DS Capital Growth Fund

The DS Capital Growth Fund was formed as an investment vehicle for the founders and like minded investors to build wealth over the long term. The Fund aims to deliver absolute returns balanced with preserving capital. It does this by investing in the stock market in a disciplined way by constructing and actively managing a concentrated portfolio of investments.  We seek to compile a portfolio of businesses with outstanding long term economics that are being mispriced by the stock market. We aim to invest with a 3 to 5 year time horizon. Investors will gain exposure to a portfolio of well researched companies that represent well managed growth businesses. 

The Fund is not constrained by the size of a business, yet it will predominantly invest in small to medium sized industrial businesses. We place a high priority on quality management that we can engage with and gravitate towards businesses with attractive returns on capital.

We focus on sectors and businesses where we believe we have a competitive advantage based on our experience. This advantage is derived from a detailed knowledge of the sector, the business and its drivers. We will generally avoid sectors highly exposed to volatility in commodity prices and businesses with start-up or execution risk.

Our focus is on businesses that have a history of stable and predictable cash flows that we can value. We favour profitable businesses and look closely at margins, organic growth, market position and dividend track record. We also concentrate on sectors with structural advantages, pricing power and barriers to entry.

The Fund is not focused on short term trading opportunities and seeks longer term investments in growth businesses. We focus on situations where we believe the risk of permanent loss of capital is low, whilst still expecting to generate optimal pre-tax returns through a combination of capital growth and dividends.

The Fund is an absolute return fund focused on not losing capital and making a good return so that wealth can be grown and preserved for subsequent generations.

The Fund reflects the Principals and Founder's investment strategy. Together with their families, they have a considerable investment in the Fund meaning that the Founders and unit holders are aligned.

The Principals will focus on businesses and sectors that they know well.

While the Fund's main focus is investing in Australian equities, the Fund's mandate is not limited to Australia so the Fund has international investments where those holdings satisfy our investment process. 

The Principals have considerable industry and investment experience and have developed a detailed knowledge and understanding of a number of sectors that are focused on.

The Principals have an excellent network of contacts in industry, business and investment markets that provide access to a wealth of real life and business experience that is an important aspect of our detailed due diligence research process.

The Principals use a dynamic investment process, detailed below, and will constantly test the investments to be sure that the Fund is invested in the best businesses available to achieve the goal of each investment and protecting unit holders capital.

The key benefits and features of investing in the Fund are as follows:

• exposure to high quality Australian and internationally listed businesses;
• exposure to investments that will potentially generate above average longer term returns;
• exposure to investments that have a track record of paying dividends that form part of annual distributions;
• strong alignment with the investment managers who are Founders and Principals;
• exposure to businesses that have been highly researched and are constantly and closely reviewed by DS Capital;
• exposure to a portfolio managed in a highly disciplined way with a high priority on not losing capital;
• diversification away from traditional equity investments offering market linked returns and which do not track to any particular index; and
• Managers with a genuine medium to longer term investment time horizon and a track record of good investment returns.

The Fund’s investments typically focus on two categories:

• Listed equities which are the core strategic focus and the major part of the Portfolio (Core Strategic Equities Investments); and
• Listed equities that are event driven opportunities, which is a smaller part of the Portfolio (Event Driven Investments).

Each of these investment categories are explained below.

Core Strategic Equities Investments

The investment process draws from the listed universe and generally aims to have a concentrated portfolio of between 25 and 30 investments that we consider have a high prospect of doubling in value. The Fund aims not to have more than 10% of the Portfolio in any one investment. Typically we aim to hold investments for the medium to longer term.

We look for the following characteristics in a business:

• Businesses that we understand;
• High quality management team who act and think like owners;
• Strong history of predictable cash flows that we can understand and value;
• Profitable businesses with good margins, organic growth prospects and a strong sustainable market position;
• A track record of strong returns on capital;
• A strong balance sheet with minimal reliance on financial engineering; and
• Economically resilient industries with structural advantages.

Typically these investments are listed on the Australian Stock Exchange or another major stock exchange and DS Capital generally has no direct active involvement in the management of the business e.g. board representation.

The Fund will generally not, as a part of its Core Strategic Equity Investments, invest in businesses in the resources or biotech sectors, or in businesses with significant execution risk. We aim to avoid investments where success is largely reliant on speculating commodity prices correctly or successfully forecasting binary outcomes. However, the Fund may invest in these areas where Event Driven Investment opportunities are present (see below).

Event Driven Investments

From time to time investment opportunities arise that are outside our Core Strategic Equities Investments focus. While not a core strategic investment, a special event may give rise to a compelling investment opportunity. The opportunity will be assessed with a view to liquidating the investment after the anticipated event has occurred.

Event driven investments may from time to time include listed and unlisted investments and investments in resources, biotech and startup businesses.

These investments will be a smaller part of the portfolio (generally totaling less than 15%) and are likely to fall into one of the following categories:

• Mergers or takeovers where our entry price is underpinned by an announced takeover bid or scheme of arrangement that is, in our view, highly likely to succeed;
• Capital raisings including placements and Initial Public Offers where we can invest at a discount to market prices and valuations;
• Other corporate actions where investments can be made at discounts to market prices and valuations;
• Corporate bonds; and
• Unlisted investments where DS Capital considers that the investment may become listed within a reasonable period of time.

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This website provides information to assist investors and their advisors in deciding on the merits of investing in financial products. DS Capital Pty Ltd (DS) advise all investors and their advisors to read the entire Information Memorandum and any associated material carefully and seek independent advice. 

The information on this website is general information only. It does not consider your investment objectives, financial position or needs. Accordingly you must consider if the investment decisions are appropriate to your needs. You should also seek independent advice on taxation, retirement planning and risk tolerances. DS nor its staff, owners or associates do not guarantee or underwrite the returns, repayment of capital, distributions, rates of returns or success of any investment or the meeting of any investors expectations or objectives. 

DS publish information on its website that it believes to the best of its knowledge is correct at the time of publishing and is not liable for any direct or indirect losses attributable to errors or omissions from the website for whatever reason. 

Investors should make their own inquiries before making any investment with DS.