8/13/2019 Selector September 2012 Quarterly Newsletter
1/20
In this quarterly edition we review performance and attribution. We discuss our stock selection process. We focus on obstructive sleep apnea specialist ResMed Inc. And finally we revisit government intervention. Photo. Whale migration coincides with reporting season in Sydney.
Selector Funds Management Limited ACN 102756347 AFSL 225316 Level 3, 66 Hunter Street Sydney NSW 2000 Australia Tel 612 8090 3610 www.selectorfund.com.au
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8/13/2019 Selector September 2012 Quarterly Newsletter
2/20
Septemb
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8/13/2019 Selector September 2012 Quarterly Newsletter
3/20
8/13/2019 Selector September 2012 Quarterly Newsletter
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Septemb
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8/13/2019 Selector September 2012 Quarterly Newsletter
6/20
Septemb
Selector ACN 102 Level 3, Telepho
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over the y
sed the diffi
bstructive sl
werful indu
gineering gr
hton has
sh
t embrace
e are those t
ore durable
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and
ned ver
hip
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the
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to will
cial
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ars
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and
8/13/2019 Selector September 2012 Quarterly Newsletter
9/20
Septemb
Selector ACN 102 Level 3, Telepho
There a
this de
SIRTeX
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many
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ResMe
Table 1
Year
1980 1987 1989 1993 1994 1995 J1998 1999 1999 1999 1999
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1999
2000 2001
2001 J2002 2002 2004
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2005 2006 2007 2007 2007 2008 2009 2010 2010 2011 2012
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Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
re countless
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Medical (Sep
logy One (Ju
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ance gets di
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are Corporatio
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ng to New York
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imated at US$2
rldwide volunt
allahue appoin
n for first time.
arket with acq
ep testing mark
search and dev
resigns as CEO,
profits pass $U
erly Newsletter
.au
lector has d
s quarterlie
rch 2010), B
these busin
This is ho
FM
sity of Sydney
ed to as Contin
rom University.
chnology right
estimated that
mura Jafco inv
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illion, currently
ry recall
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ted new CEO, s
uisition of Fren
et, released ne
lopment spend
Peter Farrell re
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#31
iscussed ove
s include W
lackmores (J
sses do not
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provide first su
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s relating to C
approximately
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pany starts pa
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8/13/2019 Selector September 2012 Quarterly Newsletter
10/20
Septemb
Selector ACN 102 Level 3, Telepho
History
In the h
They in
manufa
Cochle
busines
Sullivan
healthc
While
treatm
technol
What i
People
These
muscle
narrow
comple
Diagra
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After a
the lev
subconAlthou
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sleepin
pressur
mornin
er 2012 Selecto
Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
ealthcare ar
clude blood
cturer Ansell
r and ResM
ses had thei
respectivel
are field.
Professor Su
nt for obstr
ogy in 1989 t
OSA?
with OSA e
pisodes are
, which nor
2. If the thro
tely blocked
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rce: ResMed In
period of ti
el of oxygen
sciously
arouh the suffer
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ss due to di
e, serious he
g headaches.
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ent Limited 5316 t Sydney NSW 0 Web www.s
na, Australia
plasma gro
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llivan and c
ctive sleep
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due to a t
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at is particul
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c. annual repor
e, which ma
in the blo
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rupted slee
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000, Australialectorfund.co
has given bi
p CSL, bion
s of this re
travelled si
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e upper airw
arly narrow
d an obstru
s
y be anythin
d is low an
ep,
causing aware of it, t
mptoms of
. Other mor
s, sexual pr
erly Newsletter
.au
rth to a prett
ic hearing i
iew, sleep a
ilar time pa
inventors Pr
have forge
om Sydney
in 1980, it t
ness case.
odes where
llapse of th
ay open duri
r the muscl
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SA are hea
serious con
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#31
y impressive
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d a leading
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respiratory
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ory lapses, i
list of curre
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t ResMed In
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me Clark an
position in
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ay. This ha
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clude depre
tellectual d
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c. In many
t underpin b
Professor C
their respec
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quisition of
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8/13/2019 Selector September 2012 Quarterly Newsletter
11/20
Septemb
Selector ACN 102 Level 3, Telepho
How D Like m
(CPAP)
throug
works,
to kee
cure, t
busines
“Wake
Prior to
proced
point f
Congre
approxi
Birth o
In 1994
busines
the iss
transfe
on the
er 2012 Selecto
Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
es CPAP Wo
ny great tec
treatment i
a small nas
only in rever
the upper
e growing p
s with annuit
up America"
CPAP, patie
re to
cut
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r the OSA i
s in 1993, i
mately 40 mi
ResMed Inc.
, the comme
s in the US.
ing of two
red its prim
ustralian St
Res
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ent Limited 5316 t Sydney NSW 0 Web www.s
rk?
hnologies, t
rather sim
l mask. Som
e. The air pr
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atient and
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report to Co
nts diagnose
ole in
the
pa
ndustry took
which the
llion individu
rcialisation o
name chan
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ry listing to
ck Exchange
ed Inc. lists on
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000, Australialectorfund.co
e actual sci
ple. Patients
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to prevent o
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ues.
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d with OSA
tient’s wind
effect with
National Co
als suffer ch
f sleep apne
ge to ResMe
es, raising U
he New Yor
(ASX).
NYSE 30 Septe
erly Newsletter
.au
nce behind
are connec
e treatment
applied via
bstructive a
tance of thi
3
ere primari
ipe to
creat
the release
mission on
onic disorde
a began in e
d Inc. in 199
S$24 million
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ber 1999
#31
the Continu
ted to a un
method sim
he nasal pas
neas. While
s nightly rou
ly treated w
a channel
f
of the “Wak
Sleep Disord
rs of sleep ap
rnest with F
coincided
in new ca
nge (NYSE),
us Positive
it that deliv
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ith a tracheo
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e up Americ
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arrell registe
ith its listin
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8/13/2019 Selector September 2012 Quarterly Newsletter
12/20
Septemb
Selector ACN 102 Level 3, Telepho
Table progres
group’s
starting
tenfold
from a
investe
and hig
Table 2 US$’M
Revenue
Operati
Researc
EBIT NPAT EBIT Ma Shareho
Net DebMarket Enterpri
Buyout (ROCE (%GOCF /
Underlyi
PER Dividen
Dividen
Share PrIssued s
* Adjuste
** Buyou
*** ROCE
er 2012 Selecto
Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
provides a
s. What is m
products a
point, the y
from US$11
starting poi
d heavily in
hlighted furt
: ResMed Inc
g Expenses & Development
rgins (%)
lders’ Equity / (net cash) apitalisation e Value
%) ** ) *** BITDA (%)
ng EPS (¢)
per share (¢) Yield %
ice 30 June ($US) ares (m)*
d for stock splits
represents EBIT
= EBIT / (Shareho
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timeline of
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highlights c
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ort.
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n/a n
16.50 23
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ge
t – cash. Share pr
erly Newsletter
.au
overing the
through the ines the fin
eriod. Denot
S$1.3 billion
S$303 millio
rship via its c
06 2007
7.0 716.3
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nteen years
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o research a
2010
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8/13/2019 Selector September 2012 Quarterly Newsletter
13/20
Septemb
Selector ACN 102 Level 3, Telepho
Growin
While
decade
“unhea
obesity
hypert
form of
among
group b
Sleep C
Historic
sleep s
patient
and wh
patient
inconv
remaini
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uptake
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sleep t
ResMe ResMe
equipm
awaren
innovat
generat
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ResMe
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mask c
conseq
latest
require
annuity
er 2012 Selecto
Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
g market op
any patient
a growing
lthy sleep” h
both as a
nsion. Such i
OSA. In the
both the m
eing treated
inics
ally, patients
ecialist for f
would be ob
at it will me
s suspected
nience of at
ng undiagno
ng cost of U
in home sle
tion, the ge
he use of sl
sting sugges
’s Inc. role
’s Inc. pri
ent for diag
ess of the il
ion and mar
ors that are
up does not
’s Inc. prod
s diagnosed
onnected to
ences of do
irflow gene
ment for us
type revenu
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ent Limited 5316 t Sydney NSW 0 Web www.s
ortunity
s who suffe
ool of evide
as on peopl
cause and
s the extent
US, this give
dical comm
or diagnose
diagnosed
rther evalua
served overn
an for the in
of having a
ending resul
ed.
healthcare
p testing. U
neral practit
eep clinics w
s a growing
ary role is
nosing, trea
lness that is
ket share. I
smaller, qui
ell to the en
ct suite
ith OSA re
an airflow
ing otherwis
ator the S9
rs to replac
e model in m
ities Fund Quar
000, Australialectorfund.co
r with OSA
nce is givin
e’s daily live
a sympto
of the diseas
rise to appr
nity and th
thus far.
s suffering
f
tion. Invaria
ight. It is im
dustry playe
sleep disord
ted in a larg
and technol
nder this sce
ioner sends
ill continue,
umber of
O
that of a
ing and ma
OSA has s
portantly t
ter and ma
d user but to
ain on ther
enerator ha
e are now
AutoSet a
e masks reg
uch the sam
erly Newsletter
.au
are unaware
rise to the
s. The long
of OSA,
e that it is es
oximately 40
general pu
rom OSA
we
ly this woul
ortant to ap
rs. Until very
er was the
e number av
gy advance
nario, rather
the patient
the cost an
A diagnosed
eveloper, m
naging sleep
en ResMed
e company
ks that are
home health
py for life.
s obvious dr
ell docume
d some of
larly, provi
way as the
#31
they have t
significant l
list of seriou
oronary dis
timated that
million adul
lic has resu
re referred
b
involve a vi
reciate how
recently, th
overnight st
oiding the p
ents in ne
than being
home with
convenienc
patients.
anufacturer
‐disordered
Inc. lead th
has re‐invest
ore comfor
care dealers
hile the nig
awbacks for
ted. Diagra
the group’s
es ResMed
lassic razor
he conditio
ng term co
s health co
ease, strok
one in five a
s, yet the la
lted in less t
y a general
sit to a sleep
this process
e only viable
y, however
ocedure alt
CPAP devic
sent to a cli
a self titrati
e factors tha
and distrib
breathing. A
e industry b
ed heavily i
table for the
and sleep cli
htly regime
users, the l 2 illustratextensive
Inc. with a
nd blades b
, over the
sequences t
ditions inclu
, diabetes
dults have s
k of aware
han 20% of
practitioner
clinic where
is now chan
option ope
the stigma
gether, ther
es has led t
ic for overn
g CPAP de
t support h
tor of med
growing pu
oth in term
designing f
nightly wea
nics.
f fitting a fa
ng term he
s ResMed’s
ask range.
ighly attract
siness mode
12
ast
hat
des
and
me
ess
this
o a
the
ing
to
and
eby
an
ight
ice.
me
ical
blic
of
low
rer.
cial
alth
Inc.
The
ive,
l.
8/13/2019 Selector September 2012 Quarterly Newsletter
14/20
Septemb
Selector ACN 102 Level 3, Telepho
Operat From it
growth
countri
totaled
manufa
in Tabl
Diagra
Mask r
Swift FX
Airflow
The S9 A
While
of 40%
pronou
margin
Manufa
operati
manufa
manag
er 2012 Selecto
Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
ons / Geogr
s startup po
both financ
es through a
3,700, with
cturing. The
3.
2
nge
asal Pillow Ma
Generator ra
toSet
anagement
in both th
nced in mask
sit above 80
cturing is un
ons in Singa
cturers. The
ment has be
Australian Equ
ent Limited 5316 t Sydney NSW 0 Web www.s
phical cove
sition in 19
ially and ge
network of
500 emplo
biggest mark
k
nge
is reluctant
domestic a
s. This segm
% and wher
dertaken in
pore is in
group’s abili
en in growin
ities Fund Quar
000, Australialectorfund.co
age
4, the Res
ographically.
istributors a
ed in rese
et contribut
Quattro F
o discuss m
nd offshore
nt of the bu
the replace
oth Sydney
any ways a
y to maintai
the top line
erly Newsletter
.au
ed Inc. busi
Today, Res
nd a direct s
rch and de
r to group r
Nasal Mask
Apnea Link
rket share, i
regions. Im
iness is the
ent cycle c
and Singapor
reflection o
n gross marg
without co
#31
ness has ex
Med Inc. pr
les force. A
elopment,
venue remai
lus home sleep
ndustry anal
portantly, th
ighest contr
ntributes an
e. Managem
f the limite
ins at circa 6
prising its co
erienced en
oducts are
at June, em
,700 in sal
ns the US m
Quattro Full
test device
sts estimate
e company’
ibutor to pro
nuity type re
ent’s prepar
benefits p
0% illustrate
ntribution to
ormous org
old in over
ployee num
s and 1,50
rket as outli
l Face Mask
levels in ex
share is m
fits, where g
enue.
dness to se
rovided to l
how succes
profits.
13
nic
70
ers
in
ned
ess
ore
oss
up
cal
sful
8/13/2019 Selector September 2012 Quarterly Newsletter
15/20
Septemb
Selector ACN 102 Level 3, Telepho
Table 3 Year Group rUS
Germa
France
Australi
Rest of
Total re
Produc
Airflow
Masks
Total p
Group Cost of
Gross p
Gross p
Expens
Selling,
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other
Total e
Net inc
R&D /
Resear
Critical
highlig
this am
million.
acknow
experie
line an
year.
Compe
While t
decline
full of
er 2012 Selecto
Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
: ResMed Inc
evenue (US$m)y
a
world
venue sales split
generators
oduct sales et Revenue
sales
rofit
ofit margin %
s general, admin
h & developme
penses
me evenue %
h & develop
to that suc
ts, the comp
ounted to $
However, t
ledge that t
ncing contin
appropriat
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8/13/2019 Selector September 2012 Quarterly Newsletter
16/20
Septemb
Selector ACN 102 Level 3, Telepho
betwee
with a
Amster
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Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
n the two le
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of greater e scene in l
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8/13/2019 Selector September 2012 Quarterly Newsletter
17/20
Septemb
Selector ACN 102 Level 3, Telepho
Howev
most r
the bus
To be f
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er 2012 Selecto
Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
r as we hav
cent price ac
iness than th
air it hasn’t
with difficul
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ward to 201
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ached a crit
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sMed Inc. a
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.au
ing could be
lofty investo
period asso
many to que
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rit of investo
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and reapin
nagement sh
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8/13/2019 Selector September 2012 Quarterly Newsletter
18/20
Septemb
Selector ACN 102 Level 3, Telepho
Tabcor The old
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Holdings (T
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8/13/2019 Selector September 2012 Quarterly Newsletter
19/20
Septemb
Selector ACN 102 Level 3, Telepho
Compa
July
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Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
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8/13/2019 Selector September 2012 Quarterly Newsletter
20/20
Septemb
Selector ACN 102 Level 3, Telepho
Septem
Selecto
The inf
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Funds Manage756347 AFSL 266 Hunter Streene 612 8090 36
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