H&G High Conviction Limited is an investment company with a focus on risk adjusted returns through constructing a high conviction portfolio of microcap ASX-listed companies.
In June 2022, H&G High Conviction Limited was formed and acquired
its initial investment portfolio of cash and ASX-listed securities in exchange for shares in H&G High Conviction Limited.
H&G High Conviction Limited has appointed H&G Investment Management Ltd as its investment manager and adopted the investment strategy described below.
Approximately 75% in value of the initial investment portfolio was acquired from the H&G High Conviction Fund. The H&G High Conviction Fund was launched in November 2007 by the Manager (then named 'Supervised Investments Australia Limited').
H&G Investment Management Ltd has been the investment manager of the H&G High Conviction Fund since its inception and over this period has adopted a fundamentals-based investment strategy focused on investment in micro capitalisation companies, which is consistent with the company's investment strategy described below.
Historical Fund Return Data
*Includes the original vehicle since inception, H&G High Conviction Fund, launched in November 2007, and the 7 days of pre tax performance of H&G High Conviction Ltd to 30 June 2022.
The strategy of investing in micro capitalisation listed equities has remained consistent.
Historical performance is not a guide to future performance.
Performance to 30 June 2022 (after all fees)
Last 12 months
10 years p.a.
H&G High Conviction Fund
ASX Small Ordinaries Accumulation Index
H&G High Conviction Ltd (ASX:HCF)
Investment Management Agreement
H&G Investment Management Ltd
The company invests its capital in companies with a significant discount in the share price relative to perceived inherent value. These companies have superior fundamental prospects, yet negative external events have attracted a flight of investors. The company seeks to assist investee companies to demonstrate, grow and realise their inherent value.
What we look for
Sub $300M market cap
Conservative balance sheet
Board and management own > 10%
Trading below intrinsic value
Catalysts to realise inherent value
Quantitative & Qualitative Screening
Buying a dollar for 50 cents
Secular growth opportunities
Disruptive model / tech
Low cost, extreme payoff
The company is aiming to provide its investors with access to:
a highly experienced and active investment manager with expertise and a strong track record in ASX-listed equities;
a concentrated portfolio of approximately 20 – 25 investments in ASX-listed micro capitalisation companies (with market capitalisations under $300 million at the time of the initial investment);
an actively managed, fundamentals-based investment approach with a focus on capital preservation, long term capital growth and income from its investments; and
targeting attractive performance of at least 10% per annum (after all fees).
1% of gross asset value plus GST p.a. paid monthly in arrears
20% of pre-tax benchmark outperformance, with a highwater mark, paid semi-annually
*charged by the investment manager, H&G Investment Management Limited
The Company intends to pay regular dividends to Shareholders from the dividends received from underlying Portfolio Companies, and a portion of realised profits from the sale of securities in Portfolio Companies, provided that the Company has sufficient profit reserves and franking credits, and it is within prudent business practices to do so.
As the investment strategy of the Company includes long term capital growth through investments in ASX-listed companies with a market capitalisation of up to $300 million, it is possible that dividends may be low (or nil) in any given period.
However, the amount of any dividend will be at the complete discretion of the Board and will depend on a number of factors, including expectations of future earnings, capital requirements, financial conditions, future prospects, laws relating to dividends and other factors that the Board deem relevant.
It is the current policy of the Board that all dividends paid to Shareholders will be franked to 100% (or to the maximum extent possible without incurring liability to franking deficit tax).
However, no assurances can be given by any person, including the Directors, about the payment of any dividend and the level of franking on any such dividend.
John is an experienced Chairman and Director in public, private and government organisations. Through his extensive career of over 30 years in venture capital, private equity and commercialisation, he has gained a depth of experience in the formation and growth of emerging companies with an emphasis on commercial entities that provide broad societal benefits.
John is currently the Chairman of Patrys Limited (ASX:PAB). He was previously on the Board of CVC Limited (ASX:CVC) from 1989 to 2020, Eildon Capital Limited (ASX:EDC) from 2013 to 2016, Pro-Pac Packaging Limited (ASX:PPG) from 2005 to 2010, The Environmental Group Limited (ASX:EGL) from 2001 to 2012 and The Central Coast Water Corporation from 2011 to 2014.
John is a Fellow of the Australian Institute of Company Directors and holds a Master of Business Administration (MBA) and a Bachelor of Science (Honours).
Nick has over 27 years' equity capital markets experience, that spans trading, research, sales, corporate finance and investment management. Nick has specialty expertise in the Energy, Healthcare/Life Sciences and Small Capitalisation sectors, garnered from working both in Australia as well as offshore in London and New York.
Nick has been an executive at Hancock & Gore since June 2021. Prior to joining Hancock & Gore, Nick spent 14 years at Morgans Financial Limited, where he was Executive Director of Institutional Equities. Nick oversaw rapid growth of the division’s profitability over a 10+ year period.
Nick has a Master of Business Administration (MBA) from Macquarie Graduate School of Management, a Bachelor of Commerce from the University of Queensland, and a Graduate Diploma in Applied Investment and Finance from FINSIA.
Director & Portfolio manager
Joseph has worked in funds management since 2014 and has experience with UK-based Smith and Williamson and Hunter Hall International.
Since 2016, he has worked at Supervised Investments Australia Limited, which was acquired by Hancock & Gore and subsequently rebranded as H&G Investment Management Ltd. Joseph is a director and Portfolio Manager of the Manager and an Executive Director of Hancock & Gore.
He is also a Director of Po Valley Energy Limited (ASX: PVE). Joseph has a Master of History from the University of Oxford and a Bachelor of Arts (Honours) from the University of Melbourne. He is a Graduate of the Australian Institute of Company Directors
Michael is the Company Secretary of Hancock & Gore, the Manager and the Company.
Michael has over 25 years' experience in finance and investment roles. Prior to working with Hancock & Gore, Michael spent 17 years at CVC Limited (ASX: CVC), initially as Chief Financial Officer and Company Secretary and then as Investment Analyst and Manager.
Prior to that, Michael trained at KPMG in the UK and had various finance roles in the UK, New Zealand and Australia. Michael is a Chartered Accountant and member of both Chartered Accountants Australia and New Zealand and the Institute of Chartered Accountants in England and Wales. Michael has a Bachelor of Science (Honours) in Chemistry from the University of Durham.
Registry Direct Limited
PO Box 18366
Collins Street East
Melbourne VIC 8003
Frequently Asked Questions
What are Listed Investment Companies? A LIC is an investment, listed on an exchange such as the Australian Securities Exchange (ASX). It is incorporated as a company. Many LICs operate like a managed fund. They have an external or internal fund manager, who selects and manages the company's investments. LICs are 'closed-ended'. This means they don't issue new shares, or cancel existing shares, as investors join or leave. Instead, they issue a fixed number of shares in an initial public offering (IPO). Investors then buy and sell those shares on the exchange. This allows a fund manager to focus on investing, without having to worry about cash flow.
What are the diferences between an ETF & LIC? There are a number of key differences between ETFs and LICs that will influence your decision as to which one is best for your portfolio.
Structure An LIC is a company, so when you invest in an LIC you’ll own shares in the LIC itself, rather than the underlying assets. An ETF is a trust, so when you invest in an ETF you’ll receive units in the fund. Because an LIC is a company, the board of directors will determine the dividend payment (or decide to pay no dividend at all) each financial year. An ETF must pass on all dividend earnings to unit holders as well as capital gain distributions.
Open-ended versus closed-ended ETFs are open-ended, meaning the manager can issue more units (shares) as more investors buy into the ETF. Conversly open-ended funds are also subject to redemption risk where the underlying assets must be sold to meet demand for cash. While in comparison LICs are closed-ended and have a set number of shares on issue in the market, which means the share price will vary from Net Asset Value as a result of investor demand for the LIC.
Tax implications If the LIC receives unfranked dividends from the underlying investments, it will pay tax on those dividends at the company tax rate and deliver franked dividends to shareholders. An ETF, on the other hand, passes all dividends through to unitholders in the Attribution Managed Investment Trust (AMIT) tax structure. ETFs are also subject to the AMIT regime.
Management ETFs are typically ‘passive’ investments that simply tracks the performance of an entire index, while an LIC has investment managers actively picking stocks with the intention of beating the market.
Cost Because LICs have investment managers actively selecting which assets to invest in and seeking investment opportunities they believe will outperform, LICs usually have higher costs attached than ETFs but LICs tend to pursue risk adjusted returns rather than just track an index.
Exposure When investing in a wide index tracking ETF, you get exposure to a wide pool of assets, potentially tracking several hundred stocks or multiple asset classes. Because LICs actively select each individual asset to invest in, they usually select between 20 to 100 underlying assets at most, and folow a specific strategy.
How do I invest in H&G High Conviction? To purchase our shares (ASX Code : HNG), you will need to engage a broker /online share trading account provider in the country that you reside in. Typically we find people new to investing find it easier to use the share trading account attached to their bank or an online share trading account provider. For a full list of brokers go to http://www.asx.com.au/prices/find-broker.html.
Proposed ASX Code: HCF
“The intelligent investor is a realist who sells to optimists and buys from pessimists.” - Benjamin Graham
(Warren Buffett’s mentor)
“Investment success doesn’t come from “buying good things”, but rather from “buying things well”.”
- Howard Marks
“Mimicking the herd invites regression to the mean (merely average performance).”
- Charlie Munger
(Warren Buffett’s partner)
“When an investor focuses on short-term investments, he or she is observing the variability of the portfolio, not the returns – in short, being fooled by randomness.”
- Nassim Nicolas Taleb
(Author of the Incerto)
“In the stock market a good nervous system is even more important than a good head.”
- Philip Fisher
(Author of Common Stocks, Uncommon Profits)