Firetrail S3 Global Opportunities Fund (Managed Fund) (ASXS3GO)

The Fund’s philosophy is built on three key investment principles.

1. Sustainable companies deserve premium valuations – Companies that the market perceives to have sustainable characteristics, such as good environmental practices, a social license to continue operations over the long-term, or strong corporate governance, deserve premium valuations relative to companies that do not.

2. Share prices follow earnings – No matter how undervalued a company may seem, if earnings expectations are downgraded, the share price will generally fall. Companies generally reach fair value when they meet or beat market earning expectations.

3. The market is slow to recognise positive change – Companies can change for the better or worse. Fundamental analysis is the best way to uncover companies that can benefit from positive change in their business, industry, or markets. In this case, positive change refers to changes made by companies to implement one or more of sustainable
investment themes described below.

Firetrail aims to buy companies that it believes:

• are misunderstood and undervalued by the market;
• will meet or beat earnings expectations over the medium-term (5-year horizon); and
• may benefit from positive change or meet one or more of Firetrail’s sustainable investment themes (see below under the heading ‘Labour Standards or Environmental, Social or Ethical Considerations’).

1. Idea generation

There are three key areas that generate ideas in the Investment Manager’s research process:

1. investment team ideas – Firetrail analysts will use their industry expertise and fundamental judgement to identify potential opportunities for further research.
2. proprietary screens – Firetrail utilises quantitative and proprietary qualitative screening tools to identify potential opportunities for further research. Some examples of screens used to identify companies for further research include but are not limited to:
   
   • Consistency of cashflow growth;
   • Operational earnings momentum;
   • Valuation premium / discount relative to characteristics, for example, growth, volatility, quality, and sustainability characteristics;
   • Fundamental classifications of stocks into Firetrail positive change themes (described in further detail below); 
   • Sustainability trends (as set out in further detail under the section titled 'Labour Standards or Environmental, Social or Ethical Considerations), for example, reduction in greenhouse gas emissions, improvements in diversity metrics, strengthened governance processes, recent controversies.
3. market events and corporate activity – Firetrail will use market events or corporate activity (such as capital raisings and initial public offers) as a catalyst to undertake further research on potential investment opportunities.

2. Fundamental Research

The Investment Manager conducts deep-dive fundamental research focused on what it believes to be the key driver(s) of a company’s earnings and the share price.

The research process often includes, but is not limited to:

• detailed financial modelling;
• engagement with management, competitors, customers, suppliers,  employees, and industry experts;
• ESG research (see below for further detail); and
• peer review and rigorous team debate.

3. Team decision making

Investment decisions are made as a team. For a potential company to enter the portfolio, each individual member of the investment team must have high  conviction in the investment idea.

Only companies that Firetrail judge as meeting the ‘S3” investment criteria above will be included in the portfolio. In addition, companies that do not meet at least one of Firetrail’s sustainable investment themes outlined in the ‘Labour Standards or Environmental, Social or Ethical Considerations’ section below, will be excluded from the portfolio.

Firetrail will divest company’s that do not meet the S3 investment criteria or one or more of its sustainable investment themes based on the Investment Managers fundamental research and judgement.

4. Portfolio construction and risk

The Investment Manager aims to construct a concentrated portfolio of companies which the investment team believes to be undervalued over a 5-year investment horizon.

The portfolio construction methodology accounts for the Investment Manager’s conviction in a company, stock specific factors such as a company’s volatility and liquidity, and the portfolio’s overall exposure to macroeconomic, thematic, currency, or country risk. Each of these factors will determine a potential investment’s suitability and position size in the portfolio.

While the portfolio may hold cash for liquidity purposes, it is typically expected to be close to fully invested. The portfolio may use derivatives for currency hedging purposes.

Click here to view the latest Performance Details.

Click here to view our five key holdings.

Firetrail is an investment management boutique that specialises in high conviction investing. We build concentrated portfolios of our best ideas, to generate outstanding long-term performance for our clients.

The Firetrail story

The Firetrail history

Patrick is the Managing Director at Firetrail Investments as well as Portfolio Manager for the Firetrail Australian High Conviction Fund, Firetrail Absolute Return Fund, Firetrail Australian Small Companies Fund, and Firetrail S3 Global Opportunities Fund. 

Patrick has over 36 years experience investing in equity markets.

James is a Portfolio Manager at Firetrail Investments for the Firetrail High Conviction Fund and the Firetrail Absolute Return Fund.

James’ primary sector responsibilities is Industrials stocks. James has over 14 years’ experience investing in equity markets.

Justin is Portfolio Manager of the Firetrail S3 Global Opportunities Fund and Head of Risk at Firetrail.

Justin’s primary responsibilities include daily portfolio management, oversight of investment risk management and fundamental analysis. Justin is a qualified actuary and has over 20 years relevant industry experience.

Anthony is the Head of Investment Strategy for the Firetrail S3 Global Opportunities Fund (Managed Fund).

His primary responsibilities include fundamental idea generation, portfolio analysis, and economic insights including currency and macroeconomic risk management. Anthony has two decades of experience including 10 years working as an investment manager in the UK.

You are investing in the same fund but you have a choice whether you hold off-market units via the responsible entity (RE) or buy the on-market units on the ASX in the same way you buy other publicly listed ETFs and shares.

Investors who apply for units directly with the Responsible Entity may pay a different price per unit to an investor who purchases those units on the ASX at the same time, and such differences may have a material impact on the performance of that investment. The above performance reflects the performance of the Fund where units are purchased and redeemed directly with the Responsible Entity only.