Sandon Capital Investments

About this Fund

Fund Detail

FUND MANAGER Sandon Capital
INVESTMENT STYLE SNC will invest in listed securities that exhibit value characteristics and whose prices may benefit from 'activist' engagement.
INVESTMENT PROFILE SNC seeks to generate positive returns over the medium to long term.
BENCHMARK 1 month Bank Bill Swap Reference Rate
FUND SIZE 1 month Bank Bill Swap Reference Rate
FEES 1.25% p.a.



Benefits of investing in SNC

SNC aims to deliver the following benefits:

  • access to an activist investment strategy that few investors have the capacity to implement themselves;
  • access to an absolute return fund, that seeks to generate positive returns over the medium to long term; and
  • a growing income stream in the form of regular dividend payments, franked to the fullest extent possible. The Company aims to pay dividends of at least 6.0 cents per annum (assuming a full financial year of operation). This is not intended to be a forecast. It is merely an indication of what the Company aims to achieve over the medium to long term. The Company may not be successful in meeting its objective. Any financial market turmoil or an inability by the Manager to find and make profitable investments will likely have an adverse impact on achieving this objective. Returns are not guaranteed.




Key Features

About the Fund

Sandon Capital Investments Limited (SNC) will seek to invest in Securities the Sandon Capital Pty Ltd (the Manager) considers to be under-valued and where the Manager considers there to be opportunity to encourage changes to unlock what the Manager has identified as intrinsic value. 

SNC and the Manager view activism as a critical, and an often missing, tool of value investing.

Activism, as conceived by the Manager, is the process of investing in entities whose Securities the Manager considers to be under-valued and where the Manager considers there to be opportunity to encourage changes to unlock what the Manager has identified as intrinsic value.

The Company may take advantage of "activist opportunities that arise from the actions of others (if the Manager considers these actions may lead to beneficial outcomes). The Manager may also invest, from time to time, in market-based investment opportunities, such as placements, merger arbitrage and other investments it considers appropriate.

Strategies the Manager may advocate include changes to capital structures or dividends policies, changes in corporate strategy, changes to board and management personnel and changes through corporate activities, such as takeovers or divestitures. The Manager will also consider investing in entities that are already the subject of activist strategies initiated by other parties.

Activism does not involve exercising day to day control over the entities that form part of the Portfolio. Activism describes the exercise of the rights afforded to investors, including, where applicable, convening meetings of members, voting at meetings and otherwise seeking to influence change. See Section 2.3 of the Prospectus for a detailed discussion of "activism and Sections 2.4 to 2.6 of the Prospectus for how the Company may take advantage of these opportunities.


How we invest your money

The Company, through the Manager, aims to build a concentrated portfolio of investments that can be acquired below the Manager's assessment of intrinsic value. The Manager and the Company believe the key to successful activist investing is to exert influence over an entity which is proportionately greater than the Company's economic investment but without seeking to exercise day to day control. This may be done through the solicitation of support from management or other investors.

The Company will invest in opportunities that are identified by the Manager:

(a)  as trading below what the Manager considers to be their intrinsic values; and

(b)  that offer the potential of being positively influenced by the Manager taking an active role in proposing changes in the areas of corporate governance, capital management, strategic and operational issues, management arrangements and other related activities.

The Manager is permitted by the Management Agreement with the Company to acquire interests in a broad range of investments including (without limitation) ASX listed Securities, unlisted Securities (including interests in managed investment schemes), bills of exchange and other negotiable investments, interests in cash management trusts and other types of Securities and debt instruments (whether issued in Australia or in a foreign jurisdiction). See Section 8.1 of the Prospectus for a full list of the Permitted Investments.

Investment Strategies and Process

The following investment guidelines apply to the Manager's implementation of the Company's investment strategy:

  • The Company, through its Manager, will seek investments whose intrinsic value largely comprises tangible assets, and preferably with easily valued tangible assets, for example, cash, liquid Securities and other assets for which a value can be obtained or derived. The Manager does not favour investments with high levels of intangible assets (though may invest in such investments if it considers it prudent). A corollary of this approach is that the Manager seeks investments that can be bought at prices that the Manager considers to offer a considerable margin of safety (i.e. prices that are considered by the Manager to be at a significant discount to the intrinsic value). The Company's typical target universe would be viewed as what are traditionally referred to as value' investments.
  • The Manager will consider first all investments from a risk perspective, and only after assessing the risk will the Manager consider the potential return and assess whether the potential reward is sufficient in light of the risks. The Manager believes putting risk assessment first avoids some of the dangers of getting caught up chasing returns without properly assessing all the risks.
  • The Company seeks to provide positive returns over the medium to long term (i.e. 3 to 5 years). The Manager's activist investment strategy requires time and persistence. The Company and the Manager will look to do this by applying its "activist strategy and also, from time to time, by investing in market opportunities created by corporate transactions including takeovers, demergers, management changes or other trading and arbitrage opportunities.
  • The Company may invest in the Permitted Investments listed in Section 8.1. Any investments that are not Permitted Investments under the Management Agreement require prior Board approval. See Section 2.7 for details.
  • The Company investment philosophy also focuses on the potential risks associated with a potential investment; particularly on the nature of the risks (for example asymmetric or binary) and whether potential returns are adequate given potential risks.
  • The Company has flexibility to take significant positions in individual Securities and cash. This may reduce the diversity of the Portfolio and therefore increase the exposure to falls in the market price of any single investment.
  • While the Company believes it may achieve acceptable diversification by owning Securities in approximately 20 - 25 different entities, the Manager will not be required to maintain this level of diversification. Rather the focus will be on delivering an absolute return for the Portfolio. This may be achieved by investing in a significantly lower number of Securities.
  • The Portfolio is expected to include a significant cash component at all times. In addition, capital preservation is a key investment objective for the Company. Accordingly, the Manager will generally only make investments if it considers the price at which these can be bought is appropriate, having regard to the potential risks and return. This could lead to the Company holding up to 100% of the Portfolio in cash. The Manager expects the Company is likely hold more cash, from time to time, than more traditional managed funds.
  • The Company may seek to manage investment risk, in certain circumstances, by selling short (that is, borrowing Securities it does not own to sell them) against its long positions or holding significant levels of cash. Short selling may be paired against a long position whose risks are unwanted (for example buying shares of an investment company at a discount to net tangible assets and short selling at par another asset whose underlying assets may be considered broadly similar). See Section 2.9 for further details.
  • The Manager may obtain leverage, which involves borrowing against the Company's assets, in order to increase exposure to a stock or financial market which the Manager believes is rising.