The Market Matters Emerging Companies Portfolio targets small & mid capitalisation emerging stocks (ex-100) that show strong underlying growth characteristics – Click here to view
The portfolio was up +1.80% in the week, strongly outperforming the S&P/ASX Small Ords index which fell. Cash in the portfolio is sitting at around 9%. Strength in Paladin (PDN) +20% and Lovisa Holdings (LOV) +18% drove the performance, more than offsetting weakness in Aussie Broadband (ABB) -15% and EML payments (EML) -9%. The portfolio was also supported by dividends from Bapcor (BAP) and Pinnacle Investment (PNI).
Portfolio amendments on the MM radar:
- Switching Pilbara (PLS) into Global Lithium (GL1): Lithium stocks have been strong since our purchase of Pilbara (PLS) with the portfolio enjoying a strong 30% upside in the position. PLS is in production while GL1 is a higher-risk explorer. Funds generally transition up the risk curve in time and we are considering getting ahead of this potential move. Global Lithium has a number of near-term catalysts with drilling campaigns underway at both of their assets. We remain bullish medium-term and see additional upside in GL1 given their growth options.
- Selling Lovisa (LOV): It was a great FY22 report from the jewellery retailer headlined by continued store rollout to boost future growth. It is trading on 31.7x FY23 est PE, more in line with our expectations and now limiting the upside. We are looking to take a profit near all-time highs. The position is up ~40%.
- Buying Sandfire Resources (SFR): shares in the copper miner were weak yesterday after failing to declare a final dividend. This may mean higher than expected investment is needed to get their Motheo asset in Botswana up and running however the growth profile remains strong and we have recently seen M&A interest in the space which may benefit SFR.
