Strawman do you think that it's likely that Spectur will need to raise more capital?

Any capital raising at this price would be disasterous. If it doesn't need to, it could potentially be interesting.

Yeah will be close @Hackofalltrades

Maybe they can get another loan from EGP capital if they experience a bit of a squeeze?

Tony Hansen has had some trouble picking winners at EGP Capital over the past few years @Strawman - see below - the first page of their October 2023 (latest) report:

Source: https://egpcapital.com.au/wp-content/uploads/2023/11/2023_10_1.pdf

That's quite the divergence between his fund's performance and the ASX200 TR (Accumulation) index, with most of the damage ocurring in FY22 when the EGP CVF posted a negative return of (29.96%) versus the index's (6.47%) fall, however he also underperformed the index in FY18 (by 10.6%) and FY19 (by 6.92%), being the first two years of that particular fund, and most of the remainder of that time he's struggled to catch up to his benchmark index. YTD numbers for each FY are in the right side column above.

Tony has his reasons for choosing the ASX200 TR Index as his fund's benchmark, however there is an argument that because his portfolio is comprised of smaller companies, some very small, perhaps an index like the XSO - the S&P/ASX Small Ords Index - might be a better fit - however he's underperformed that one as well.

It's a concentrated portfolio he runs - being high conviction positions - but his losers have unfortunately outnumbered his winners so far.

Some of those positions, like Smartpay (SMP) and Cettire (CTT) have had a reasonable recent 12 month period, but those wins have not been enough to claw back much ground overall.

The Market Capitalisation Bands Chart above tells the story with 25.7% of the portfolio in companies with market caps of less than $50m, 54.7% being up to $200m, 76.1% of the portfolio in companies worth less than $500m, and only 23.8% of the portfolio invested in companies worth $500m or more. It's hard to beat the market anyway, but it's even harder at the smaller end of the market. Investing can certainly be hard work, even for full time professional fund managers.

Yeah it's been a tough run for Tony @Bear77

I wont cast any stones (being in a glass house and all), and I wont try and defend him either, other than to say even the best fundies tend to have extended periods of underperformance -- even when their process remains sound. Forager was probably a good example of that at one point.

At the same time, we know at least half of fund managers underperform their chosen benchmark over time, so it's pretty common (and no doubt a big part of the reason most of us manage our own money).

All true @Strawman however I would add that something that Forager and Tony's EGP CVF have had in common is the bottom fishing - so companies that are either small and out of favour, or in Forager's case, any size and out of favour, so pretty much universally despised by the market. Tony might prefer the term "Deep Value" to bottom fishing, but the problem is that for every stock you get right, that doesn't go broke and is a big winner for you, there are often 1 or 2 others where the market was right all along, or the company was in even worse shape than even the majority of the market thought they were. Like LHC Capital holding 8.3% of ISX (iSignthis, later Southern Cross Payments, later delisted) and riding them into the ground. Like anybody who has ridden Appen down. Sometimes the value isn't deep, it just isn't there.

Very true @Bear77

The market can be irrational, but very often isn't!

Also, who was it that said better a great company at a fair price, than a fair company at a great price?

I haven't looked lately, but I think Forager is struggling since inception too. They are either neck-and-neck or slightly underperforming last I looked, and they have had some real stinkers over the past few years. Just shows how hard it is to beat the market (and yet we all try!).

Deep value isn't my cup of tea - I prefer to invest in strong businesses that are performing well and have enough levers to pull to grow larger over the long-term i.e. I would rather pay $1 for something that is going to turn to $1.50, then buy $1 for 50 or 75 cents :)

Agreed @thunderhead - because, as you say, the market doesn't usually leave windows open for too long when there is obvious mispricing, so a company viewed as deep value is also viewed in a much less favourable light by the majority of market participants, hence the low share price, and if you're going to bet against the masses, you need to have some info that they either don't have or they don't believe, or else - if everybody is looking at the same data and just interpreting it and extrapolating it differently, you need to have superior analysis skills based on assumptions that prove to be more right than theirs are. It's rare that I believe I'm in that situation, and usually when I think I am, I find out later that I was wrong - that the market had a better understanding or analysis of the company and its future prospects than I did. And I book a realised loss.

So, in summary, I agree, Deep Value and Bottom Fishing is not for me. Uncle Warren did it for a while - when he first started out - I think he called it cigar-butt stocks or something - finding some value in that which others have discarded as being worthless. But he soon moved on to his “It's far better to buy a wonderful company at a fair price than a fair company at a wonderful price” stance, and I daresay that has proven to be a FAR superior investment strategy over the years, contributing far more to his billions than the cigar butts did.

However, for every rule, there are exceptions. For this rule, one of my exceptions is Swoop (SWP). So, what I should really be saying is that Deep Value and Bottom Fishing is not my preferred strategy, but it's sometimes where I end up with a small portion of some of my portfolios. The rest are hopefully, for the most part, high quality companies bought at cheap to reasonable prices.

That makes eminent sense @Bear77 . The occasional dabble with a limited portion of your investment capital shouldn't do much harm, and may even result in a few large payoffs.