About Barramundi |
||||||||||||||||||||||||||||||||||||||||||||||||
|
Why Australian Small Companies?
The Australian smaller company market is a very attractive investment destination. Market breadth - the Australian market presents a number of advantages for a focused smaller company stock-picker. The market is rich in opportunities both in terms of the number of listed companies and in the broad array of industries that these companies operate in. The breadth of opportunity often means that companies are poorly researched and not well understood, which can result in high quality companies trading below their inherent value.
A larger population base – Australia’s larger population and internal market also makes Australia an attractive investment destination. The growth path for smaller Australian companies is often smoother than that for New Zealand firms – there are as many potential customers living in Sydney as there are in New Zealand. This provides a broader growth opportunity for companies before they have to consider the challenging step of exporting their business model.
Improved portfolio characteristics – adding an exposure to high quality, smaller companies to a portfolio of other Australian and New Zealand shares can enhance returns and lower overall portfolio risk.
Active management is important – whilst the smaller company sector in Australia is attractive it is important to be selective in choosing individual companies. Not all companies are created equal and intensive research is required to seek out superior long-term investment opportunities.
Why Fisher Funds?
Robust process with proven success – Fisher Funds’ investment process relies upon intensive research and hands-on company analysis. The quality of Fisher Funds investment process has been proven through eight years of index and industry out-performance in New Zealand. Fisher Funds was named top New Zealand Equity Manager by Fundsource in 2002, 2003 and 2007, also Morningstar Fund Manager of the Year – Domestic Equities in 2004, 2005 and 2006. Its research intensive, award-winning investment process is applied to the management of Barramundi.
Top-rated, experienced team – there is more than 70 years of combined investment experience in the Fisher Funds team. Carmel Fisher is the Managing Director and Frank Jasper is the dedicated specialist Australian portfolio manager who works with well-known and highly rated analyst Terry Tolich. They all work closely together in applying Fisher Funds’ successful investment approach in Australia.
Why Invest in Barramundi?
Access, research and communication – Barramundi gives New Zealand investors targeted access to smaller Australian companies. These companies are often overlooked by investors as they are not familiar with them or there is limited research available.
Long-term investment focus – Barramundi is a closed-end fund structured as a limited liability company. The closed-end structure enables the company to have a genuine long-term investment horizon where the Manager can take a long-term perspective on investments, not having to worry that they may have to be sold to fund investor withdrawals.
Diversification and simplicity – Barramundi provides diversification by giving investors exposure to a portfolio of smaller Australian stocks wrapped up in one listed investment vehicle.
Managers’ incentives aligned with investors – the fee structure rewards superior performance and penalises inferior performance.
History
Barramundi Limited listed on the New Zealand Stock Exchange on 26 October 2006 following an initial public offering that raised $100.0 million. Participants in the initial public offering also subscribed for Barramundi Limited warrants. These ‘A’ warrants expired on 26 October 2009.
On 27 October 2009 Barramundi Limited issued new ‘B’ warrants which trade independently to the shares on the New Zealand Stock Exchange under ticker code BRMWB. The remaining dates for these ‘B” warrants to be exercised are: Tuesday 25 May 2010 , Tuesday 24 August 2010, Tuesday 23 November 2010, Tuesday 22 February 2011, Tuesday 24 May 2011, Tuesday 23 August 2011 and Thursday 27 October 2011 (Final Exercise Date).
Investment Objectives
The key investment objectives of Barramundi are to:
The investment philosophy of the Manager, Fisher Funds, is summarised by the following broad principles:
Authorised Investments
The Manager is authorised to undertake investments on behalf of the Company in accordance with the Management Agreement. The Manager is authorised to invest in the following on behalf of the Company:
Borrowings
The Company will procure a debt facility from a registered bank to a maximum value of 20% of the Gross Asset Value of the Company at the time of draw down. The Manager has the authority to draw on this facility with the prior written approval of the Board.
The Manager may use the borrowings where it believes they will enhance the management and/or return of the portfolio.
Acquisition of Own Shares or Warrants
The Company may acquire its own shares or warrants or provide financial assistance in connection with the purchase of its own shares or warrants, with shareholder approval by ordinary resolution and without shareholder approval if effected pro-rata to existing holders, or in certain other limited circumstances. The Company may also elect to acquire its own shares for distribution through any dividend reinvestment plan.
Capital Management
The Board will from time to time consider buying shares or warrants in Barramundi if in the opinion of the Board the value of the shares and warrants do not appropriately reflect the underlying asset value. Any decision by the Board to acquire Barramundi shares or warrants will also involve consideration of other investment alternatives and whether any acquisition is in the best interest of the remaining shareholders.
Dividend Policy
As an investment company investing in growth companies, Barramundi can be expected to generate greater long-term value for shareholders through capital growth than through dividend income. However, the Board recognises the importance of dividends to many shareholders and announced a new dividend policy on 21 August 2009.
Under the new long-term distribution policy Barramundi will pay out to shareholders 2% per quarter of its average Net Asset Value (NAV). The payments will be made in March, June, September and December.
To meet the payment, Barramundi will firstly utilise income from its investments and realised capital gains. If these are insufficient to cover the targeted payout Barramundi will then liquidate part of its capital base and return it to shareholders.
As a Portfolio Investment Entity (PIE), these distributions will be tax-free to NZ Resident Barramundi shareholders. Investors in Barramundi Limited should refer to ‘PIE regime’ under the FAQ’s section of the website or their financial advisor for further information.
The Directors intend that imputation credits will be attached to dividends to the fullest extent possible. To the extent that the dividend is not imputed, the dividend should be treated as excluded income for New Zealand resident investors.
Portfolio Holdings Summary as at 31 March 2010:
For our top five holdings, please refer to the latest NAV on our home page.
Portfolio StocksThe following is a brief introduction to each of the portfolio companies, with a description of why we believe they deserve a position in the Barramundi portfolio.
AevumWhat does it do?
Aevum is a retirement village and aged care operator with 21 villages in New South Wales and Western Australia. In all they now own 2,123 independent living units and 202 aged care beds. Why do we own it?
We like Aevum’s deferred management fee revenue model which is profitable and capital efficient and, with premium assets in Sydney’s metropolitan area, we see Aevum as having a strong and defendable market position. Arrow EnergyWhat does it do?
Arrow Energy is involved in the development and marketing of coal seam natural gas in North West Queensland, India, China and Indonesia. Why do we own it?
Arrow Energy is poised to become a leading supplier of natural gas to the eastern seaboard of Australia ramping up its gas production from around 24 PJ this year to over 70 PJ in 2011. We also expect gas prices to rise boosting profitability. In time we expect Arrow international assets to begin producing gas and we see further growth options through the export of LNG. AustbrokersWhat does it do?
Austbrokers operates a general insurance broking network focused on the small to medium sized business market. Why do we own it?
We like Austbrokers’ ownerdriver business model where member firms are strongly incentivised to grow. We believe insurance broking is an industry ripe for consolidation and are of the view that Austbrokers will be an aggregator of smaller broking firms. Bravura SolutionsWhat does it do?
Bravura Solutions is a leading supplier of wealth management software for the superannuation and pension, investment management and life insurance industries. Why do we own it?
Wealth management is growing globally and Bravura Solutions has market leading software in the key areas of wrap platforms and registry systems. We like Bravura’s technology, the ‘lock-in’ they get with key clients, and the global market they address with clients in Australia, the UK and Asia. Centrebet InternationalWhat does it do?
Centrebet is an online wagering (sports and horse betting) and gaming business. It is an international business with dominant market positions in Australia and Scandinavia, and a growing European presence. Why do we own it?
Centrebet participates in the high growth online wagering and gaming industry that, in Europe at least, is forecast to grow at more than 15% per annum for the next five years. Over time we expect Centrebet to cross sell more gaming products to their wagering customer base, driving sales. We also expect them to enter new geographic and product markets using their core strengths in marketing and risk management. Credit Corp GroupWhat does it do?
Credit Corp is a specialist purchaser and collection agent of defaulted debt ledgers, working for a variety of financial institutions and other credit providers. Why do we own it?
Credit Corp has a history of growing profitability based on a market leading industry position and by having a clear market niche and business strategy which is differentiated from their main competitors.
|