (ASX: EGH)
NAOS core investment | Eureka Group Limited (ASX: EGH) • The number of Australians aged over 85 will increase from 535,000 Organic revenue growth to over 1 million in 15 years time.* • As more villages are brought into the EGH model this should Margin expansion provide significant fixed cost leverag
Slide 13: Australian population projections
Australian population projections* 9,000,000 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 Perons aged 65 & over Perons aged 85 & over * Source: https://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/BriefingBook43p/ageingpopu
Slide 14: Q&A
Q&A Thank you for your support “If you own stocks like you’d own a farm or apartment house, you don’t get a quote on those every day or every week.” Warren Buffett CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Management Limited 14
Slide 15: Appendix
Appendix CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Management Limited 15
Slide 16: S&P/ASX All Ordinaries Index long term investing
Long term investing Historical Market Events and S&P/ASX All Ordinaries Index Long Term Performance* 7000 6000 S&P/ASX All Ordinaries Index 5000 COVID-19 4000 3000 US Loses 2000 Tech Wreck Global AAA Stock Great Bond Financial Credit Market Australian Massacre Crisis Rating 1000 Australian Crash Rec
Slide 17: NAOS investment portfolio financial year returns
NAOS investment portfolio financial year returns * 30% 20% 10% 0% -10% -20% FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 YTD NAOS Emerging Opportunities Company Limited (ASX: NCC) NAOS Ex-50 Opportunities Company Limited (ASX: NAC) NAOS Small Cap Opportunities Company Limited (ASX: NSC) * Investment Port
Slide 18: NAOS LIC dividend history and profit reserves
NAOS LIC dividend history and profit reserves* 70 65.89 60 50 46.50 Cents per share (CPS) 40 35.64 30.90 30 24.95 20 16.43 17.90 15.80 11.50 10 0 NCC NSC NAC Total Dividends Paid (Since Inception) Total Gross Dividends Paid Including Franking (Since Inception) Profit Reserves 31 May 2020 * All figur
Slide 19: NAOS LICs addressing the discount to NTA
NAOS LICs addressing the discount to NTA Discount to Pre Tax NAOS LIC Share Price^ NTA* Dividend Yield^ NTA^ NAOS Emerging Opportunities Company Limited (ASX: NCC) -2.81% $0.865 $0.89 8.38% NAOS Small Cap Opportunities Company Limited (ASX: NSC) -24.60% $0.475 $0.63 8.42% NAOS Ex-50 Opportunities Co
Slide 20: NAOS investment universe
NAOS investment universe CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Management Limited 20
Slide 21: NAOS strong long term risk-adjusted returns
NAOS strong long term (5 years+) risk-adjusted returns * NCC Investment Portfolio Risk and Performance Metrics NAC Investment Portfolio Risk and Performance Metrics 13% 13% 11% 10.42% 11% 9.29% 9% 9% 7% 7% 5.00% 4.83% 5% 5% 3.54% 2.82% 2.59% 3% 2.30% 3% 1% 1% -1% -1% -1.28% -1.35% -3% -3% -3.41% -3.
Slide 22: NAOS alignment of interests
NAOS alignment of interests 9,000,000 Inception Directors 7,944,998 Shareholding (Ordinary • Investment team members 8,000,000 Shares) are prohibited from holding 31 May 2020 Directors any securities outside of the 7,000,000 Shareholding (Ordinary NAOS LICs. Shares) 6,000,000 • Directors and all inv
Slide 23: NAOS investment process
NAOS investment process CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Management Limited 23
Slide 24: NAOS ESG framework
NAOS ESG framework CONVICTION. LONG TERM. ALIGNED | Copyright 2020 NAOS Asset Management Limited 24
Slide 25: NAOS giving
NAOS giving NAOS Asset Management, the management company, is proud to be giving back ~ 1% of recurring income to the following charities ‘Golden Shouldered Parrot’ threatened ‘Reef Aid’ campaign, in partnership RFDS, dedicated to providing species project, in partnership with with Greening Australi
Slide 26: NAOS Directors and Team
NAOS Directors and Team OUR DIRECTORS Sebastian Evans Warwick Evans Matthew Hyder David Rickards Sarah Williams Mark Bennett Trevor Carroll Managing Director, NAOS Chairman, NAOS Asset Director, NAOS Asset Independent Chairman & Independent Director, Director, NAOS Asset Independent Chairman Asset M
Slide 27: Investor awareness and communication
Investor awareness and communication CEO Insights, NAOS Shareholder Monthly Investment The news and media Newsletter, Webinars and Events, Report & NTA email section of our website subscribe via our subscribe via our updates, subscribe via is updated regularly website website our website naos.com.au
NAOS Asset Management — ASA Webinar 'Does Value Investing Still Make Sense?' (June 2020) on 6ix