Searching for the hidden gems during restless markets

Funds Management

by Carolyn Herbert

Transcription of Finance News Network Interview with Antares Elite Opportunities Fund Portfolio Manager, Nick Pashias
Carolyn Herbert: Hello I’m Carolyn Herbert from the Finance News Network and joining me from the Antares Elite Opportunities Fund is Portfolio Manager, Nick Pashias. Nick, welcome back.
Nick Pashias: Thank you.
Carolyn Herbert: Can you start by giving us an introduction to the Fund and its objective?
Nick Pashias: The Fund is a concentrated offering, so it doesn’t own a lot of stocks, no more than 30 companies at any one time. And it’s designed to be significantly differentiated from the benchmark, so it does take an active position across the stocks that it owns. And it’s designed to achieve a performance objective of four per cent above the benchmark, over rolling five-year periods.
Carolyn Herbert: What sort of stocks does the company hold at the moment and what’s the investment approach?
Nick Pashias: The investment approach is one of being selectively contrarian. So what that is we are contrarian, so we try and go against the herd. We look for things that are perhaps not as obvious at the surface. We do a lot of research, we’ve got a big team and we conduct a lot of company meetings. We do a lot of analysis, trying to find those hidden gems that have value. At the moment, one of the things that we’ve identified over the last quarter or so is this recovery in China. So we’ve positioned ourselves accordingly and pleasingly that’s played through.
Carolyn Herbert: As you say Nick, the Fund has a contrarian approach to investing. So what’s an example of an out-of-favour stock that’s since turned it around?
Nick Pashias:A good example is BlueScope Steel Limited (ASX:BSL). So BlueScope is a domestic steel producer. Steel has been a dirty word in investment markets for a long period of time, but we saw great value. BlueScope is a global business; they have really great management capability we feel. And they’ve been able to cut costs significantly to restore profitability, and now it seems the cycle is helping them as well. So we’ve done very well out of that.
Carolyn Herbert: Turning to performance now. How’s the Fund performed over the March quarter?
Nick Pashias: The March quarter is actually quite a good one for the Fund. So we outperformed the benchmark by about 2.5 per cent and some of that has been driven by our resource, or resource related companies. I mentioned BlueScope earlier, we’ve introduced Sims Metal Management Limited (ASX:SGM), we’ve had a big position in Rio Tinto Limited (ASX:RIO). We’ve introduced stocks like Worleyparsons Limited (ASX:WOR), which have all benefitted with this recovery in commodity prices. So it’s been pleasing.
Carolyn Herbert: Which stocks were the best contributors for the quarter?
Nick Pashias: Medibank Private Limited (ASX:MPL) was a contributor, they had a very positive result on the back of some good cost cutting. South32 Limited (ASX:S32) which is a resource related company, which had performed badly in the December quarter, bounced back aggressively in the March quarter, with the bounce in the underlying commodity. And the final one was Vocus Telecommunications Limited (ASX:VOC). They have come together with M2 Group Limited (ASX:MTU) to form an integrated telecommunications company that was rewarded by the market, during the March quarter. So all very pleasing.
Carolyn Herbert: Finally Nick. What market factors do you think are going to influence the Fund’s strategy, for the second half of the year?
Nick Pashias: There are some interesting points coming up on the horizon. We’ve got the UK vote, the Brexit vote is coming up, you’ve got expectations of the Fed raising rates. You’ve got US elections and you’ve got Australian elections. So all of these things will have a material impact on equity markets. Already we’re starting to see a little bit of a slowdown in consumer stocks in Australia, on the back of the prospect of an election. So it’ll be very interesting, very important for us to keep an eye on these developments.
Carolyn Herbert: Nick Pashias, thanks for the update on the Antares Elite Opportunities Fund.
Nick Pashias: Thank you.