Investing in Australia’s best companies

The Falkiner Australian Absolute Returns Fund (FAARF) gives you simple and direct exposure to some of Australia’s most exciting companies. These companies are carefully selected based on fundamental research, using an active bottom-up stock selection process.

The objective is to generate strong absolute returns for investors in most years and in most market environments. FGI does not seek to mirror a particular market index (e.g. the ASX 200) and has no benchmark constraints. This gives them unfettered choice of the best companies available – and how strongly they choose to back them. They look widely for opportunities, and aim to deliver a steady upward trend in investment returns. They also aim to preserve investors’ capital.

Strong Performance History ⁽¹⁾

How are investments chosen?

FGI is a true active equities manager with a strong focus on ‘alpha’ returns generation. Stocks are selected on their individual merits, without regard to sector or style descriptions such as value or growth.

The investment process is primarily based on ‘bottom up’ stock selection overlaid with ‘top down’ macro themes. The managers take a high conviction approach and aim to hold 15-30 stock positions including long and short, with no individual position at the time of purchase greater than 10% of the assets of the fund.

The fund may hold high levels of cash from time to time, however the managers believe holding cash is expensive and have a bias to being fully invested in shares. They seek to have a very good macroeconomic understanding of global issues, and how they might impact companies.

Typical portfolio positions, both long and short, include Amcor, Austar, BlueScope, Computershare, Crown Gaming, Fosters, Flight Centre, Fortescue, GrainCorp, Incitec Pivot, James Hardie, Lion Nathan, Nufarm, Rio Tinto, Tabcorp, and Tower Australia ⁽²⁾.

How do FGI seek to maximise returns?

• Focus on the larger Australian companies. The subset to choose from is around 175 stocks (most of the S&P/ASX 200) with a market cap of more than $300 million.
• Use fundamental company analysis (of strategic plans, financials, management execution and valuation etc) to achieve a solid initial understanding, and rely on sell side analysts for in-depth modeling. FGI don’t rely on analysts’ opinions on a stock, but take them into account.
• Focus on public meetings/forums to collect further information, and seek an ongoing understanding of company culture and management.
• Invest in companies that they feel offer attractive value in light of various key financial and performance measures. This means they may invest in cheap companies in less attractive industries that are temporarily out of favour for some reason.
• Prefer companies whose executive remuneration is uncapped, mostly at risk, substantially deferred and tightly aligned to longer-term shareholder wealth creation.
• Aim to hold stocks for three years or more, but continually review investments, particularly where expected returns have failed to materialise.

About Falkiner Global Investors

Falkiner Global Investors is a specialist equities manager focusing on global investment opportunities. Founded in 2004 and based in Sydney, Australia, FGI has an investment strategy that is designed to generate strong absolute returns from concentrated portfolios of stocks that include both long and short positions. FGI currently offers two funds that are available to both retail and institutional investors: the Falkiner Australian Absolute Returns Fund (FAARF), which invests in Australian equities, and the flagship Falkiner Global Absolute Returns Fund (FGARF), which invests in international equities.

FGI is majority owned by James Falkiner who is its Chief Executive Officer and Chief Investment Officer. Mr. Falkiner has over 20 years’ experience as an investment professional. Other members of the FGI board are Warwick Negus – a cornerstone investor and who is Chief Executive Officer of Colonial First State Global Asset Management – and investment banker and company director Malcolm McComas who is also a shareholder.

The owners of FGI also have personal funds invested in the Fund – so the managers interest is strongly aligned with its investors. Falkiner Global Investors offers a highly transparent portfolio approach. They maintain an open dialogue and are accessible and accountable to investors. This will suit investors who want a clear understanding of what they are investing in. They expect high net worth investors as well as SMSF investors wanting to enhance their long-term returns may be interested in allocating a percentage of their equities portfolio to the Fund. Investors should have a medium-long term time horizon to gain the maximum benefit from their investment in the Fund.

In the news

James Falkiner, the Chief Executive Officer of Falkiner Global Investors, believes that being a smaller, high-conviction manager has its advantages as it is not hampered by consensus decision making like its bigger counterparts. Read the full story from the Market Wrap section of the Australian Financial Review last Monday 18th Feb.

Click here to view the fund profile.

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