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Portfolio Holdings Summary as at 30 April
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ASX
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Portfolio Stocks
The following is a brief introduction to each of your
portfolio companies, with a description of why we believe
they deserve a position in the Barramundi portfolio.
Aevum
What 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 Energy
What 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.
Austbrokers
What 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 Solutions
What 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 International
What 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 Group
What 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.
McMillan Shakespeare
What does it do?
McMillan Shakespeare provides bureau style services
in salary packaging administration and fleet management.
Why do we own it?
We like McMillan Shakespeare’s market leadership
position which we think will strengthen over time as
the benefits of scale support a “winner takes
most” outcome. This also helps establish high
barriers to entry in this industry. To fuel future growth
McMillan Shakespeare will take advantage of the trend
to outsource packaging services and can drive service
uptake within the existing client base.
Noni B Limited
What does it do?
Noni B is a specialist retailer focusing on the 40+
year old woman's fashion segment.
Why do we own it?
We believe that Noni B will post strong earnings growth
over the next three to five years as sales rebound from
the global financial crisis, the company experiences
a demographic tailwind and it continues a measured rollout
of new stores.
Oakton Limited
What does it do?
Oakton is a mid-scale IT services business positioned
below the major full-service global consulting firms
such as Accenture and Cap Gemini, but with a broader
range of services than more specialist mid-scale operators
and smaller boutiques.
Why do we own it?
Oakton is a superb operator in the IT services sector,
showing an ability to extract maximum utilisation from
its consultant base which in turn drives industry leading
profit margins and financial metrics.
Pharmaxis Limited
What does it do?
Pharmaxis Ltd. is an Australian specialty integrated
pharmaceutical company focused on the development of
new products for the diagnosis and treatment of chronic
respiratory and immune disorders.
Why do we own it?
We own Pharmaxis as we believe the quality of their
intellectual property, primarily Aridol and Bronchitol,
will drive long term earnings growth for the company.
Pipe Networks
What does it do?
Pipe Networks is a telecommunications network infrastructure
provider. The company offers dark fibre, peering and
collocation services. Pipe’s customers include
Internet Service Providers, telecommunications carriers
and government and corporate organisations.
Why do we own it?
We rate Pipe’s management very highly as being
innovative and having a demonstrated ability to spot
and then profit from industry opportunities. Pipe’s
dark fibre network is now profitable, but with spare
capacity – this means that any sales from now
will be highly profitable given that the marginal cost
of adding dark fibre clients is low.
Reckon
What does it do?
Reckon is a software company specialising in the development,
marketing and distribution of accounting software ranging
from personal financial services, to ledger and business
management solutions for smaller businesses, through
to accounting firm practice management software.
Why do we own it?
In our view Reckon has a key competitive advantage through
its relationship with major US software developer Intuit
– this provides Reckon with access to a product
stream from a company spending over US$200 million per
annum on software development. This means top quality
products for Reckon to sell to its Australasian client
base.
Tox Free Solutions
What does it do?
Tox Free Solutions is a provider of waste management
and environmental services based in Western Australia.
The company specialises in the treatment of industrial
and hazardous waste, the remediation of contaminated
soil and equipment and the provision of industrial services.
Why do we own it?
We like Tox Free’s market position in the rapidly
growing Western Australian economy where they have established
a strong foothold that is difficult to compete with
given green-fields waste operations are notoriously
hard to start under current environmental regulations.
Treasury Group
What does it do?
Treasury Group is a specialist service provider and
investor in boutique funds management businesses. The
firm currently has interests in six fund managers and
has the management rights to a Listed Investment Company,
Premier Investors.
Why do we own it?
The key to Treasury Group’s proposition that we
see as desirable is the synthesis between their experienced
executive team and the opportunity provided by highly
motivated boutique funds managers in the strongly growing
wealth management industry.
Vision Group Holdings
What does it do?
Vision Group is a specialist provider of ophthalmology
services, diagnosing and treating people with eye disorders
and diseases.
Why do we own it?
Vision’s long run appeal is driven by growth in
the core cataract business as the population ages, increasing
uptake of laser refractive error treatment, market consolidation
and advancements in technology meaning new conditions
can be successfully
treated, hence opening up new revenue opportunities.
WHK Group
What does it do?
WHK Group owns a network of mid-market accountancy firms
across Australia and New Zealand. In addition to traditional
accounting services, WHK offers clients a full range
of financial services through its network, including
financial planning, lending services and provision of
risk insurance.
Why do we own it?
The outlook for the firm is driven by organic growth
in both financial services and the accountancy business,
ongoing acquisition of accounting practices and through
the cross sell of new services to existing and newly
acquired clients.
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