PetersMacGregorCapitalManagementLimited(ABN77087181600AFSL225984)P+6129332213Wpetersmacgregor.comEservice@petersmacgregor.comSuite1801A,WestfieldTower2,101GraftonStreet,SydneyNSW2022,Australia
GLOBALFUNDPDSUPDATE
DearInvestor,
WearewritingtonotifyyouofanimportantchangetoourProductDisclosureStatement(PDS)with
regardstoourabilitytoutilisecashwithintheportfolio.OurcurrentPDSrestrictscashto0-20%of
theportfolio,withtheabilityforthemanagertomovebeyondthatrangeforriskmanagement
purposesortotofundintendeddistributionsorpotentialredemptions.Inshort,wearerelaxingthis
range,bringingbackgreaterflexibilitythroughrevertingto0-100%equitiesand0-100%
cash.Basically,beingabletoholdanylevelofcashwhenwebelieveitprudentfromarisk
managementperspectiveorwhereweareunabletoidentifyandholdappropriatecompaniesat
pricesthatmeetourtime-tested,strictvaluecriteria.TheamendedPDSisavailableatourwebsite
atwww.petersmacgregor.comorbyclickinghere.
Long-terminvestorswillrecallwehistoricallyoperatedwiththisverybroadmandatebutinrecent
yearstightenedthecashbandto0-20%tobetterreflectourrecentexperienceinmarketsofhaving
ampleopportunitiesinwhichtoinvest.
Thepastyearhasbeenexceedinglychallenginginmarkets,asyou’llappreciate,withuncertaintyand
volatilityrising.Inadditiontoanincreasinglyprecariousbroadmacroenvironment,investorsmust
contendwithadisruptivelandscapeformanybusinesses,andcorporatebalancesheetsthathave
balloonedwithdebt.
We’verecentlytakenthedecisiontomateriallyincreasecashintheportfolioforriskmanagement
purposes.Overtime,weexpecttobemostlyinvested,mostofthetime.Butaswehavelearnedin
ourdecadesofexperienceinmanagingthroughmultiplemarketcycles,thekeytoearning
respectablereturnsthroughthefullcycleisprotectingandpreservingcapitalduringthemajor
downdrafts.
Inordertomanageriskwithinthispresentmarketenvironment,wehavemovedoutsideofour0%–
20%targetcashrange.Thiswillprovideuswiththeopportunitytoredeployintogreatcompanies
withgreatmanagementatattractivepricesbeforetoolong.Atthistimewefeelitprudentand
appropriatetoamendourPDStoprovideultimateflexibility.
Whilethischangegivesusgreaterflexibilityintermsofcash,wenotethattherearenochangesto
thecoreinvestmentphilosophy,strategyorprocessofseekingtoidentifyandownadiverse
portfolioofhigh-qualitybusinesseswithgreatmanagementteamsatattractiveprices.Thenatureof
PetersMacGregorCapitalManagementLimited(ABN77087181600AFSL225984)P+6129332213Wpetersmacgregor.comEservice@petersmacgregor.comSuite1801A,WestfieldTower2,101GraftonStreet,SydneyNSW2022,Australia
themarketenvironmentintermsofthecombinationoftheeconomicrisks,agreaterrateofchange
inthefortunesforindividualcompanies,corporatebalancesheetsthatarestretched,andthe
‘starting’valuationsoftoday–inourview–willreallyplaytoastrictvalue-orientedinvestment
philosophyintheyearsahead.Beingabletorotateinandoutofappropriately/inappropriately
pricedcompanies–withoutbeingundulyconcernedaboutholdingexcesscashforperiodsoftimein
between–willlikelybeakeydifferentiatorthathelpsgeneratestrongoutperformanceoverthelong
term.
Pleasecontactuson(02)[email protected]
questionsorconcernsyoumayhave.
Thankyouforyourcontinuedtrustandwewishyouasafeandhappyfestiveseason.
Yourssincerely,
LWaynePetersMichaelHaddad
ChiefInvestmentOfficerPortfolioManager
