The Firetrail Australian High Conviction Fund had a shocker in August, falling 3.2 per cent for the month versus the 1.4 per cent gain in its benchmark ASX 200 Accumulation Index.
August reporting season proved disappointing for the fund, with one-month returns negatively impacted by a range of small earnings downgrades across the portfolio. The top ten positions within the portfolio incurred earnings downgrades of minus 3.3 per cent on average.
One of the key detractors for the month was an overweight positions in Sims Metal Management (ASX:SGM).
Sims is the world’s largest scrap steel producer. Firetrail’s investment thesis for Sims is focused on two main areas: