Airlie Small Companies Quarterly Update

Video Insights
Apr 2024

Airlie Small Companies Quarterly Update

Download Transcript

Key Takeaways

[00:00:31] It's been a year since the Airlie Small Companies Fund launched, with 22% returns since inception, outperforming the index by 9%. Can you talk us through some of the contributors?

The Fund has experienced a strong start, with performance stemming from a diverse range of stocks, evidenced by 11 contributors exceeding 1% to gross performance and only two detractors surpassing negative 1%. Gentrack, a tech enterprise software provider to airports and utilities, has rebounded impressively after facing temporary challenges, benefiting from improved revenue growth and margin recovery. Despite its increased valuation, the long-term potential remains promising as utility customers continue upgrading systems amidst the energy transition. Similarly, News Corp, particularly its transformed Dow Jones segment, has delivered robust results, prompting the market to recognise its improved quality and adjust its valuation accordingly. On the flip side, Tabcorp has faced challenges amid a soft wagering market, although its operational performance remains satisfactory. Despite short-term fluctuations in performance, the investment approach remains focused on long-term fundamentals rather than transient market sentiment, ensuring alignment with investors' interests through Will’s personal holdings in the Fund.

[00:04:30] What themes have been driving the market in the last 12 months?

Over the past year, the resilience of the consumer sector has been a standout theme, defying expectations amid rising interest rates and cost of living pressures. Despite macroeconomic uncertainties, retailers like Premier Investments and Nick Scali have demonstrated record profits and margins, driven by the strength of their business models and robust management. The volatility in retail valuations, with significant increases within a short timeframe, provides opportunities for active managers to capitalise on quality businesses at attractive prices. This is shown by the Fund's performance, where retailers, initially a drag, have become top performers, highlighting the dangers of short-term focus and the importance of a long-term investment mindset. It’s important to stay true to a disciplined, long-term investment approach amidst market fluctuations.

[00:07:08] Are there still opportunities you are seeing in the market at the moment?

Despite the challenges posed by the current market environment with soaring valuations, the Fund maintains an optimistic outlook due to its broad mandate and focus on the small-cap universe. With a well-established process for identifying nascent high-quality businesses, honed over several years, the team remains confident in their ability to uncover opportunities despite market fluctuations. This optimism reflects a belief in the Fund's ability to navigate evolving market conditions and capitalise on potential opportunities for future growth.


Important Information: Units in the fund(s) referred to herein are issued by Magellan Asset Management Limited (ABN 31 120 593 946, AFS Licence No. 304 301) trading as Airlie Funds Management (‘Airlie’). This material is issued by Airlie and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation. This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement (‘PDS’) and Target Market Determination (‘TMD’) and consider obtaining professional investment advice tailored to your specific circumstances before making a decision to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to an Airlie financial product or service may be obtained by calling +61 2 9235 4760 or by visiting

Past performance is not necessarily indicative of future results and no person guarantees the future performance of any fund, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. Statements contained in this material that are not historical facts are based on current expectations, estimates, projections, opinions and beliefs of Airlie. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon. This material may contain ‘forward-looking statements’. Actual events or results or the actual performance of an Airlie financial product or service may differ materially from those reflected or contemplated in such forward-looking statements. This material may include data, research and other information from third party sources. Airlie makes no guarantee that such information is accurate, complete or timely and does not provide any warranties regarding results obtained from its use. This information is subject to change at any time and no person has any responsibility to update any of the information provided in this material. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Airlie will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material.

Further information regarding any benchmark referred to herein can be found at . Any third-party trademarks contained herein are the property of their respective owners and Airlie claims no ownership in, nor any affiliation with, such trademarks.   Any third-party trademarks that appear in this material are used for information purposes and only to identify the company names or brands of their respective owners. No affiliation, sponsorship or endorsement should be inferred from the use of these trademarks. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Airlie.