How we pick successful ASX small-caps – and decide when to sell

Consistently beating an investment benchmark – in this case, the ASX/S&P Small Ordinaries – over 12 years is no mean feat. But that’s exactly what the Monash Investors Small Companies Fund has done in beating the market by over 4% p.a. since launching.

And it comes back to our investment philosophy, which boils down to the simple fact that most stocks are fairly priced most of the time – but sometimes, we can identify significant mis-pricing.

Our approach is style- and index-agnostic, with no clear preference for either Growth or Value-oriented companies. We have a highly active approach that also includes the ability to take short positions in companies.

How do we find the opportunities?

The identification of recurring patterns of behaviour is a core part of our approach, which helps us get an early read on the shifting earnings prospects for individual companies. We combine this with a judgement of how well this insight is understood – or misunderstood – by the market.

Co-founders of Monash Investors, Shane Fitzgerald and I, are each in our fourth decade as fund managers and analysts. Collectively, Monash has even more experience. We rely on this experience to identify these recurring situations.

In this Fund In Focus, I explain further how we find compelling investment opportunities among Australian companies. I also address the often-overlooked, but equally important, aspect of selling stocks and explain how our successful approach to selling down or exiting positions entirely.

Timestamps

• 0:30 – Where Shane and Simon started as professional investors
• 1:00 – A 12-year track record of investing success
• 2:00 – How Monash finds recurring patterns of behaviour
• 4:15 – What we look for in companies – G.I.V.E.
• 5:50 – A key source of risk management – Monash’s early warning triggers
• 7:00 - The signposts we watch for

Our objective is simple

Monash aim to identity businesses which are likely to undergo step-changes in their business prospects which will lead to oversized share price movements. They draw upon their experience in order to exploit recurring business situations and patterns of behaviour, to identify and invest in a portfolio of compelling opportunities

Managed Fund

Monash Investors Small Companies Fund

Australian Shares

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ETF

Monash Investors Small Companies Trust (Hedge Fund) (MAAT)

Australian Shares

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