AMCIL’s AGM generates robust discussions on a range of issues. We recap on two of the matters that our shareholders raised: AMCIL’s longer-term performance and how AMCIL makes its investments.
AMCIL long-term performance?
AMCIL’s portfolio performance has been sound in the calendar year ending 30 September 2023. The net asset per share growth plus dividends, including franking, was 9.0% compared to return of 5.0% from the S&P/ASX 200 Accumulation Index, including franking. AMCIL’s Per Annum Return to 30 September 2023 over one year is slightly above the benchmark index.
Part of our performance has included the payment of an attractive total dividend to our shareholders of five cents per share, fully franked.
Over the long-term periods of five and 10 years, we are aware that Per Annum Returns are slightly trailing the benchmark index’s performance. It should be noted that there are outstanding franking credits awaiting to be disbursed, and these have not yet been factored into our performance metrics.
As part of the adjustments to our portfolio, we have exited stocks such as Medibank, Pexa, Nanosonics, and IRESS, which we believe no longer fit our investment framework. We have trimmed our positions in Woolworths and Transurban due to their elevated valuations. We have reduced our holding in James Hardie after a strong run, and also in Fineos, Mainfreight, and Westpac. We have increased our holding in Macquarie Technology Group and taken new positions in NAB, idp, Computershare, Altium, Mineral Resources, and Wisetech Global.
These new positions reflect our investment philosophy: to invest in quality companies that have an industry leadership position or a developing one, a unique set of assets that are hard to replicate and conservative balance sheets. We are wary of companies that have external influences on their business and prefer companies with more consistent earnings.
We also seek effective and reliable leadership teams with a strong sense of passion and ownership alignment. Our experience shows us that these factors drive sustainable competitive advantage over the long term.
The AMCIL Board monitors performance very closely and poses thorough inquiries at each of AMCIL’s Board and Investment Committee meetings. The Board has expressed a strong interest in the portfolio’s repositioning and has collaborated with the executive and investment teams to determine the approach. The results of these actions are evident in recent performance, and we anticipate observing improvement in the longer-term comparisons in due course.
We aim to ensure that stocks that we buy and sell align with our investment framework. Our continued focus remains on adhering to AMCIL’s fundamental investment philosophy which involves investing in high-quality stocks over the long term and acquiring them when we see value.
How does the AMCIL investment team inform themselves and make good decisions?
There are numerous facets involved in the process of monitoring a company, and goes beyond perusal of documents.
Our objective is to delve deeper into the company’s operations. Our investment team interacts with most of the major brokers, each of which maintains dedicated teams of analysts. The team places particular emphasis on collaborating with analysts who possess the most effective understanding of the companies under consideration.
We maintain significant direct interaction with the companies, typically engaging in biannual meetings coinciding with the release of their half-year and full-year financial results. The visits we receive from CEOs, CFOs, and others during the reporting season present a valuable opportunity to ask questions on the business strategies and industry trends.
Interactions with CEOs and directors extend beyond reporting periods, with additional opportunities arising at various business events, including broker sponsored conferences, and corporate strategy days. The investment team also attends a range of gatherings where they can engage with companies, either in a large meeting setting or through one-on-one presentations.
Furthermore, we maintain subscriptions to independent research houses that assess the financial metrics of companies. We also utilise the services of a company that facilitates meetings with industry experts, enabling us to gain insights into corporate and industry developments.
We benefit from valuable input provided by the directors of all four of the LICs in the group. This access to their extensive knowledge base is one of the advantages of being a listed company, and our investment team actively seeks to tap into their expertise as much as possible.
We maintain connections with individuals who have transitioned from the business and industry sectors, providing us with alternative perspectives. Given the increasing global footprint of the companies in which we invest, we occasionally travel overseas to gain firsthand insights into their international operations, thus actively exploring a wide range of information sources.