The Blackrock Concentrated Industrial Share Fund has returned 19 per cent per annum on average since inception in December 2015, soundly out-performing the S&P/ASX 300 index over that period.
While many of the fund’s leading positions are larger companies, refreshingly it does not appear to have holdings in most of the popular blue chips, including Commonwealth Bank of Australia (ASX:CBA), Westpac Banking Corp (ASX:WBC), Telstra (ASX:TLS) and Woolworths (ASX:WOW). The exception looks to be Wesfarmers (ASX:WES), a top 10 holding for the fund.
In its August 2018 monthly update, the fund highlighted 3 small but fast growing ASX tech stocks that either contributed to or detracted from performance in the month. All 3 stocks are members of the All Ordinaries Index.
The Kogan.com (ASX:KGN) share price bounced back in August after a sharp sell-off due to share sales by the two founding directors.
The fund said the 1.4 million customer base is Kogan’s key asset, with Blackrock continuing to see management finding ways to add value to them which in turn drives value for shareholders. Kogan mobile is one example, with gross profit of $12 million up from $3.6 million.
Blackrock was initially attracted to the low capital intensity of the Kogan business model when investing in Kogan.com shares at $1.80 during its IPO.
The ARQ Group (ASX:ARQ) share price took a hammering in August after the company formerly known as Melbourne IT suffered a setback in its earnings outlook, due to a one of loss of a Telstra contract in its legacy small business division.
Blackrock views ARQ as turnaround story and believe the turnaround is still on track despite this setback. The fund is attracted to the enterprise division, providing mobile applications, data and analytics to large enterprises. This business achieved 39 per cent organic revenue growth and 112 per cent organic EBITDA growth in the first six months of calendar 2018.
The Bravura Solution (ASX:BVS) share price was a standout performer over reporting season.
A new position for the fund at the start of this year, Bravura’s wealth management software division reported 26 per cent revenue growth and 52 per cent EBITDA growth for fiscal year 2018. This was underpinned by Bravura’s new SaaS product Sonata, with revenue growth driven by both new and existing clients.
Blackrock said Bravura is a good example of a high quality growth company it has been able to identify at a reasonable valuation even amongst a sector dominated by extreme valuations, presumably a dig at the likes of WiseTech Global, Afterpay Touch and Appen shares.