Platypus Asset Management :: Australian Equities

We aim to out perform the
S&P/ASX 300 Accumulation Index
by 4% pa over rolling 3 year periods.

Platypus assesses each stock’s capability of delivering a 20% return over the following one year and three year periods before the stock is included or removed from the portfolio.

Investment Objective
The Fund’s objective is to provide market leading returns over the medium to long-term from a concentrated portfolio of Australian shares. The Fund aims to deliver a pre-fee investment return (before taxes) that outperforms the S&P/ASX300 Accumulation Index over a rolling three year period by 4% per annum.

Investment Strategy
The Fund invests in companies and trusts listed or soon to be listed on the Australian Stock Exchange (ASX) that offer opportunity for above-average investment returns through their growth potential. Typically the portfolio consists of 25 to 35 stocks, with a substantial portion of the portfolio in relatively large and liquid companies. The Fund is fully invested with generally low cash levels of between 5% to 15%, although to achieve positive returns the Fund has the ability to invest up to 100% in cash.

Investment Approach
Platypus actively seeks opportunities for higher investment returns through combining a top-down thematic approach with bottom-up stock selection, targeting stocks which have a track record of strong earnings growth or are perceived by Platypus to be under-valued. Platypus makes investment decisions with minimal regard to the broader Australian equity benchmarks. This enables Platypus to construct a concentrated Australian equities portfolio with high conviction and flexibility, and to focus on stocks that offer potential for growth. Platypus will not own a stock simply because it is in an index. Platypus’ investment approach focuses on share price performance and consistent earnings growth in the underlying companies. Financial derivatives such as swaps, options, and futures are not generally used, but may be employed to enable the Fund’s risk/return profile to be adjusted quickly in order to take advantage of prevailing market conditions.

Implicit in Platypus’ strategy is the confidence, ability and patience to trust its investment decision making through periods of “market noise” and short-term volatility; and, indeed, to seek further mis-pricing opportunities during such periods. Platypus’ investment approach is unique for two reasons: It aims to deliver positive returns regardless of the direction of Australian equity markets; and By not focusing on a benchmark, Platypus is free of the constraints that benchmarking brings to portfolio construction and portfolio returns. Managers that use a benchmark may see their portfolios produce a negative return when their benchmark produces a negative return. Platypus’ approach seeks to manage the portfolio to achieve positive returns in most market conditions.

Investment Process
Identify opportunities and investment themes
The starting point of Platypus’ investment process is to complete a screening of the ASX listed stocks to identify those that indicate strong earnings potential. The health or otherwise of individual industries and sectors is also assessed, and any identified themes are then applied to the following detailed quantitative analysis.

Analyse earnings potential
This produces a list of about 100 – 150 stocks. Platypus conducts detailed quantitative analysis on the industry outlook, the company’s position within its industry, historic profit growth, earnings forecasts and balance sheet strength. Critical to this process is the use of independent sources such as brokers and specialist economics forecasting groups, combined with in-house research and expertise.

Platypus assesses each stock’s capability of delivering a 20% return over the following one year and three year periods before the stock is included or removed from the portfolio.