Tribeca Investment Partners, Special Opportunities Fund

Funds Management

by Rachael Jones

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Tribeca Special Opportunities Fund Portfolio Manager Karen Towle talks about the fund's skew to microcap stocks, valuations, and growth prospects.

Rachael Jones: Hello. I'm Rachael Jones for the Finance News Network. Joining me today from Tribeca Special Opportunities Fund is Portfolio Manager Karen Towle. Karen, welcome to FNN.

Karen Towle: Thanks, Rachael. It's lovely to be here.

Rachael Jones: Thanks, Karen. Now, first up, could you give our viewers an introduction to the fund?

Karen Towle: So, the Tribeca Special Opportunity Fund was set up back in September 2017 by David Aylward, who's the Managing Director of Tribeca, and myself. And the reason for setting the fund up was that both David and I wanted somewhere to put our self managed super fund into and to have a good vehicle to invest in. So we set the fund up, and it has a fairly broad mandate. Basically we're looking for anything that can make us money, but the sweet spot for the fund is microcap stocks, so anything between $50 and $500 million. It's got a couple of different characteristics. So one of them is that the benchmark is cash, not an index, and the reason for that is that basically making a positive return was very important to us, not just beating an index. And the other thing is that it's a Cayman fund, and as a result, we don't need to make distributions, and so therefore we get to compound all the returns that we make in the fund.

Rachael Jones: And now let's talk about COVID-19. Did this seem like the opportunity of a decade, given the lows in March, or is it just too early to tell?

Karen Towle: No, we actually felt that there was some fantastic opportunities. So, as I said, because we have a cash benchmark, we are able to increase our cash levels to reasonably high levels when we think that there's not very good opportunities around. So, as COVID started to take hold around the world, we started to aggressively increase our cash levels. So we moved our cash from about 20 per cent, well over 50 per cent. And then as March came through and stimulus packages were introduced around the world, we got more comfortable that things were going to be okay, that governments were going to come to the rescue. Share prices had absolutely been decimated, and so we saw some fantastic opportunities in some stocks that we had previously held that we knew very well and that we thought had great franchises. So, we were quite aggressive in moving into the market. So we moved our cash levels from 50 per cent back well down to close to 10 per cent.

Rachael Jones: Now let's talk about the Special Opportunities Fund in more detail. Can you tell me more about the investment approach?

Karen Towle: So Tribeca, as I said, is a boutique fund manager. We've been around for 20 years. We have a very large small cap fund. So we are used to investing in smaller companies. We have a team of investment professionals of 20 people. So we spend a lot of time going out, talking to companies, investigating the market, competitive environments, and also looking in a lot of detail at financial statements as well. In the microcap space often cashflow is usually extremely important. So we spend a lot of time looking at cashflow, what the cashflow requirements of the company are going to be, and whether they can sustain themselves.

Rachael Jones: And Karen, what can you tell me about the portfolio positioning?

Karen Towle: We look to diversify the portfolio. We place the stocks that we invest in into different buckets, and we want to make sure that we've got a broad spread across those buckets. And those buckets are growth, industrial growth, and then disruptive technologies, emerging markets, turnaround situations, and capital markets activities.

In terms of sectors, we actually aren't particularly overweight in any particular sector. The advantage of the microcap space is that there's such a plethora of companies emerging in different parts of the market that sectors aren't really a particular focus for us. The biggest stock in the portfolio is a stock called Bigtincan Holdings (ASX:BTH), and we've known those guys for quite some time. What they are is a sales enabler, and it's a tech company. They're based in the US. And what they do is they enable people on the road who are sales people to get access to a lot of product information so that they can make a sale really easily. They've managed to get some fantastic clients in the last couple of years, and that includes the likes of Nike and Sephora.

And another stock that we've invested in as well as a company called McPherson's. And in particular, they've got a brand called Dr LeWinn's, which is being sold into the Chinese market. They've done incredibly well in China, and sales of Dr LeWinn's have been growing at over 100 per cent.

Rachael Jones: Thanks, Karen. So now could you tell us about performance?

Karen Towle: We've had really strong performance, which has been very pleasing. So since inception just over two and a half years ago, our gross return is up over 140 per cent. Also, this year, as I said, because we've been able to increase our cash levels and then utilise it back into the market, we've also had really good performance this calendar year as well. So, this calendar year our gross performance is still already up over 16 per cent.

Rachael Jones: And to the last question now, Karen. What is the key message you'd like to leave investors?

Karen Towle: So the Tribeca Special Opportunities Fund has had a very strong track record over both the longer term and the short term. If you would like to invest, you could visit the Tribeca website or alternatively, please contact your advisor.

Rachael Jones: Karen Towle, thanks so much for the introduction to the fund.

Karen Towle: Thanks, Rachael.


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