Airlie waiting for ‘raining down of dividends’
Backing founder-led businesses has been key to performance for the Airlie Australian Share fund as it navigated the pandemic.
In an investment update, Emma Fisher, portfolio manager of the fund and head of research, said she was pleased the fund’s performance had validated its preference for founder-led businesses.
This included three of the fund’s best contributors; PWR, Reece Holdings and Mineral Resources.
“These are all owner-managed businesses, that’s something we like a lot at Airlie, backing founder- led businesses so it been pleasing for us to the performance validate that decision.
“We have been pleased with performance, particularly as over the last two-year period, we have been able navigate this a cyclical rebound and then a value/growth debate. We have never felt like we needed a certain style to be in fashion to outperform.”
According to FE Analytics, both Mineral Resources and Reece had returned more than 140% over the year to 28 July, 2021, while PWR had returned 69%.
Looking ahead, she said she expected to see firms returning cash to shareholders in the next financial year.
“I think what’s interesting in FY22 is the amount of cash that firms have generated over the last 18 months from the strong economic environment. They have navigated the pandemic with a lot of caution and last reporting season they were sitting on that cash but next year we will see capital returns,” she said.
“Either they will have the confidence to invest or we will see them returning that to shareholders either via dividends, special dividends or buybacks.
“We like businesses that have transformed their level of leverage and have bought down gearing, many are sitting on a net cash position and we are waiting for this raining down of dividends.”
The Airlie Australian Share fund had returned 33.6% over one year to 30 June, 2021, according to FE Analytics, versus returns of 28.5% by Australian equity sector within the Australian Core Strategies universe.
AUTHOR
Laura Dew
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