The L1 Long Short Fund Limited (ASX:LSF) returned negative 5.3 per cent for the month of August as ASX 200 momentum stocks out-performed value stocks.
Since inception in just April this year, the $1.2 billion fund has fallen 14.9 per cent.
The fund invests in a portfolio of predominantly Australian and New Zealand securities, with up to 30 per cent invested in global securities. It has the ability to both buy and short (bet against) securities.
The fund said performance was adversely impacted by a high number of left-field stock events during August, most of which it expects to reverse course.
Here are three long positions highlighted in its most recent report:
Nufarm (ASX:NUF) – The Nufarm share price fell during August after a Brazilian judge announced a ban on the sale of glyphosate (generic Roundup) following a Californian court case against Monsanto. This ban was overturned after month end.
The Celeste Australian Small Companies Fund also sees good potential in Nufarm shares, saying last month the share price reaction to the weather related earnings impact created an opportunity for it to add to its position.
Sims Metal Management (ASX:SGM) – Sims Metal Management shares fell in August largely due to Trump’s announcement of steel tariffs on Turkey and some uncertainty around Chinese scrap import regulations. Sims management has stated they have seen limited earnings impact on their business to date.
The Firetrail Australian High Conviction Fund added to its position in Sims shares in August saying a Turkish economic downturn will not result in a reduction in Turkish scrap demand. Like L1, Firetrail says the tariffs on Turkey’s steel and aluminium exports to the US is a manageable short-term issue.
Mineral Resources (ASX:MIN) – The Mineral Resources share price remained weak post its June update of the earlier end to DSO operations (~2 per cent valuation impact). A major positive near-term catalyst is the 49 per cent sale of Wodgina (world’s largest hard rock lithium mine). The CEO recently purchased $5.5m of Mineral Resources shares on market.
Last month the top performing Flinders Emerging Companies Fund said lithium is providing Mineral Resources with material growth options.
The Mineral Resources share price has bounced off its September lows of close to $14 — when the shares looked absurdly cheap — to now trade at $16.23.
Last week L1 Capital fund manager Mark Landau said he is finding it very hard to find any ASX blue chip stocks worth buying.