Collins St Value Fund Macro-Economic Strategy Paper: May 2020

Written by Anton Lawrence – Chief Strategist

Last month we were sitting, as we suspected, at the peak of the health crisis component of Covid19 in Australia. Last month we said that current Government advice remains is that a full return to ‘normal’ social and business interaction will not occur until late this year and that it will be a staged process. Other than the transportation of exports and imports and the transfer of funds, Australia is likely to remain largely isolated from the rest of the world for many months. This advice has now turned into reality with a staged re-opening of the economy and society underway, at somewhat different speeds due to the existence or otherwise of community transmission of Covid-19 across each state and territory.

In this, the second edition of our Collins Street Asset Management strategy paper, we maintain the entirety of our investment thesis and supplement it with new information that has come to light over the past month.

The priority when faced with a new and dramatic event is to detach from the emotion of what is unfolding and identify the key drivers at both the global and Australian level that will shape what our Prime Minister calls ‘the bridge’ to the other side of this global event. At Collins St Asset Management we continue to review and refine our investment strategy and consider new realities as they unfold. We recognise that our strategy needs to provide clarity in our assessment of each investment we consider but must also be able to be refined as new information comes to light from national and international authorities.

To read the full report, click here.

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About Collins St Value Fund

The Fund is managed to an unconstrained Australian equities mandate and is currently ranked #1 out of 97 peers over the 3 years to 30 April 2020 based on after fee returns, and with gross returns of ~14% p.a. since February 2016.

Top in class performance has been underpinned by a range of bespoke convertible note, take-over arbitrage, special dividend and management buy-out investments, alongside unconstrained access to any ASX listed stock.  This approach has resulted in a distinctively different portfolio when compared to the broader market and is presently invested in a selection of uranium, gold, financial services and pharmaceutical companies amongst others.

Importantly, investments into the Collins St Value Fund attracts absolutely no fixed management fees. The only remuneration the Fund Manager receives is success based and requires that investors make money before they do. This incentivises a very sharp focus on both capital preservation and also capacity management so that we can continue delivering superior returns to our investors over the medium to long term.

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