I was asked yesterday if I was satisfied with the rebound in the Forager Australian Shares Fund through August. I am not happy and will not be happy for a while. I’m relieved.
It wasn’t just customers who asked us serious questions in March. We asked ourselves serious questions. It is one thing to see your portfolio decline in value. It is another matter that it happens at the end of two already sad years. Some of the price movements seemed absurd. But what if we just crammed things up?
This month showed that most of the companies we own are likely worth what we think are worth. And the prices at which they were traded in March you will only see a few times in your life.
Take Kiwi Media Company NZME (NZM) for example. The share price hit a low of NZ $ 0.18. That price valued the entire company at just NZD 35 million.
Cash flow from NZME
This week the results for the period ended June 30, 2020 were released. NZME generated free cash flow of NZ $ 20 million after debt servicing and investments. That’ll be in six months. Management proposes an increase in earnings in the second half of 2020 and further growth until 2021. Net debt is now just NZ $ 55 million, and the company won’t be far from being debt-free by that time next year.
Or little National tires and sales (NTD). This company was cheap at $ 0.40 and its first half results released in February were encouraging. That did not stop the price decline. At the March low of $ 0.21, the perceived value of NTD was only $ 22 million.
It has made a significant acquisition since then that it will no longer do so little. But the results just published don’t reflect that. They show that the company generated $ 10 million in cash for the year. This increased the net present value to nearly $ 14 million. If the acquisition is successful, there are many benefits.
Get some great results
These are just two extreme examples. The main focus across the portfolio was to achieve great results in a very difficult environment. Some like Enero (EI) and Macmahon (MAH) even managed to grow.
The net asset value of our entire portfolio started the year at $ 1.36 per share. On March 23, it hit a low of $ 0.65 per unit, a decline of more than 50%. Yesterday it was worth $ 1.24, up around 90% from the bottom. Our job is of course to make money and not just get it back. However, this reporting season has shown that companies in our portfolio are making profits, generating cash flow and continuing to trade at extremely attractive prices. Last but not least, that is a relief.
Ready to invest?
Visit this page for more information on investing in Forager.
Forager Funds is a boutique fund manager who specializes in a value investing approach. We offer an Australian equity fund listed on the ASX and an international equity fund, both of which aim to provide returns for long-term investors.
By commenting on this post, you agree to Forager’s commenting policy
Note: We are not the author of this content. For the Authentic and complete version,
Check its Original Source