14 Jan

Investment Update and NTA December 2021

For m ore infor m a t i o n c ontac t C a d enc e O ppo r t u n i ti e s Fu nd o n 0 2 8298 2 4 50 o r e m ai l in f o @ c a de n cec apital . c o m .au R egist e r t o rec e i v e o ur ne w s l et t e r at w w w. c a d e n cec a pi t a l.c o m . au/ r e g i s te r - f or - fr e e - n e wslet t e r INVESTMENT UPDATE December 2021 Cadence Opportunities Fund was down 2. 1 % in Dec em ber , compared to the All Ordinaries Accumulation Index which was up 2.7 % for the month . The Company has had a strong start to FY2 2 with the fun d up 21.1 % over the first six months of the year, outperforming the All Ordinaries Accumulation Index by 16 .5 %. The final quarter of calendar year 2021 has seen a marked change in the performance of markets globally. Following the initial ‘panic’ of the C ovid 19 p andemic, high - valuation growth stocks and smaller market capitalisation stocks experienced significant g ains for nearly one and a half years. These stocks and the Small Ordinaries index, NASDAQ index and Russell 2000 index outperformed the larger indices a nd our funds benefitted significantly from being positioned in growth stocks and sectors that experience d significant growth, specifically technology related companies that traded on high multiples of earnings or were valued based on revenue multi ples. Th is trend experienced a significant reversal in la te calendar year 2021 and many stocks within these indi ces were down between 40% and 50% during this period. For example, approximately 40% of stocks in the NASDAQ are down at least 50% from highs, whil st the index itself is down only 8%. Domestically, the average stock in the ASX 200 is down over 15% whil st the index is down only 1%. Generally speaking, larger capitalization value - style stocks have held up well whilst small er capitalisation and grow th - style st ocks have experienced signif icant retracement and a revers al in trend. Following th e Cadence process of scaling into and out of positions and trends, the Portfolio saw cash levels increase to an average of 2 4% in the final quarter as a number o f positions wer e exited or reduced. In addition, a n umber of new positions have been initiated in th e portfolio related to trends that are emerging or strength ening across the resources and energy sectors . Specifically, this includes positions in BHP Billi ton, Fortescue Me tals, Champ ion Iron, Min eral Resources, OZ Minerals, Neometals, Jervois Mining, and Syrah Resources . These stocks have been performing well recently . A number of specific stocks that meet our criteria have also performed well including Joh ns Lyng , Tua s and Uniti Wireless. This rotation in the underlying portfolio has le d to underperformance in the short term but significant outperformance of over 1 50 % for the previous two years. The construction of the po rtfolio is now significantly diffe rent to a year ago and is consistent with the fact that the investment environment is different to the last few years and we may actually be starting to experience a shift in longer term t rends towards higher interest rate s and inflation. In this scenario the stocks that will perform well will be very different to the stocks that have p erformed well previously. We are beginning to see the first signs of these trends. We remain confident th at the Cadence process will move u s out of underperforming stocks in to stocks that are trending well and meet our fundamental and technical criteria . F or m o re i nfor ma ti on c o nt ac t C a d ence O p p ortu n it i e s F und o n 0 2 8 2 9 8 24 50 or e mail in fo@ c ade n cecap i t a l. c o m . a u R egi s t er to recei ve o u r FRE E ne w s lett er a t w w w . cad e nc ec a pita l . c o m.au / re g i s t e r - fo r - f r e e - n e w s lette r Fully Franked Half Year Dividend Declared Th e Board has declared a 7.5 cents fully franked half year dividend, an annualised increase of 25 % on last year ’ s ord inary div id end s , reflecting the st rong performance of the company over the current year . This interim dividend equates to a 5.1 % annualised fully frank ed yield or a 7. 3 % gross yield (grossed up for franking credits) based on the current share price of $ 2.94 per sh are . CDO currently has a healthy p rofits r eser v es b alance from which it can pay future dividends of around 6 0 cents per share ( i.e. based o ff this i nterim dividend this equat es to around 4 ye ars of div idends before ear ning an y fu ture profits ) The Divi dend Re - Inv estment Plan (“DRP”) is in operation for the interim dividend . The issue price will be at a 5 % discount to the weighted average of the prev ailing share price ov er the relevant DRP pricing period. The Ex - Date for the dividend is the 31st March 2022. T he p ayment date for the dividend is the 14th April 2022. Fund N T A F un d Performa n ce F or m o re i nfor ma ti on c o nt ac t C a d ence O p p ortu n it i e s F und o n 0 2 8 2 9 8 24 50 or e mail in fo@ c ade n cecap i t a l. c o m . a u R egi s t er to recei ve o u r FRE E ne w s lett er a t w w w . cad e nc ec a pita l . c o m.au / re g i s t e r - fo r - f r e e - n e w s lette r His to r ic Portfolio Exposur e -15% 5% 25% 45% 65% 85% 105% Long Exposure Short Exposure Net Exposure P o r tf ol io S e c t o r A n a l ysi s Sector Long Short Net Technology 22.7% -0.2% 22.4% Communications 22.6% -0.3% 22.3% Basic Materials 20.1% 20.1% Consumer, Cyclical 7.0% 7.0% Industrial 4.4% 4.4% Financial 5.7% -1.6% 4.1% Materials 3.3% 3.3% Energy 2.9% 2.9% 88.5% -2.1% 86.4% Net Cash and Tax Liabilities 13.6% F or m o re i nfor ma ti on c o nt ac t C a d ence O p p ortu n it i e s F und o n 0 2 8 2 9 8 24 50 or e mail in fo@ c ade n cecap i t a l. c o m . a u R egi s t er to recei ve o u r FRE E ne w s lett er a t w w w . cad e nc ec a pita l . c o m.au / re g i s t e r - fo r - f r e e - n e w s lette r Po r tfol i o P o si t i on s Stock Code Position Direction Exposure Stock Code Position Direction Exposure ANET US Arista Networks Inc Long AUD MAF MA Financial Group Long AUD ABB Aussie Broadband Pty Ltd Long AUD MRVL US Marvell Technology Inc Long AUD BET AU Betmakers Technology Group Ltd Long AUD MIN Mineral Resources Ltd Long AUD BHP BHP Group Ltd Long AUD NMT Neometals Ltd Long AUD CIA Champion Iron Ltd Long AUD NEWR US New Relic Inc Long AUD DTL Data#3 Ltd Long AUD ON US On Semiconductor Long AUD DHG Domain Holdings Australia Ltd Long AUD OPEN US Opendoor Technologies Inc Short AUD EXTR US Extreme Networks Inc Long AUD OZL Oz Minerals Ltd Long AUD FB US Facebook Inc Long AUD PSTG US Pure Storage Inc Long AUD FLT Flight Centre Travel Group Ltd Long AUD QCOM US Qualcomm Inc Long AUD FLTR LN Flutter Entertainment Long AUD REA REA Group Ltd Long AUD FMG Fortescue Metals Group Ltd Long AUD SMAR US Smartsheet Inc Long AUD HPG Hipages Group Holdings Ltd Long AUD SOFI US Sofi Technologies Inc Long AUD PI US Impinj Inc Long AUD SWP Swoop Holdings Ltd Long AUD IFL IOOF Holdings Ltd Short AUD TIE Tietto Minerals Ltd Long AUD JRV Jervois Mining Ltd Long AUD TUA Tuas Ltd Long AUD JLG Johns Lyng Group Ltd Long AUD TWLO US Twilio Inc Short AUD LRCX US Lam Research Corp Long AUD UWL Uniti Group Ltd Long AUD 360 Life360 Inc Long AUD UNI Universal Store Holdings Ltd Long AUD LOV Lovisa Holdings Ltd Long AUD WHC Whitehaven Coal Ltd Long AUD N e w s Cadence Opportunities Fund held its AG M an d I nvestor Bri efing i n December 202 1 . At the Investor Bri efing, Chairman Karl Sieglin g start ed by giving an update on the Company’s recent IPO, perform ance, dividends, prof its reserves and franking balances and its current portfolio structur e. Portfolio man agers Jac kson Aldridge and Charlie Gray then discuss ed C DO’s trading statistics and a n umber of the company’s current positions. Karl Siegling close d off with the outlook for 2022 . Click her e to view th is I nvestor Briefing. We en cour ag e yo u t o v i si t o u r 5 2 b oo k s yo u shou l d r e a d be f or e bu y i ng y o u r n e xt s t o ck pag e on o ur w e bs i t e . W e h av e c o m pi le d a l ist o f b oo k s / d o c u me n t a ri es th a t h a v e i nf l uenc ed ou r i nvest m e nt s ty l e o r h el ped prov id e in si g h t i nt o t h e i nvest m ent pr ocess. To v ie w a l l p rev i o u s C a den c e w e b c a s ts an d pre ss art i c le s , p le a se vis i t the M e d i a S e c t i o n o f t h e w e bs i te. Di s c laim e r T h e info rm a tio n co nt ain e d in th i s repo rt h as b ee n pre p are d w ith a l l reason a bl e c ar e by Ca d en ce A s s e t Ma na ge me nt Pt y Lt d a n d i s o f a g e ne ra l n at ure o n l y. I t i s pr ov id e d f or i nf or m at i o n p u rp oses o nly a n d s h o ul d n o t b e c on s t ru ed a s an of f er or s ol i c itat i o n. No t hing c on t ain ed i n thi s docu me n t cons tit u te s in v estm e nt, l e gal , f i n ancial , b u s i ne s s , tax, or o t he r a dv ic e. I t s hou ld no t b e r el i e d up o n a s t he so l e b a s is f o r mak in g an inve stm en t d e c i s i o n, nor s hou l d a d e cis i on b e m a d e u nti l th e ri s k s o f t he i n ve stme n t a re fully und e rs tood . C ad e nce As s e t Manag eme n t P ty Ltd a ssum e s no r e s p onsibi l it i e s fo r e rr or s , in a ccu ra ci es , or o m i ssi on s i n t hi s s u m mary . T he in for m a ti o n is p r ovide d w i th o ut warr an t y o f an y k ind . P ast pe r f o r man c e i s n ot i n dica tiv e of f u t u re pe r f o rma nce . Inv e s tors m ay n o t get bac k the ful l amount or i g i n a ll y in v ested .

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