Flagship’s portfolio outperforms index by 20%

By Trevor Hoey. Published at Aug 13, 2018, in Special Reports

Name: Flagship Investment Ltd (ASX:FSI)

Market Capitalisation: $44 million

Share Price: $1.73

Funds management group, Flagship Investments Ltd (ASX:FSI) performed well in fiscal 2018 with its after-tax profit increasing by 10.2%.

However, it was the performance of the ASX listed companies in its portfolio that made it stand out from the pack, with many larger funds management groups no doubt envious of its 20.1% increase in value.

This represented a substantial outperformance compared with the overall market.

As a result, the Net Tangible Asset (NTA) per share value of the company increased by 8.5% in fiscal 2018 to 198.2 cents per share at 30 June 2018, after paying dividends of 7.5 cents per share or 4.1% of the 2017 NTA. Interestingly, this isn’t reflected in the company’s current share price which is trading at a 25 cents per share discount to its NTA value.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Key holdings performing well during reporting season

FSI’s has an investment horizon of three to five years and focuses on quality companies that have the ability to grow their earnings and dividends over this period.

Management is of the view that this should ensure continued growth in the future dividends it declares, while also believing there is significant capital appreciation potential for the portfolio.

Rather than simply focusing on the big banks and miners and a clutch of other top 20 ASX companies, FSI throws the net wider, looking for emerging companies.

However, casting an eye across the portfolio there are a few big names that have performed well in the last week following the release of strong results.

Note that any decision with regards to adding this stock to your portfolio should be taken with caution and professional financial advice sought.

Some strong performances since June 30

One in particular that stands out is Magellan Financial Group (ASX:MFG) which is in its top 10 investments.

Based on its share price as at June 30, Magellan Financial Group accounted for about 3.8% of FSI’s portfolio by market value. After delivering an outstanding result last week and flagging the likelihood of earnings growth and stronger dividends the company’s shares surged to a 12 month high of $28.32, not far short of its all-time high of $29.50. Importantly, from Flagship’s perspective, its shares were trading at $23.30 as at June 30, implying a capital gain of circa $430,000 in the last six weeks.

The past performance of this product is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

For investors looking to take a leaf out of Flagship’s book, here is a list of its investments as at June 30:

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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The information contained in this article is current at the finalised date. The information contained in this article is based on sources reasonably considered to be reliable by S3 Consortium Pty Ltd, and available in the public domain. No “insider information” is ever sourced, disclosed or used by S3 Consortium.

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