Cadence Asset Management, led by founder Karl Siegling, has continued to navigate market dynamics with a distinct contrarian strategy, recently opting to forgo the hotly anticipated float of neocloud firm Firmus. Cadence Asset Management oversees about $400 million across two global hedge funds, which are separately listed on the ASX. Its portfolios have an open mandate, allowing investment in any stock and flexible allocation between equities and cash. Siegling expressed disinterest in Firmus, citing its lack of profitability and a “humongous” potential valuation, underscoring Cadence’s non-index-tracking approach. This disciplined method has underpinned significant outperformance, with its Opportunities Fund returning 25 per cent in the year through August, beating the All Ordinaries Accumulation Index by 21.5 per cent.
The firm’s investment philosophy centres on acquiring stocks when they are relatively inexpensive, specifically after the share price has bottomed and commenced an upward trend. This was demonstrated by recent moves to build a position in BHP, capitalising on its 10 per cent share price drop. Siegling also noted purchasing Samsung, a company in the artificial intelligence space trading at a five-times price-to-earnings ratio with 50 per cent annual earnings per share growth. Furthermore, Cadence seized opportunities in June by buying “fallen blue chips” such as CSL, Cochlear, and A2 Milk, which had experienced significant sell-offs.
Cadence’s strategy also extends to “price makers” in inflationary environments, particularly within the resources sector. The firm recently invested in rare earths developer Lindian Resources, tungsten producer EQ Resources, and Kantra Copper, which has more than doubled in value over six months. Additionally, Cadence has accumulated positions in coal miners Whitehaven Coal, New Hope, and Yancoal, and pounced on gold miner St Barbara as a turnaround play. Siegling prefers waiting for market “emotions” to subside, noting that irrational sell-offs, driven by “animals emoting every day,” create prime opportunities.
