The compelling opportunities in our own backyard.
The compelling opportunities in our own backyard.
The compelling opportunities in our own backyard.
The compelling opportunities in our own backyard.
One of the key questions when we were setting up the firm was ‘would we offer a Canadian smaller companies’ portfolio’?
For me it was never in question but its important you hear a variety of credible perspectives before making important decisions and given this would impact the optimal size of team, increase start up costs and also how the team spends their time we did extensive diligence on the market opportunity, our ability to create value in that market and the appetite among the types of clients we hope to have for the asset class. Clearly, we ultimately decided to do it, but we are very aware that we may be the only clients of this strategy for many years and we are very comfortable knowing that.
Currently employees are between 20-50% of the portfolio assets and we are very excited about our ability to compound our capital at attractive rates over the long-term. Having compounded returns with our prior firm in this asset class at ~15% per year over a 10 year period with only 3 periods where we saw a drawdown of 15-20% we know from experience how attractive the opportunities are in this asset class for patient and well informed investors. In fact, we had the top performing portfolio over that 10 year period and knew we wanted to be clients ourselves here hence why we ultimately said we’d be comfortable if employees and our families were the largest owners for the next 3or even 5 years. Our experience is eventually the returns will do the marketing for us and our hope is we find other clients AHEAD of the best opportunities playing out but we recognize that is outside our control.
This will be the only time we ever discuss why we think smaller companies in Canada are a compelling opportunity because while the opportunities are significant there isn’t sufficient underlying liquidity to invest billions of dollars without sacrificing returns. We will be managing capacity very tightly in this portfolio as we did at our prior firm.
Hand to heart, this is the most interesting time we’ve seen in the last 15 years to be investing in this asset class for a team with our approach of doing extensive due diligence focusing on quality businesses run by talented and long-term oriented teams that are materially undervalued.
This article is prepared by Langdon Equity Partners. Content in respect of the Langdon Smaller Companies Fund (ARSN 657 901 614 (the Fund) is issued by Pinnacle Fund Services Limited ABN 29 082 494 362 AFSL 238 371 (‘PFSL’) as responsible entity of the Fund. PFSL is not licensed to provide financial product advice. It contains general information only. It is not intended as a securities recommendation or statement of opinion intended to influence a person or persons in making a decision in relation to investment. It has been prepared without taking account of any person’s objectives, financial situation or needs. Any persons relying on this information should obtain professional advice before doing so.
Past performance is for illustrative purposes only and is not indicative of future performance.
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FOR AUSTRALIAN CLIENTS:
The Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) of the Fund are available via the links below. Any potential investor should consider the PDS and TMD before deciding whether to acquire, or continue to hold units in, the Fund.
Link to the Product Disclosure Statement: here
Link to the Target Market Determination: here
For historic TMD’s please contact Pinnacle Client Service Phone 1300 010 311 or Email service@pinnacleinvestment.com
FOR CANADIAN CLIENTS:
Important information about each Langdon mutual fund is contained in its prospectus, AIF, fund facts document and in its management report on fund performance. Any potential investor should review these documents prior to making any investment decision relating to such fund. You can view copies of these documents by following the links below:
Link to the Langdon Global Smaller Companies Portfolio Disclosure Documents: here
Link to the Langdon Canadian Smaller Companies Portfolio Disclosure Documents: here
