Lennox Australian Small Companies 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 1.02% (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 travel management company Corporate Travel, mortgage broker Australian Finance Group and electronic conveyancing company PEXA. Shares in Corporate Travel fell 10.9% in August following the release of its full year results, with a slightly weaker than expected FY24 guidance number. Australian Finance Group dropped 13.7% as it posted its full year result, with NIM compressing progressively through the financial year and further into early FY24. PEXA was down 12.8% as the company delivered a noisy result, with the domestic business beating expectations but the international business missing expectations.
What is Lennox Australian Small Companies Lennox Australian Small Companies is an Managed Funds investment product that is benchmarked against ASX Index Small Ordinaries Index and sits inside the Domestic Equity - Small 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 Small Companies has Assets Under Management of 280.24 M with a management fee of 1.1%, a performance fee of 0.19% and a buy/sell spread fee of 0.78%.
How has the investment product performed recently? The recent investment performance of the investment product shows that the Lennox Australian Small Companies has returned 5.73% in the last month. The previous three years have returned 2.43% annualised and 20.51% each year since inception, which is when the Lennox Australian Small Companies 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 Small Companies first started, the Sharpe ratio is 0.47 with an annualised volatility of 20.51%. The maximum drawdown of the investment product in the last 12 months is -8.87% and -33.37% 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 Small Companies has a 12-month excess return when compared to the Domestic Equity - Small Cap Index of 9.93% and 1.05% 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 Small Companies has produced Alpha over the Domestic Equity - Small Cap Index of 0.7% in the last 12 months and 0.01% since inception.
What are similar investment products? For a full list of investment products in the Domestic Equity - Small Cap Index category, you can click here for the Peer Investment Report.
What level of diversification will Lennox Australian Small Companies provide? Lennox Australian Small Companies has a correlation coefficient of 0.94 and a beta of 1.16 when compared to the Domestic Equity - Small 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 Small Companies and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Lennox Australian Small Companies with the ASX Index Small Ordinaries Index? For a full quantitative report on Lennox Australian Small Companies compared to the ASX Index Small Ordinaries Index, you can click here.
Can I sort and compare the Lennox Australian Small Companies to do my own analysis? To sort and compare the Lennox Australian Small Companies financial metrics, please refer to the table above.
Has the Lennox Australian Small Companies 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 Small Companies. 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 8.17% (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 global fund manager GQG Partners. 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. GQG Partners advanced 16.9% following another strong month of performance and net flows across its portfolio of funds.
The largest detractors from performance included positions in NBN retailer Aussie Broadband, public transport operator Kelsian and steel distributor Vulcan Steel. Aussie Broadband traded down 7.7% on the back of general weakness in telco sector. Shares in Kelsian retreated 4.5% reversing the strong performance seen in the prior month. Vulcan Steel ended the month down 5.6% following an earnings downgrade due to softer than expected end market expectations in New Zealand
Performance Commentary - June 30, 2023 The Fund returned 1.44% (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 included overweight positions in fast food operator Collins Foods, transportation company Kelsian and family security software company Life360. 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.
Kelsian grew 6.8% as the company announced the completion of its All Aboard America! acquisition. Life360 gained 11.6% in June as share price momentum in the stock continued following a strong first quarter update released in May.
The largest detractors from performance included overweight positions in travel company Corporate Travel Management, travel company Flight Centre and charter flight company Alliance Aviation. Corporate Travel Management shares fell 13.7% as travel exposed names were broadly weak, despite the company announcing a material contract win. Flight Centre shares declined 9.8% as the company hosted a strategy session, with no notable changes to outlook. Shares in Alliance Aviation dropped 8.6% off no company specific news.
During the month, Lennox topped up EBOS as the market reacted to the loss of the Chemist Warehouse wholesale supply arrangement.
Performance Commentary - May 31, 2023 The Fund returned -3.02% (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 included overweight positions in transportation company Kelsian, family security and monitoring company Life360 and software networking company Megaport. Shares in Kelsian added 11.5% for the month as it announced the approval of its acquisition of All Aboard America. 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 overweight positions in retailer Universal Store, retailer Lovisa and media company oOh!media. 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 Lovisa dropped 22.5% as retail performed poorly for the month following weak trading updates from several industry participants. oOh!media dropped 25.8% following the release of a trading update, noting a sharp decline in April media revenue.
During the month, Lennox trimmed its NextDC position, taking advantage of recent share price gains.
Performance Commentary - April 30, 2023 The Fund returned 2.99% (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 included overweight positions in networking company Megaport, plumbing supplies manufacturer Reliance and corporate travel company Corporate Travel Management. Shares in Megaport added 36.7% for the month as it announced a drastically-above-expectation EBITDA outlook for FY23 and FY24. Reliance grew 10.9% as the company provided a trading update for the 9 months to date of the financial year, with a 10.3% uplift in revenues year on year. Corporate Travel Management grew 15.8% in April as it was awarded the Bridging Accommodation & Travel Services contract by the UK Home Office, worth approximately AU$3.0bn of TTV.
The largest detractors from performance included overweight positions in education technology company Keypath Education and contract flight operator Alliance Aviation, as well as an underweight position in biotech company Telix. 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. Telix gained 47.1% following the release of its quarterly update, with record revenues and a positive update on its Olaratumab products. Lennox does not hold a position in Telix and was negatively impacted by its relative outperformance. During the month, Lennox opened a position in tourism company Tourism Holdings.
Performance Commentary - February 28, 2023 The Fund returned -0.41% (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 included overweight positions in funds administration platform Hub24, transit operator Kelsian and auto technology company Infomedia. Hub24 grew 11.5% as the company delivered strong profit growth in its half year result, with profit before tax up 39% compared to the prior comparable period. Kelsian shares added 12.5% in February as the company delivered a solid first half result, with profit up over 20%, as well as a new Sydney bus contract win. 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, mining services company NRW and an underweight position in Eagers Automotive. Fineos shares declined 31.6% as it delivered a miss on its revenue guidance. NRW shares fell 16.8% in February as the company delivered a result in-line with its guidance. Shares in Eagers Automotive rallied 19.9% as the company delivered its FY22 result, with the company beating consensus expectations at the profit line and positive commentary around FY23. Lennox does not hold a position in Eagers Automotive and was negatively impacted by its relative outperformance. During the month, Lennox opened a position in travel agent Flight Centre.
Performance Commentary - December 31, 2022 The Fund returned -3.46% (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 included an underweight position in miner Liontown Resources, as well as overweight positions in Pharmaceutical and Animal Care company Ebos and transport contractor Kelsian. 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. Ebos rallied 8.1% in a month which saw Woolworths acquire 55% of Petspiration, providing validation to the market that the animal care strategy Ebos is pursuing is sound. Shares in Kelsian were up 4.3% as it announced the successful contract retention of Sydney’s Southwest bus region.
The largest detractors from performance included overweight positions in proptech company Pexa, social media company Life360 and travel operator Corporate Travel. Pexa fell 17.9% as Link Administration undertook an in-specie distribution of its Pexa stake to its shareholders. Life360 shares dropped 22.2% as the company undertook a $50m capital raising at the end of November. Shares in Corporate Travel dropped 10.9% in a month that saw share price pressure broadly across the travel sector. During the month, Lennox trimmed its position in the strongly performing NRW to realise some profits.
Performance Commentary - November 30, 2022 The Fund returned 1.67% (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 2.6% (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 enterprise business software Technology One, transport and tourism company Kelsian Group and an underweight position in real estate and agricultural business Elders Limited. Shares in Technology One rallied 12.9% after releasing a result to the market that was well-received. Kelsian jumped 17.2% over the month as investors gained some confidence around stability of earnings after the business won the Gladstone Marine contract.
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 restaurant and fast food operator Collins Foods, travel management provider Corporate Travel Management and education platform Keypath Education. Shares in Collins Foods were down 18.6% after the business called out margin pressures for the full year at its first half result. Corporate Travel Management lost 5.4% as the business highlighted slower than anticipated recovery due to capacity constraints.
Finally, Keypath moved down 23.2% on no companyspecific news. During the month, Lennox added Superloop Limited to the portfolio. As the business wins more customers through subscribers and market share, it will add incremental margin through a largely fixed cost base.
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