@Bear77

Found this in their May 2024 update. META is unfortunately not the top holding and like you mentioned. Seems to filled with mainly resources. Some are at early stages of the business cycle.

Alphabetical order @edgescape - we don't know the real portfolio weightings order.

Thanks for pointing that out.

Unfortunately all the data providers I have access to like Factset and Factiva don't have the holding information when I click on CDM.

I believe Capital IQ Pro does but my access has been revoked.

Computer says "No"...

As I explained in that long post about CDM that I linked to earlier tonight, from January this year I think it was written - CDM have progressively reduced their portfolio disclosure information over recent years as their underperformance has persisted, even at one point not disclosing to their own shareholders the companies that their money was invested in every month, instead giving some brief commentary about one or two of the companies and listing their sector exposures and their long/short split in percentage terms, so they haven't been easy to track in terms of what they hold and how much, because they haven't always shared that information. But I do know their benchmark index has been beating them for 10 years.

Thanks for explaining the lack of transparency.

It's a bit annoying when you can't find the holding information or is hidden from public view. Obviously using some nominee to hide the actual holding and so can't click on one company and click again to find the whole holdings.

I can't remember for sure if I tried looking at LICs in IQ Pro, but from what I see now going through Tikr, those LIC holdings could be hidden too.

CDM's July report, released today via email to their subscriber list (which I'm apparently still on) is a classic example of what I'm talking about @edgescape : https://www.cadencecapital.com.au/cadence-capital-limited-newsletter-july-2024/

1. More underperformance: Cadence Capital Limited returned a gross performance of 0.1% in July, compared to the All Ordinaries Accumulation Index which was up +3.8% for the month. So a further underperformance of -3.7% compared to their benchmark index (All Ords);
2. NO list of their holdings, or even their top 10 positions, either in alphabetical order or in any order;
3. Limited commentary on a small number of their positions mixed in with some macro commentary: The top contributors to performance during July were Resolute Mining, Evolution Mining, Robex Resources, Sierra Rutile and Regal Partners. The largest detractors from performance were Alcoa, Capstone Copper, Meta Platforms and Netflix. Resolute Mining’s share price was up 25% during the month. This was partially due to a 5% increase in the gold price, as well as continued good operational performance with the company producing 91 koz of gold in the 2nd quarter, up 19% compared to the previous quarter. In our recent quarterly webcasts, we have also spoken about how the share price of gold companies has failed to match the performance of gold itself, even though gold companies are leveraged to the gold price. We believe that part of Resolute Mining’s good performance in July is the share price essentially playing ‘catch up’ on the gold price increases that we have seen over the past year. While the Australian market was up overall in July there were some areas of weakness. The aluminium and copper prices were both down during the month which impacted our investments in Alcoa and Capstone Copper. The market appears undecided on whether the selloff in Copper and Aluminium indicates a world economic slowdown, and overall change in trend, or rather a temporary correction in a long-term trend. Our cash levels increased during July which had a negative impact on July performance but have been beneficial during August after global stock markets fell significantly due to concerns about an economic slowdown in the U.S. [9 companies mentioned there];
4. Further reminders about the NTA discount and the buyback: CDM is trading at a pre-tax NTA discount of around 12%. CDM has implemented an on-market buy-back to buy back the shares it has issued under the DRP. This buy-back will operate whilst the CDM share price is trading at a discount to the Pre-Tax NTA; and
5. the usual tables and charts: NTA, Performance (reproduced below), dividend history (reproduced below), profit reserve info (15.5 cps in their PR), long/short split chart, sector analysis table (reproduced below), market capitalisation bands table (reproduced below), and some news about their upcoming year-end webcast.

From that, you can see why trying to track what they hold is difficult. We got 9 companies mentioned there, sometimes it's significantly less than 9. The industry standard is to list their top 10 exposures at the end of each month, as a minimum, either in weighting or in alphabetical order, but CDM ignore that industry standard. CDM don't even indicate whether those 9 are their top 9, just that they had the most financial impact on their NTA during the month (both positive and negative).

Source: https://www.cadencecapital.com.au/cadence-capital-limited-newsletter-july-2024/

So we've got Tony Hansen's EGP CVF severely underperforming their benchmark (XJO/ASX200) because they invest in too many nanocaps with low liquidity, wild share price fluctuations and poor performance over time, and then we've got Karl Seigling's Cadence Capital (CDM) that invest much more at the larger end (net 47.9% invested in companies with m/cap over $1 billion, being 51.3% long and 3.5% short those companies) but have a strategy that keeps changing whenever it struggles to perform (which is most of the time) and ends up performing even worse as a result of those changes.

Underperform the All odds by 4.5% pa for a decade and continue collecting millions in fees every year via locked up capital.

Pretty sweet gig.

Oh to go back in time to the golden age of funds management when there were no pesky index investment options available and you could raise a ton of capital, lock it in, be opaque, underperform, charge high fees and become a multi-millionaire....

Alas I think you can only do that in private markets these days...

Have to agree but I only checked when this popped on a scan.

Probably you do better buying META shares yourself?

Or buy an ETF with the Mag 7 in it.

Exactly! Also, as I am not getting younger these days my eyesight struggles and it is hard to read the fine print. So, to help the elderly like me here, I would also note this underperformance being discussed is,

BEFORE MANAGEMENT AND PERFORMANCE FEES.

Yes, most LICs - including all of WAM Funds' 8 LICs and Karl Seigling's CDM disclose returns BEFORE fees and taxes, however the EGP CVF I alluded to is an open ended fund that Tony Hansen runs and he doesn't charge fees unless he outperforms the index - which he doesn't - except for a very basic management fee that just covers the fund's running costs - so he doesn't draw a wage from running it, and has the vast majority of his own money in it, so he has plenty of alignment of interest with other unitholders but still can't manage to outperform the ASX200. So from that point of view I can not fault Tony (from a governance and alignment perspective) but he is NOT running a closed-end LIC, and LICs... they're mostly a scam if they're not providing either outperformance AFTER fees and/or exposure to companies that you want exposure to at a discount to their market value (the LIC's NTA) - preferably both.

Most LICs appear to only outperform on rare occasions and some, like CDM, hardly ever, certainly over the last decade, hardly ever.

@edgescape Only 1% of CDM's portfolio is in technology stocks, so while Karl says he holds Meta (NASDAQ: META), it can't be much.

Meta falls into the US subsector of "Social Technology" within the broader "Technology" (or "IT") sector, so I can't imagine Karl is classifying them as a "Communications" company - they have to be within that 1% of his portfolio that is in Tech, and even if ALL of that 1% was just Meta exposure, that's still just 1% of the portfolio, so if Meta was to double in price, it could only have a maximum +1% impact on CDM's performance. As you say, I wouldn't be trying to get exposure to Meta through CDM, best to go direct or to hold an ETF that holds the Magnificent 7, as you say.

Also, his commentary for July said that Meta and Netflix were among the largest detractors in terms of portfolio performance, so those companies helped drag CDM's performance back towards that +0.1% NTA movement that he recorded for July, which is not surprising considering the Crowdstrike outage impacted sentiment around the Tech sector in the US during July. What Karl used to do, back in the day, like 8 to 10 years ago, was scale into positions (adding as they rose) and then sell out if they dropped by 5% or more - although that 5% figure did get changed to a few different numbers I think. That strategy helped him in his first 8 years particularly when markets were relatively calm, but he did complain a while ago (during the past 10 years) that the excessive market volatility with share prices "whipsawing" up and down was shaking him out of positions that bounced back almost immediately after he sold. He admitted at the time that the strategy that had been serving him well in his earlier years was no longer working. He blamed the markets, but the read-through was that he needed to change his strategy. I don't know however if he still sells out of stocks when they fall by a certain amount, like a stop-loss. If so, perhaps he held more Meta and then sold down or out because they fell so much in July and then he ended the month holding either none or not much of the company's shares.

That's the problem - he gives commentary on what hurt or helped him DURING the month, but gives very little in the way of an end-of-month top-10-holdings list. No details of stocks sold out of the portfolio or added to the portfolio, just what hurt him and what performed relatively well (9 companies only) - the only company he was talking up appeared to be Resolute Mining (RSG), the absolutely worst performing ASX-listed West African gold miner by a country mile - RSG's one year chart looks reasonable but the real story (in terms of longer term TSRs) is in their 5 year and 10 year charts; they've come down a long way, so they have plenty of ground to make up, and they're in a very tough part of the world to do it in. I did recently add Perseus (PRU) to my SMSF - breaking my own no-West-African-gold-miners rule, but you'd have to invent a new and truly diabolical type of torture to make me invest in RSG.

Anyway, just thought I'd mention, if Karl hasn't already exited Meta, i.e. if he still DOES hold Meta, it's no more than 1% of the CDM portfolio, according to his end-of-July sector chart above.