How Plato's Dr David Allen has returned 44% to his investors in 2024 (so far)

Note: This interview was taped on Wednesday 13 November 2024.

Any time you can deliver 44% by mid-November, it has typically been a pretty good year as an investor. That's exactly what Plato Investment Management's Dr David Allen has done in 2024.

In case you think he's just lucky or a one-trick pony, the Plato Global Alpha Fund he runs returned 32% last year and has consistently delivered at least 10% per annum in alpha since its inception in September 2021. 

Allen, who has run long-short equity funds since the Global Financial Crisis, attributes his success to three main themes: 

1) The defence theme: The world has been re-militarising since the Russian invasion of Crimea, and as Allen explains, "defence is defensive" in that stocks in this sector are low beta despite the key tailwinds propelling its performance.

2) The obesity/weight loss theme: Allen's Shocking Prediction at Livewire Live 2023 was about this very subject. Since the introduction of these drugs to the mass market, the US obesity curve has actually inflected and now companies are using these medicines to see whether they can be used to treat arthritis, diabetes, heart disease, and fertility just to name a few.

3) Short positions: And of course, being a long-short fund, a well-timed short can make all the difference. As Allen explains, the macro environment of rapidly rising rates and extreme valuations has created an optimum situation for alpha to be generated through short calls.

Also unique to this particular strategy is the Plato Red Flags system, which allows Allen to punch in any listed company anywhere in the world and measure it against 150 "red flags". The red flag system is designed to a) preserve capital on the long side and b) generate alpha on companies where the valuation or the business' operations just don't pass the smell test.

Best of all, this fund which has been previously platform-only is now about to be listed on the ASX under the ticker code PGA1. But before Dr Allen heads to the golf course (see what I did there?), he's joining us for our Fund in Focus. Stay tuned to hear how Allen identifies short opportunities, some examples of red flags, and a single stock that he is long on based on his view of what sector will benefit most from the second Trump administration.

Timecodes

• 0:00 - Intro
• 0:46 - What's been the secret to your returns?
• Stocks mentioned: BAE Systems (LON: BAE), Rolls Royce (LON: RR), Novo Nordisk (CPH: NOVO-B), Eli Lilly (NYSE: LLY), Weebit Nano (ASX: WBT), Brainchip (ASX: BRN)
• 4:38 - Is the ASX providing more short or long opportunities at the moment?
• 6:24 - What are some of the "red flags" in the Plato Red Flag system?
• Stocks mentioned: Cettire (ASX: CTT), Mineral Resources (ASX: MIN), Liontown Resources (ASX: LTR)
• 10:03 - What are the criteria for a long stock position?
• 11:01 - What is one long position you are backing?
• Stocks mentioned: JPMorgan (NYSE: JPM)
• 11:58 - Where can investors access this fund?

Access the Plato Global Alpha Fund on the ASX (ASX:PGA1)

An ASX-listed version of The Plato Global Alpha Fund (the Fund) will be available starting Monday, 25 November, under the ticker PGA1.

Investing in PGA1 provides exposure to an actively managed all-weather long/short global equities portfolio with the ability to generate strong returns from both rising and falling stock prices. To 31 October 2024, The Plato Global Alpha Fund has delivered a total return of 21.0% p.a after fees since inception (1 September 2021) outperforming the MSCI World Net Returns Unhedged Index benchmark by 10.6% p.a .

To learn more about the Plato Global Alpha portfolio, visit the Plato website here.