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A fresh approach to value investing in
undiscovered, quality businesses.

FY19 DMXAM Stock Picking Competition

 

We are very pleased to announce the results of the FY19 DMXAM stock picking competition. The competition ran from 1 July 2018 to 30 June 2019.


The entries are listed here.

 

A big congratulations to Anthill who took out first place, picking ASX:ANO (Advance Nanotek Limited). ANO delivered a phenomenal return for the year of 1,244%. ANO manufactures powders that are used primarily in sunscreens, and saw increased investor interest as the global potential from its product sales was recognised. On the back of increased production capacity, sales in FY19 are expected to exceed $12.6m, up from $6.5m in FY18. Sales opportunities in Europe and USA are likely to continue to support further strong growth in FY20.

 

In second place was Jab232 who picked Mount Gibson Iron (ASX:MGX). With its strong cash backing, and supportive tail winds from an increasing iron ore price, MGX returned an impressive 142% for the year.

 

Third place was taken out by Silver Oak who picked Kip McGrath Education Centres (ASX:KME). KME had a strong year, with record revenues and is expected to deliver an NPAT result up 30% on FY18. Including dividends, it returned 80% for the year.

 

Across the stocks picked, the average return was 46% (influenced by the ANO result), however the median result was -14%.  The Emerging Companies Index (XEC) fell 5% over the year, and reflecting this, over half of the stocks picked ended up delivering negative returns for the year. The bottom three performers included Freedom Insurance Group (ASX:FIG) - down 95%, Oliver’s Real Foods (ASX:OLI) - down 70% and Isentia Group (ASX:ISD) - down 66%.

 

Among the stocks picked, there were two that received takeover offers during the period (Zenitas Healthcare (ASX:ZNT) and Legend Corporation (ASX:LGD)). There were also a number of stocks that unfortunately surprised the market with quite negative trading updates, notably Smart Parking Limited (ASX:SPZ) and HRL Holdings Limited (ASX:HRL).

 

The results highlight the spectrum of outcomes in small cap investing: some very powerful opportunities to create significant value, but also the real potential for landmines to emerge from leftfield. It certainly keeps small cap investors on their toes!

 

Thank you to all participants, and we wish you all successful investing in FY20.