Regular Updates

EGP Fund No. 1 Pty Ltd Launches!

Posted on by tony
Finally, after so many years of planning, we have launched.  Our seed capital has been deposited and we commence from tomorrow in allocating the capital as per our investment principles.  Our Application form and Redemption form are available on request to those who have secured a spot in the initial operating format.
 
As promised, we launch alongside EGP Fund No. 1 Pty Ltd, the sample index the EGP20.  As mentioned previously, this is a composite of those ASX200 companies we think represent the best of the index we do not own (in EGP).  The constituents (representing 5% each) are:
 
Disclosure/Caveat – The selections below do not constitute investment advice.  They are simply a view we have taken as to a group of stocks which, based on our quantitative analysis we view as likely being better value than the broader ASX200 over a reasonable term.  Based upon a full and thorough qualitative analysis, there is a high likelihood some of these stocks would be excluded from such a list.  I cannot speak for Dave, but my wife and I own 3 of the stocks listed.
 



  1. RSG
  2. OST
  3. PBG
  4. HIL
  5. PPX
  6. OMH
  7. SIP
  8. RIO
  9. DOW
  10. KCN
  11. MCR
  12. ALS
  13. MCC
  14. CAB
  15. SHL
  16. JBH
  17. HVN
  18. PRY
  19. TEL
  20. ERA

The selections above are not advice, if you are at all interested in any of the stocks mentioned above; speak to your financial advisor or accountant.  We will not be held liable for anyone who acts on a list provided chiefly as an entertainment item.
 
I won’t comment too much on the reasoning behind the make-up of the 20 stocks above, you can see it is fairly heavy with miners, and has a couple of ‘turnaround’ businesses.  There were 7 stocks that also made the above list on a quantitative basis, but were excluded due to certain rules I cannot break (though I have bent them a little with some of the above).  Some of those excluded were for such reasons as insufficient profitable history in the case of some, too much debt or an overly complicated capital structure, the need to see a turnaround gain traction, or just for being an airline in the case of one.
 
The performance of EGP Fund No. 1 Pty Ltd and the EGP20 will be mentioned each week at the start of any web update we make.
 
The fund initially houses the seed capital from Eternal Growth Partners Ltd, the asset manager for EGP Fund No. 1, along with investments from our lovely wives and our children.  Our reasoning for starting with our own funds before taking on our other investors is the potentiality for underperformance in the first quarter due to the likelihood of taking some time to allocate all the cash into investments. By this I mean that in the event that the broader market runs upwards strongly whilst we cautiously (it is our default state) deploy our funds, underperformance is more likely. By the time we get to the end of June, it is likely that we will have allocated the majority of our initial capital and any fresh capital we take on will be allocated into an underlying equity base.  Proportionally, this means we will have less of our fund in cash at July 1st (hopefully only about 10%) than we will at April 1st (100%).
 
In respect of the EGP Fund No. 1, though we will post a price update weekly, we will make more thorough quarterly and six monthly updates.  As I have mentioned previously, discussion about particular holdings within EGP Fund No. 1 will be extremely limited and usually restricted to any holdings we have eliminated completely (which is unlikely to be for a couple of years, barring takeover).
 
I will run our first update to EGP Fund No. 1 & the EGP20 index will on Sunday April 3rd, obviously there will be very little to report. I will try to update virtually every Sunday, and to let you know in advance any time I need to miss an update.  This doesn’t mean you should pay great heed to the weekly movements in either EGP No. 1 price, nor the index, we are targeting long-term out-performance, as such, in the short term, we won’t panic in the event we fall behind, confident in the belief that our views will bear fruit over the longer term.  Our target is benchmark out-performance in at least 75% of 6-month periods totalling 3-5% after performance fees over the medium-term.
 
For information purposes, the closing prices of the 3 measures we are interested in as at COB March 31 are:
 
  1. EGP Fund No. 1 Pty Ltd          $1.00000 per share
  2. EGP20 Index                           1000.00 points and
  3. Benchmark                              35,632.05 points
 
We will be trying hard to effectively deploy our capital over the coming weeks, if you could all pray for declining markets, we would be much obliged – Tony Hansen 31/03/2011
tony