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  • Sean Rapley

June 2021 - Luke's Fund Performance Update & Annual Review

Updated: Jul 1, 2022

The ASX 200 Index was up 2.4% for the month of June, and Luke's Fund achieved a return of -5.5% over the same period, bringing Luke’s Fund returns for FY2021 to 47.7%. Over FY2021, the ASX 200 Index return was 23.2%, with Luke’s Fund outperforming the index by 24.5%.

FY2021 was a year of two halves, as can be seen in the table below:

In the second half of the year, some of our largest holdings became battleground stocks, and were consequently sold down, particularly during the tax loss selling season. These stocks included EOS, which missed deadlines, over promised, and practiced denialism; SWF, with concerns regarding competition, and a fading negative yield tailwind; TLG, with delays, and emerging investor impatience; CSX, with an erroneous valuation call that we own, and uncertainty in product demand in a post-COVID world.

The distribution of performance over FY2021 is outlined graphically below:

Of the 36 portfolio holdings over the financial year, 58% were successful investments. The majority of gains came from just two holdings, and the majority of losses, again, came from two holdings. The two losses were quite disappointing, as they were entirely avoidable.

For A2 Milk, there were numerous red flags, including one which compelled us to sell out of Bubs Australia in the previous financial year. We should of seen the troubles at Bubs Australia as evidence the A2 Milk thesis was broken.

For Cleanspace Holdings, we simply stuffed up our Post-COVID valuation analysis, and opened our position too early. It was a painful lesson, but in the long term, the lessons learned will make us better investors.

Over the year, our gold hedge portfolio returned 3.7% for the year (vs a gold price fall of 9.7%). As at the end of June, the precious metals portfolio is 17.0% of the fund portfolio.

Notable changes to the portfolio over June were:

1. We added to our Cleanspace Holdings, as tax loss selling took hold. We consider there to be very limited downside risk at the current share price, with significant upside potential.

2. We added to our Sequoia Financial Group position, following an upgrade to FY2021 guidance.

We held 0.2% cash at the end of June.


We are quite satisfied with our performance over the year. However, the last 6 months has demonstrated to us that the market will test ones patience at certain times. This is inevitable, as are periods of underperformance.

The most significant cause of the funds underperformance over H2 2021 was due to the errors we have highlighted concerning Cleanspace Holdings, and A2 Milk. We hope to build on these lessons into FY2022.

However, another drag on recent performance are the battleground stocks we have identified. The upcoming full year results, quarterly reports, and contract updates will confirm whether our current conviction in these businesses is correct. Whether we are right or wrong, and how we respond to developments in these four businesses, we expect will determine our performance over FY2022. It will be an interesting financial year ahead.

If you have any opinions on the companies we hold, or would like to know more, we would love to hear your feedback.

Thank you for your time, and we wish all our readers/subscribers a prosperous FY2022.



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