The Market Matters Emerging Companies Portfolio targets small & mid capitalisation emerging stocks (ex-100) that show strong underlying growth characteristics –Click here to view
A positive week for the portfolio up +1.42% in line with the Small Ords. Regal Partners (RPL) +10.2%, HMC Capital (HMC) +6.8% and Pinnacle (PNI) +6.5% offered most support, however gains were broad based with only 2 positions down over 2%, namely Liontown Resources (LTR) -4% and Silex Systems (SLX) -2.2%.
- No changes to the portfolio. Cash sits at ~14%
Emerging Companies Portfolio Hit List: Southern Cross Electrical (SXE), Light & Wonder (LNW), Chrysos Corp (C79), Ive Group, Arafura (ARU), Life360 (360) & Audinate (AD8)
Today’s update centres on portfolio changes, given we entered this current weakness with reasonably high cash levels and some flexibility around holdings, with two takeovers (JLG & RUL) having been largely completed.
Buys:
Life360 (360): Having peaked at ~$56 in October, 360 pulled back ~37% with two main factors at play. An elevated multiple going into a period of rotation out of the tech sector, plus the recent update disappointed slightly on the key user growth figures. At the same time , they also announced 3Q25 earnings that came in above consensus and upgraded FY25 guidance. We now believe the washout is done, and while the stock has bounced in the last few sessions, we view this as a very attractive medium term growth story, with material upside from current levels. We are adding 360 to the Portfolio.
Light & Wonder (LNW): A combination of factors put LNW share under pressure for much of the year. A long-running legal battle with Aristocrat Leisure (ALL) over alleged intellectual property theft prompted a big sell-off in October, after a court ruled against the gaming company and forced it to hand over maths models for games released in recent years. Following that, LNW decided to wrap up its Nasdaq listing and revert solely to the ASX, which prompted selling by some US funds. However, there are some silver linings here. LNW will now come onto the radar of ASX index investors with buying from passive funds stepping up in line with increased index weightings. Further, a stronger than expected 3Q25 result, the extension of its ASX share buyback, and news that US investment firm Fine Capital Partners had taken a 10.1% stake in the company has led to a partial recovery. We think there is more to go. We are adding LNW to the portfolio.
NexGen Energy (NXG): The $8.6bn dual listed exploration and development stage company has one of the largest, highest-grade uranium assets globally, only really overshadowed by a couple of monster Canadian deposits and the mega low-grade systems like Olympic Dam. The Emerging Companies Portfolio is all about growth, and backing our highest conviction calls with stocks providing most leverage. For that reason, we are switching from Paladin (PDN) into NexGen (NXT), for this portfolio only, to gain additional leverage towards the increasing global demand for Uranium in the coming years.
Reiterating stocks that have pulled back to attractive levels; We would buy here, if we did not already hold:
Aussie Broadband (ABB), ARB Corp (ARB), Catapult (CAT), PEXA Group (PXA), SiteMinder (SDR) & Zip Co (ZIP)
Sells:
Paladin Energy (PDN): The Uranium producer has been busy in the last 12 months, increasing exposure through its acquisition of Canadian based Fission Uranium in December 2024, however, NXG provides greater leverage, albeit with more permitting and development risk than PDN. We remain bullish on PDN (held in the Growth Portfolio), however, we believe NXG is a better fit for the Emerging Companies Portfolio. We are re-allocating funds from PDN to NXG.
RPMGlobal (RUL): The takeover of RPMGlobal (RUL) by Caterpillar (CAT US) is expected to complete in the first calendar quarter of 2026. The binding Scheme Implementation Deed has been signed, though the transaction remains subject to RUL shareholder approval; approval by the Australian Competition and Consumer Commission (ACCC) and the Foreign Investment Review Board (FIRB). The $5.00 price relative to the $4.90 is reflective of the cost of capital between now and close. We believe we can better utilise the funds elsewhere, and are selling RUL, locking in a 60% profit.
