MoneyTalks: 3 definitely not disco picks with Rich and Mike from their Prime Value Emerging Opportunities Fund
MoneyTalks is our regular drill down into the stock specific delights moving Australia’s best investors, right now.
Recorded live and commercial free in front of an underpaid Journalist of no fixed address, Stockhead puts the hard word on our experts to find out what’s hot, what’s not, and what’s worth sticking your neck out for in these testing times of great uncertainty.
Today we’re delighted to welcome Richard Ivers and and Mike Younger, running point on the Prime Value Emerging Opportunities Fund at Prime Value Asset Management
We got on the blower to Richard after the Prime Value Emerging Opportunities Fund kicked a goal by securing a rating among Australia’s ‘Star Managers’ by the fin services journos at Financial Newswire. Their Star Manager ratings jig aims to identify Australia’s ‘top 10 most consistent fund managers.’ The process must be delightfully data rich because it’s been developed in tandem with Louis Christopher’s figure-feasting SQM Research and looks at three-year track records across some 500-600 funds. So well done lads.
So what’s hot right now?
Thanks for having us Chris and let me say straight up – we’re not trying to pick what’s hot at the moment. We don’t do disco… we’re not moved by fashion, if you know what I mean. That’s a bum steer. I’m saying – it’s just not a sound or solid approach for small to middle cap – smiddling – investing. What we do at Prime Value is we tend to focus more on identifying that business with predictable earnings which you can forecast with more confidence over the next few years.
And yes. The Australia small cap sector contains plenty of resilient businesses, which have reliable earnings and can weather market storms.
By identifying these consistent performers it’s possible to construct a portfolio which exhibits significantly lower volatility levels than the small cap index.
So our Prime Value Emerging Opportunities Fund has an historical track record of outperforming 82% of the months when the index has fallen. Protecting capital minimises the worst of markets when they come along. But it also allows us to maximise the buying opportunities which emerge during market corrections.
The key is using these opportunities to find companies which have strong balance sheets, good management and durable businesses, at a better price… shall we begin?
“Pushpay provides management software and payments processing for over 14,000 churches in the US. It has a market leading position in medium and larger churches, benefits from high customer switching costs and generates significant cash flow.
Pushpay is looking to grow organically, with a planned expansion into the Catholic market, as well as continuing to make accretive acquisitions to build its capabilities in adjacent markets – such as digital streaming.
Notably, it has also recently received takeover interest from multiple parties, including private equity firm BGH Capital.
We view Pushpay as an example of a profitable listed technology company and is currently trading on a reasonable multiple.
IRESS was established over 20 years ago and has been highly profitable throughout the journey, providing mission critical software to the global financial services industry. It has very high market shares in both the equities market data and trading and wealth management segments, with customers comprising investment banks, fund managers and wealth advisers.
While well-known in the investment community, the company is under-appreciated in our view, largely due to its historical bottom-line growth under-performing market expectations.
However, with a reset in focus to organic growth and management KPIs linked to EPS growth, we see solid medium-term growth ahead at a reasonable valuation.
While lesser known, Hansen Technologies was also established over 20 years ago and is a founder-led, highly profitable, global provider of billing software to the Utilities and Communications industries.
Organic growth is mild, but relatively predictable, and driven by growth in its client’s customer bases, as well as regulatory and product changes that open new markets (e.g. energy/water deregulation) and provide complexity in managing customer bills. Supplementing this growth is the company’s acquisition strategy that has seen it successfully acquire and integrate more than 30 businesses over the journey.
With a conservative balance sheet and undemanding valuation, we view the stock’s medium-term prospects as attractive.
The views, information, or opinions expressed in the interviews in this article are solely those of the interviewees and do not represent the views of Stockhead. Stockhead does not provide, endorse or otherwise assume responsibility for any financial product advice contained in this article.