Lennox Australian Microcap Fund aims to outperform the S&P/ASX Small Ordinaries Accumulation Index over the medium to long term (after fees). Lennox applies a structured and rigorous approach to investing. Every business that is considered an investment opportunity is assessed using Lennox’s proprietary quality screening tool.
The Fund returned 1.82% (after fees) for the month of August, while the S&P/ASX Small Ordinaries Accumulation Index returned – 1.31% and the S&P/ASX Small Industrials Accumulation Index returned -1.47% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions in internet service provider Aussie Broadband, hotel software provider Siteminder and location-sharing technology company Life360. Shares in Aussie Broadband lifted 29.8% for the month as the company released its full year results, achieving the top end of its guidance range, as well as strong subscriber adds in early FY24 and full year guidance in-line with expectations. Siteminder rose 16.2% following the release of its full year results, which highlighted strong half-on-half improvements in a number of key operating metrics such as subscriber numbers and ARPU. Life360 was up 20.7% for the month as it announced its first half results, with strong cost control being the key feature as the company announced an in-line vs expectation revenue number but a strong beat at the EBITDA line.
The largest detractors from performance included overweight positions in international payments provider OFX Group, drilling services provider Imdex and mortgage broker Australian Finance Group. Shares in OFX Group fell 17.6% following the company’s AGM, where it announced a healthy recovery in its top line but also disclosed the departure of a handful of traders from Firma. Imdex dropped 17.3% as the company delivered its full year results, with the company navigating challenging market conditions well on the top-line, but missing expectations on costs. Australian Finance Group was down 13.7% as it posted its full year result, with NIM compressing progressively through the financial year and further into early FY24.
What is Lennox Australian Microcap Fund Lennox Australian Microcap Fund is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Micro Cap Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Lennox Australian Microcap Fund has Assets Under Management of 19.87 M with a management fee of 1.3%, a performance fee of 1.94% and a buy/sell spread fee of 1%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Lennox Australian Microcap Fund has returned 3.74% in the last month. The previous three years have returned -1.73% annualised and 22.51% each year since inception, which is when the Lennox Australian Microcap Fund first started.
How is risk measured in this investment product? There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Lennox Australian Microcap Fund first started, the Sharpe ratio is NA with an annualised volatility of 22.51%. The maximum drawdown of the investment product in the last 12 months is -7.87% and -37.78% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product? Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Lennox Australian Microcap Fund has a 12-month excess return when compared to the Domestic Equity - Micro Cap Index of 9.93% and 1.22% since inception.
Does the investment product produce Alpha over its Peers? Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Lennox Australian Microcap Fund has produced Alpha over the Domestic Equity - Micro Cap Index of NA% in the last 12 months and NA% since inception.
What are similar investment products? For a full list of investment products in the Domestic Equity - Micro Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Lennox Australian Microcap Fund provide? Lennox Australian Microcap Fund has a correlation coefficient of 0.92 and a beta of 1.09 when compared to the Domestic Equity - Micro Cap Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers? For a full quantitative report on Lennox Australian Microcap Fund and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Lennox Australian Microcap Fund with the ASX Index Small Ordinaries Index? For a full quantitative report on Lennox Australian Microcap Fund compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Lennox Australian Microcap Fund to do my own analysis? To sort and compare the Lennox Australian Microcap Fund financial metrics, please refer to the table above.
Has the Lennox Australian Microcap Fund been independently verified by SMSF Mate? This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
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Comments from SMSF Mates SMSF Mate does not receive commissions or kickbacks from the Lennox Australian Microcap Fund. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - July 31, 2023 The Fund returned 8.99% (after fees) for the month of July, while the S&P/ASX Small Ordinaries Accumulation Index returned 3.54% and the S&P/ASX Small Industrials Accumulation Index returned 4.80% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance included overweight positions hotel software provider Siteminder, network connection company Megaport and youth fashion retailer Universal Stores. Shares in Siteminder jumped 44.2% for the month as the company released its Q4 result with revenues, cash flow performance and growth indicators all tracking ahead of expectations. Megaport added 44.3% as the company upgraded earnings guidance due to continued improvement in operating metrics and tight cost control. Shares in Universal Stores were up 20.1% as fears around a general slowdown in consumer facing stocks eased.
The largest detractors from performance included overweight positions in diagnostic imaging provider Capitol Health, NBN retailer Aussie Broadband and RV rental operator Tourism Holdings. Shares in Capitol Health ended the month down 13.0% following a softer than expected earnings outcome for FY23 driven by persistent cost pressures. Aussie Broadband traded down 7.7% on the back of general weakness in telco sector. Tourism Holdings sold off 6.8% due to ongoing concerns around the impact of extreme weather conditions in the North American market.
During the month, Lennox opened a position in foreign exchange payments company OFX Group. We are attracted to the large Company’s value proposition which presents an exiting opportunity to win share from incumbents in a large addressable market. Central to our thesis is an increasing contribution from higher value customers in the corporate segment which accelerated following the acquisition of Firma.
Performance Commentary - June 30, 2023 The Fund returned 1.89% (after fees) for the month of June, while the S&P/ASX Small Ordinaries Accumulation Index returned 0.03% and the S&P/ASX Small Industrials Accumulation Index returned 0.50% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of June included overweight positions in biotech company ImpediMed, fast food operator Collins Foods and technology company Infomedia. ImpediMed shares were up 28.6% following a number of payor policy changes to include bioimpedance spectroscopy as medically necessary. Shares in Collins Foods added 17.0% for the month as the company released its full year results, with revenues and profit ahead of expectations and positive commentary around early FY24 trading. Infomedia gained 14.3% off no company specific news.
The largest detractors from performance included overweight positions in internet service provider Superloop, timber producer Big River Industries and charter flight company Alliance Aviation. Superloop fell 12.1% off no company specific news. Shares in Big River dropped 2.4% for the month off no company specific news. Shares in Alliance Aviation dropped 8.6% off no company specific news.
During the month, Lennox exited its position in Big River.
Performance Commentary - May 31, 2023 The Fund returned -6.64% (after fees) for the month of May, while the S&P/ASX Small Ordinaries Accumulation Index returned – 3.26% and the S&P/ASX Small Industrials Accumulation Index returned -1.72% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of May included overweight positions in utilities software company Gentrack, family security and monitoring company Life360 and networking company Megaport. Gentrack shares were up 29.4% in May as the company released its half year results, with further upgrades to its FY23 and FY24 guidance. Life360 grew 34.1% as the company delivered a strong quarterly update while tech names also broadly performed well.
Megaport gained 21.1% in May as share price momentum in the stock continued following a strong update in April. The largest detractors from performance included a write-down of the fund’s pre-IPO investment in tech business Canopy Tools, as well as overweight positions in retailer Universal Store and engineering company Austin Engineering. Canopy Tools is a pre-IPO business the fund has held for 18 months that was priced downwards to reflect the business’ current cash burn and tightened credit availability.
The business has commenced a sale process to provide an exit for current holders. Universal Store shares declined 39.8% as the company delivered a trading update, indicating that consumers are reducing their spending which is expected to continue into FY24. Shares in Austin Engineering fell 25.6% following a material downgrade to its profit guidance, driven by a large and delayed customer order.
During the month, Lennox added to its position in Life360.
Performance Commentary - April 30, 2023 The Fund returned 0.28% (after fees) for the month of April, while the S&P/ASX Small Ordinaries Accumulation Index returned 2.78% and the S&P/ASX Small Industrials Accumulation Index returned 3.61% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of April included overweight positions in laser clinic operator Silk Laser, utilities software company Gentrack and networking company Megaport. Silk Laser shares were up 45.7% in April as Australian Pharmaceutical Industries submitted an acquisition proposal for the company at $3.15 per share. Gentrack gained 15.6% off no company specific news. Shares in Megaport added 36.7% for the month as it announced a drastically-above-expectation Earnings Before Interest, Tax, Depreciation & Amortization (EBITDA) outlook for FY23 and FY24. The largest detractors from performance included overweight positions in education technology company Keypath Education, contract flight operator Alliance Aviation and mining services contractor DDH1.
Keypath Education shares declined 44.1% as the company delivered modest revenue growth for the third quarter year on year, with the company reiterating that it expects to be fully funded through to cash flow breakeven. Shares in Alliance Aviation fell 10.4% as the ACCC opposed Qantas’ acquisition of Alliance, with Qantas seeking more information under the belief the acquisition would not materially lessen competition in the market. DDH1 dropped 5.6% in April off no company specific news. During the month, Lennox opened a position in tourism company Tourism Holdings.
Performance Commentary - January 31, 2023 The Fund returned 0.38% (after fees) for the month of February, while the S&P/ASX Small Ordinaries Accumulation Index returned – 3.70% and the S&P/ASX Small Industrials Accumulation Index returned -1.71% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in). The largest contributors to performance for the month of February included overweight positions in timber manufacturer and distributor Big River, marine services company MMA Offshore and auto technology company Infomedia.
Big River shares added 12.0% in February following the release of the company’s results, with results coming in 12% ahead of expectations. MMA Offshore grew 21.2% following a strong first half result, with profits more than doubling and incremental contracts in renewable sources being secured. Infomedia gained 26.7% following the release of its half year results, delivering solid top-line growth.
The largest detractors from performance included overweight positions in insurance technology company Fineos, online task portal Airtasker and dental clinic Pacific Smiles. Fineos shares declined 31.6% as it delivered a miss on its revenue guidance. Airtasker fell 27.1% as the company continued to burn cash to grow its top line. Shares in Pacific Smiles fell 21.6% as the half yearly results came in below expectations. During the month, Lennox topped up its position in diagnostic imaging company Capitol Health.
Performance Commentary - December 31, 2022 The Fund returned -1.62% (after fees) for the month of December, while the S&P/ASX Small Ordinaries Accumulation Index returned -3.73% and the S&P/ASX Small Industrials Accumulation Index returned -3.38% (the Small Industrials index excludes resources and energy companies, which the Fund does not invest in). The largest contributors to performance for the month of December included overweight positions in IT services company COSOL and timber manufacturer Big River, as well as an underweight position in miner Liontown Resources. COSOL rallied 9.5% as the company announced several major contract wins. Shares in Big River added 6.5% for the month off no company specific news. Liontown Resources shares dropped 31.8% for the month as lithium names were broadly weaker. Lennox does not hold Liontown and was positively impacted by the underweight position relative to the benchmark.
The largest detractors from performance included overweight positions in social media company Life360, mining equipment engineer Austin Engineering and mortgage broker Australian Finance Group. Life360 shares dropped 22.2% as the company undertook a $50m capital raising at the end of November. Austin Engineering fell 17.4% despite the company announcing strong fundamental momentum in the business in Indonesia, with revenues over 80% above the prior period. Shares in Australian Finance Group withdrew 12.6% as concerns around the real estate market grew. During the month, Lennox initiated a position in MMA Offshore. The company operates a fleet of vessels which provide various services to the offshore oil and gas industries, such as storage and maintenance. MMA is experiencing materially improved utilisation compared to the prior comparable period, which is flowing through to strong bottom-line improvement in the business.
Performance Commentary - November 30, 2022 The Fund returned 0.88% (after fees) for the month of November, while the S&P/ASX Small Ordinaries Accumulation Index returned 4.92% and the S&P/ASX Small Industrials Accumulation Index returned 2.60% (the Small Industrials index excludes mining and energy companies, which the Fund does not invest in).
The largest contributors to performance for the month of November included an overweight position in software solutions business Gentrack Group, software and digital services provider COSOL and an underweight position in real estate and agricultural company Elders Limited. Gentrack added 63.7% in November after a strong result (beating consensus expectations) with further growth in the pipeline. COSOL added 12.3% over the month as the business provided an AGM update largely in line with expectations with an indication of potential inorganic growth. Finally, Elders Limited lost 18.4% from news of the CEO stepping down – Lennox does not hold Elders in the portfolio.
The largest detractors from performance included overweight positions in timber manufacturer and distributor Big River Industries, education platform provider Keypath Education and airline services business Alliance Aviation Services. Big River Industries took away 7.0% over the month off no news aside from the appointment of a new CEO (pre-announced). Keypath moved down 23.2% on no company-specific news. Finally, Alliance Aviation Services was down 7.1% off no company-specific news. During the month, Lennox topped up its position in Gentrack Group. The business released a strong result, ahead of all expectations. The fund sees upside in the business from more evidence of a cost turnaround – with earnings further buoyed by new logos and top-line momentum.
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