Justin Hardwick was just 25 when the Sydney hedge fund where he was an analyst, VGI Partners, began digging into SlaterIt was 2015, and the then ASX-listed law firm was a market darling. Working with VGI’s Doug Tynan, Hardwick couldn’t help but second guess what he had found. If only just for a moment.Gordon’s income statement, balance sheet and cash flow statement simply did not reconcile and profits were overstated,” he says.
This month, GCQ sent its first annual investor letter, revealing a market-beating return of 13.1 per cent net of fees since inception in July. This is against 7.3 per cent for the MSCI World Index and 5.6 per cent for the SHowever, GCQ cautions that this isn’t a long time to measure performance, with a target of net compound returns between 8 per cent and 12 per cent through investment cycles.
“We apply the same level of forensic research to high-quality companies that we own. We want to be sure they truly meet our quality requirements.”A recent investment for the fund is a July spin-off from £60 billion consumer goods and pharmaceuticals giant GlaxoSmithKline, which is a London Stock Exchange stalwart heavily favoured by European fund managers managing the largest mandates.
“Often, a spun-off business can end up in the hands of the wrong shareholder base, which can create short-term selling pressure. This creates an opportunity for long-term shareholders.” “Sensodyne is arguably the best toothpaste franchise on Earth as it dominates the premium, high-margin and high-growth sensitive toothpaste category,” he says. “We expect significant growth ahead, given nearly one in three adults experience sensitive teeth, while only one in three of those use sensitive toothpaste.”Hardwick says every potential investment GCQ considers must pass a rigorous checklist, among other risk-management tools. Haleon, he says, ticked all the boxes.
The fund manager said it would prefer lower debt, but has confidence management will pay it down quickly, with the portfolio allocation limited to 2 to 3 per cent.