Transcription of Finance News Network Interview with Hunter Hall International Limited (ASX:HHL) Interim CEO, Peter Hall Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from Hunter Hall International Limited
(ASX:HHL) is interim CEO, Peter Hall. Peter, welcome to FNN.
Peter Hall: Great to be here Carolyn.
Carolyn Herbert: Peter, last year was pretty interesting for investors. How do you feel about the performance of Hunter Hall Funds for the year ended 31 December 2015?
Peter Hall: I feel we did pretty well. Our two largest Funds did beat their benchmark and provide a reasonable performance. So the Value Growth Trust was up 16 per cent and our listed investment company, Hunter Hall Global Value was up 12 per cent. Global Value, we’ve just announced a three cent fully franked dividend today. And that company’s setting up a nice trend of increasing dividends, so that’s very nice. We’ve been paying dividends for a couple of years now, so I hope that we can continue doing that.
Some of our smaller Funds also did very well. Our Australian Value Trust was up 27 per cent and the Australian Equity Fund, which is sort of an institutional offering, was up 22 per cent. And that’s pretty good in context of the market; the Australian market was up about 4.5 per cent. And then we have this other Fund, which we launched last year called the High Conviction Trust, which actually was the best performing Fund in Australia, over the year to December. And I think, was the 50
th best performing Fund in the whole world.
It generated a return of around 100 per cent, over the year and that’s a Fund that’s basically as it describes, it’s a very high conviction Fund, so highly concentrated portfolio. Some describe it as Peter Hall unchained, which means it has very little in the way of constraints. The only constraint it has is that no more than 15 per cent of the Fund’s assets can be listed, in any one situation.
And we had a fabulous win in a company called St Barbara Limited
(ASX:SBM), which is a goldmining company, which we first identified at seven cents and is trading at around $1.70 today. And we bought 15 per cent of that company and I think we paid 13 cents a share, for that 15 per cent holding. And we put a chunk of that into that Conviction Fund. So we had a really good year, I think St Barbara was up 1,257 per cent in the year. So that was a good win.
Carolyn Herbert: What’s the slip between international and local shares, and has this changed much over the year?
Peter Hall: For our global Funds, which is the Value Growth Trust and Global Listed Investment and Global Value Limited, we’ve got about 30 to 33 per cent in Australian shares, and then the rest in international shares. In both those Funds we actually have quite a high cash rating, about 22 per cent roughly in each Fund. So the balance is probably about some 50 per cent in global shares there.
And the reason why that is is because for many, many years, we have found fantastic bargains in Australia. And often those bargains are companies, which really sell in international markets or have assets in international markets. So it’s a bit of a misnomer to call them Australian shares. So Sirtex Medical Limited
(ASX:SRX), 90 per cent of its sales happen outside Australia. That’s a liver cancer company, where we bought in at $3.64 I think was our in price, they’re now between $35 and $40 a share.
So we really like Australian companies and we really like the governance here, we like the business culture and Australia is a great haven of security in this world. And we are coming to this period of very difficult, volatile times of great events happening across the world. And it’s really nice to have a chunk of our money in Australia. So that’s sort of basically behind the reason why we have such a high Australian weighting.
Carolyn Herbert: Finally Peter. Given the market volatility over the past six to 12 months and especially with what we’re seeing right now, how do you feel about investing in the market at the moment?
Peter Hall: I think we’re entering a very very interesting phase that’s going to last for two or three years, which is basically an adjustment to the excesses of the last six or seven years. Entering into this phase, we feel we’re very well positioned. We’ve got 20 to 25 per cent in cash across our Funds. We’ve got 10 to 15 per cent in various gold stocks and we’ve got our big exposure to Australia, which I regard as a very defensive economy and a very defensive market. Yes there’re all the resource stocks, which are being cruelled and punished, but Australia as a country is very well positioned.
We’ve got a low sovereign debt, a low national debt compared to everyone else. We’ve got real interest rates, so we haven’t jammed our rates down as lots of other places have done. And I think we’ve got a government stability, I think Malcolm Turnbull will be a great Prime Minister. So we’ve got a solid, steady professional hand on the helm, so I think we’re in a really good place. So I’m really pleased we’ve got 30 to 33 per cent of the Fund in Australia. So it’s about as defensive as you can get and still be in the game.
Carolyn Herbert: Peter Hall, thank you for the update on Hunter Hall.
Peter Hall: Thank you very much Carolyn, it’s been a great pleasure.
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