NAOS Ex-50 Opportunities Co. Ltd. · ASX:NAC
NAOS Ex-50 Opportunities — NAOS Asset Management — Non-Deal Roadshow (September 2018)
40 slides from NAOS Ex-50 Opportunities's roadshow presentation, September 2018
Slide 1: National Investor Roadshow
National Investor Roadshow NAOS Asset Management September 2018 CONVICTION. LONG TERM. ALIGNED | Copyright 2018 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 Asset Management Limited
NAOS Asset Management Limited CONVICTION. LONG TERM. ALIGNED NAOS is a specialist fund manager providing genuine, concentrated exposure to Australian listed industrial companies outside of the ASX-50. With more than 8,000 shareholders, NAOS manages over $330 million across three Listed Investment Co
Slide 4: NAOS Investment Beliefs
NAOS Investment Beliefs Value with Long Quality over Invest for the Performance v Term Growth Quantity Long Term Liquidity Focus Ignore the Pure Exposure Environmental, Management Index to Industrials Social and Alignment Governance (ESG) CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Ma
Slide 5: NAOS Investment Mandate
NAOS Investment Mandate 01 02 NAOS seeks to protect investor capital NAOS provides investors with genuine, whilst providing a sustainable growing concentrated exposure to Australian stream of fully franked dividends and undervalued listed micro, small and long-term capital growth above the mid-cap c
Slide 6: NAOS Listed Investment Companies
NAOS Listed Investment Companies CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 6
Slide 7: NTA & Performance
NTA & Performance 1 YEAR 1 YEAR 1H FY18 PRE TAX NTA PORTFOLIO PERFORMANCE BENCHMARK PERFORMANCE PERFORMANCE TO 31 PORTFOLIO INCEPTION 31 JULY 2018 TO 31 JULY 2018 TO 31 JULY 2018 DECEMBER 2017 PERFORMANCE P.A. NCC* $1.23 +1.48% +22.58% +11.86% +15.39% NSC^ $0.92 n/a n/a +1.09% -4.17%nom. NAC* $1.11
Slide 8: LIC Overview and Investment Update
LIC Overview and Investment Update “The real big money in the investment world, the dependable money, the safe money, is made not betting the things that have gone up a lot will continue, but on betting the things that have gone down a lot and become unloved will rebound”. HOWARD MARKS CONVICTION. L
Slide 9: NCC Overview
NCC Overview as at 29 August 2018 DIVIDENDS Dividend Profile $0.08 $0.0725 $14m $0.07 $0.0625 $0.0675 $0.0700 Profits Reserve $0.06 $0.0575 5.71% $0.05 $0.04 Fully Franked Dividend Yield $0.03 $0.0250 100% $0.02 Franking $0.01 $0.00 2H FY13 FY14 FY15 FY16 FY17 FY18 CONVICTION. LONG TERM. ALIGNED | C
Slide 10: NCC Overview
NCC Overview PORTFOLIO as at 31 July 2018 PORTFOLIO METRICS as at 30 August 2018 9 2.35% Number of Holdings Dividend Yield 0.59% 27.44%* Cash Weighting Projected EBITDA Growth (12 month) 3.9m 7.29 NCC Directors Shareholding Enterprise Value to EBITDA $90.6m 0.55 Holdings Weighted av. Mkt Cap Net Deb
Slide 11: NCC Overview
NCC Overview STOCK SPOTLIGHT Continued to build concentrated positions in our portfolio stocks, which have remained the same since our March Roadshow CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 11
Slide 12: Capital Preservation
Capital Preservation "Since you don't get advance warning about what kind of environment is coming next, you should always be concerned about preserving your money." SETH KLARMAN CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 12
Slide 13: Long Term Outperformance
Long Term Outperformance NCC Inception Performance 15.39% p.a. v Benchmark XSOAI 6.70% p.a.* NCC Investment Portfolio Performance Small Ordinaries Accumulation Index (XSOAI) Return 10.00% 8.00% 6.00% 4.00% 2.00% 0.00% -2.00% -4.00% -6.00% -8.00% Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-1
Slide 14: NSC Overview
NSC Overview as at 29 August 2018 DIVIDENDS Dividend Profile $0.04 $18.6m Profits Reserve $0.0300 $0.03 $0.0250 6.21% Fully Franked Dividend Yield $0.02 100% $0.01 Franking $0.00 1H FY18 2H FY18 CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 14
Slide 15: NSC Overview
NSC Overview PORTFOLIO as at 31 July 2018 PORTFOLIO METRICS as at 30 August 2018 11 3.24% Number of Holdings Dividend Yield 7.62% 20.77%* Cash Weighting Projected EBITDA Growth (12 month) 1.59m 7.99 NSC Directors Shareholding Enterprise Value to EBITDA $234.8m 0.36 Holdings Weighted av. Mkt Cap Net
Slide 16: NSC Overview
NSC Overview STOCK SPOTLIGHT A more concentrated portfolio, moving from 15 to 11 stocks* *Since our last Investor Roadshow in March 2018 CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 16
Slide 17: NAC Overview
NAC Overview as at 29 August 2018 DIVIDENDS Dividend Profile $0.06 $5.7m $0.05 $0.0475 $0.0500 $0.0525 Profits Reserve $0.04 5.25% Fully Franked Dividend Yield $0.03 $0.0200 100% $0.02 Franking $0.01 $0.00 2H FY15 FY16 FY17 FY18 CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management L
Slide 18: NAC Overview
NAC Overview PORTFOLIO as at 31 July 2018 PORTFOLIO METRICS as at 30 August 2018 12 3.24% Number of Holdings Dividend Yield 6.39% 20.28%* Cash Weighting Projected EBITDA Growth (12 month) 3.87m 9.54 NAC Directors Shareholding Enterprise Value to EBITDA $893.7m 0.12 Holdings Weighted av. Mkt Cap Net
Slide 19: Long Term Outperformance
Long Term Outperformance NAC Inception Performance 14.91% p.a. v Benchmark XKIAI 8.21% p.a.* NAC Investment Portfolio Performance S&P/ASX 300 Industrials Accumulation Index (XKIAI) Return 9.00% 7.00% 5.00% 3.00% 1.00% -1.00% -3.00% -5.00% -7.00% -9.00% * Figures are as at 31 July 2018, inception dat
Slide 20: NAC Overview
NAC Overview STOCK SPOTLIGHT:* Removed Added *Since our last Investor Roadshow in March 2018 CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 20
Slide 21: The case for concentrated investing
The case for concentrated investing “A lot of great fortunes in the world have been made by owning a single wonderful business. If you understand the business, you don’t need to own very many of them.” WARREN BUFFETT CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 21
Slide 22: NAOS LIC Concentration v Other Small Cap LICs
NAOS LIC Concentration v Other Small Cap LICs as at 30 June 2018 NUMBER OF HOLDINGS TOP 5 WEIGHT % OF PORTFOLIO LIC 1 92 14.30% LIC 2 72 15.70% LIC 3 20-65 24.20% LIC 4 20-30 22.70% LIC 5 30 30.68% LIC 6 29 35.70% NCC 9 71.64% NSC 11 59.99% NAC 11 66.06% CONVICTION. LONG TERM. ALIGNED | Copyright 20
Slide 23: The case for concentrated investing
The case for concentrated investing Over the last 3 years to June 2018, 4 stocks in the ASX 300 Industrials Index have been able to earn an annualised return of over 100%, and 15 stocks earned over 50% annualised return. ASX ANNUALISED 219 STOCKS IN THE INDEX (LISTED > 3 YEARS) HOLDING NAME INDUSTRY
Slide 24: The case for concentrated investing
The case for concentrated investing 10 STOCK PORTFOLIO 100 STOCK PORTFOLIO 1 stock doubles in value = 1 stock doubles in value = 10% 1% Contribution to Return Contribution to Return Holding too many stocks in a portfolio can crowd out returns from good ideas CONVICTION. LONG TERM. ALIGNED | Copyrigh
Slide 25: Portfolio Risk
The case for concentrated investing 93% of stock specific risk is Portfolio Risk eliminated with a 20 stock portfolio 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 Number of Securities in a Portfolio Portoflio Risk Market Risk Diversification isn't lost and there is evidence for superior
Slide 26: Market Review
Market Review “Bull markets are born on pessimism, grow on scepticism, mature on optimism and die on euphoria.” SIR JOHN TEMPLETON CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 26
Slide 27: Key attributes of a market correction
Key attributes of a market correction 1. VALUATION PER (x) EPS GROWTH (%) DIV YIELD (%) PRICE + DEBT/EBIT (x) Industrials ex Fin ex Listed 21.6 1.8 3.3 16.6 Property Trusts Financials 14.6 -5.1 5.7 12.6 Source: Macquarie Wealth Management Research 15 August 2018, figures as at 30 June 2018 CONVICTIO
Slide 28: Key attributes of a market correction
Key attributes of a market correction 2. RECESSION Consumer Price Inflation* Wage Price Index, Australia# 6.0 5.0 4.5 5.0 4.0 3.5 4.0 3.0 3.0 2.5 2.0 2.0 1.5 1.0 1.0 0.5 0.0 0.0 * Excluding interest charges prior to the September quarter 1998 and adjusted for the tax # Total pay excluding bonuses, s
Slide 29: Key attributes of a market correction
Key attributes of a market correction 2. RECESSION Source: NAB Monthly Business Survey July 2018 https://business.nab.com.au/wp-content/uploads/2018/08/2018m07-NAB-Monthly-Business-Survey.pdf CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 29
Slide 30: Key attributes of a market correction
Key attributes of a market correction 3. CENTRAL BANKS Australian Cash Rate % US Corporate Bond High Yield Spread Index International Official Interest Rates (bps) 8.00 1200 US Federal Funds 8.00 Maximum Target 7.00 Rate % 1000 7.00 Japan Policy Rate % 6.00 6.00 800 5.00 Euro Area 5.00 Refinancing R
Slide 31: Key attributes of a market correction
Key attributes of a market correction 4. INVESTOR EUPHORIA CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 31
Slide 32: Geopolitical Events
Geopolitical Events We can’t forecast geopolitical events and their impact CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 32
Slide 33: NAOS Asset Management giving back
NAOS Asset Management giving back NAOS, the management company, is proud to be supporting the following charities ‘Golden Shouldered Parrot’ threatened ‘Reef Aid’ campaign, in partnership RFDS, dedicated to providing species project, in partnership with with Greening Australia healthcare to Australi
Slide 34: You don't have to be brilliant, only a little bit wiser
“You don’t have to be brilliant, only a little bit wiser than the other guys, on average, for a long time.“ CHARLIE MUNGER CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 34
Slide 35: NAOS investment process
NAOS investment process CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 35
Slide 36: NAOS ESG framework
NAOS ESG framework CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 36
Slide 37: Number of Shareholders
Number of Shareholders 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 Jun-18 NCC NSC NAC CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 37
Slide 38: Investor awareness and communication
Investor awareness and communication CEO Insights, NAOS Quarterly Shareholder Monthly Investment The news and media Twice yearly National Newsletter, Conference Calls, Report & NTA email section of our website Roadshow subscribe via our subscribe via our updates, subscribe via is updated regularly w
Slide 39: NAOS Directors and Team
NAOS Directors and Team OUR DIRECTORS Warwick Evans Mark Bennett David Rickards Trevor Carroll David O’Halloran Sebastian Evans Chairman, NAOS Asset Director, NAOS Asset Chairman & Director, Chairman NSC Director, NAOS Asset Managing Director, NAOS Asset Management Limited & Management Limited NCC a
Slide 40: Q&A Thank you for your support
Q&A Thank you for your support CONVICTION. LONG TERM. ALIGNED | Copyright 2018 NAOS Asset Management Limited 40
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