Reporting Season: Cadence Capital delivers record profit

By Trevor Hoey. Published at Aug 8, 2018, in Features

Name: Cadence Capital Limited (ASX:CDM)

Market Capitalisation: $415 million

Share Price: $1.30

Equity fund manager Cadence Capital (ASX:CDM) tends to fly under the radar, but the group has delivered a record net profit for the 2018 financial year, which could well draw investor attention.

The profit after tax of $41.2 million represented an increase of 12% on fiscal 2017.

Chairman Karl Siegling, highlighted the relative outperformance in saying, “The investment portfolio performed well over the year, delivering strong risk-adjusted returns for our investors and outperforming the All Ordinaries Accumulation Index by 4.5%.”

Employs fundamental and technical research

Established in 2003, Cadence Asset Management is an independently owned Sydney-based equity fund manager that combines both fundamental and technical research with the aim of delivering above market risk-adjusted returns.

Having spent many years developing a strategy aimed at generating such returns, Siegling established Cadence Asset Management to manage a portfolio based on fundamental and technical analysis, along with a disciplined stock entry/exit strategy.

Cadence’s fund has a mandate that is not as restrictive as the larger funds management groups, enabling it to invest in a broader range of stocks, rather than taking an index-hugging approach.

For example, four of its best performing stocks in fiscal 2018, McPherson’s Ltd (ASX:MCP), Money3 Corporation (ASX:MNY), Noni B (ASX:NBL) and Shine Corporate (ASX:SHJ) all have sub-$400 million market capitalisations.

That’s not to say that the company doesn’t look for value at the big end of town, with one of its leading performers in fiscal 2018 being Macquarie Group (ASX:MQG).

Robust dividend

On July 23, 2018, CDM declared a fully franked final dividend of 4.0 cents per share, taking the full year dividend to 8.0 cents per share.

This equates to a 6.2% annual fully franked yield (circa 9% gross yield) based on the group’s current share price.

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