Yesterday, the Ophir High Conviction Fund (ASX: OPH) released its October 2020 investment update to the market. In the announcement, the fund listed its five largest holdings.
The Ophir High Conviction Fund is a listed investment trust (LIT) which has generated a return of 20.1% per annum over the last five years.
In this period, the fund greatly outperformed the 10.2% per annum return generated by its benchmark. Ophir defines its benchmark as 50% S&P/ASX Small Ordinaries Accumulation Index and 50% S&P/ASX Midcap 50 Accumulation Index.
Ophir High Conviction Fund’s investment approach
The fund aims to own a concentrated portfolio of high-quality listed companies outside the S&P/ASX 200 (ASX: XJO). As per the fund name, the portfolio managers must have high conviction in a company’s ability to grow and compound earnings over time for it to be added to the portfolio.
The fund will typically hold between 15-30 shares so that each position “delivers a meaningful impact on overall portfolio returns”.
Luckily for us, OPH’s latest update outlined the fund’s five largest holdings.
OPH top holdings
As at 31 October 2020, the fund’s top five holdings (in alphabetical order) were A2 Milk Company Ltd
(ASX: A2M), Afterpay Ltd (ASX: APT), Domino’s Pizza Enterprises Ltd (ASX: DMP), NextDC Ltd (ASX: NXT) and Xero Limited (ASX: XRO).
Rask Media writer Jaz Harrison recently covered A2 Milk’s recent AGM, at which the company reiterated guidance of FY21 revenue to be between NZ$1.8 and NZ$1.9 billion, and an EBITDA margin of approximately 31%.
In September, I suggested that a2 Milk shares may meet Peter Lynch’s investment criteria.
The Afterpay share price has been the best performing constituent of the ASX 200 over the last 12 months. Rask Media contributor Patrick Melville recently outlined the rising competition in the buy now pay later (BNPL) sector and reasoned that valuations may be stretched.
I recently analysed shares in Domino’s Pizza Enterprises and concluded that future growth is largely ‘baked in’. Check out the full write up here.
As for data centre operator NextDC, Patrick recently analysed the company and explained why NextDC shares could be a buy right now.
Finally, check out Owen’s presentation from late 2019 on why you should own software shares and companies like Xero. The Xero share price is up around 60% in the last year.
Is the Ophir High Conviction Fund a buy?
OPH is trading at $3.55 at the time of writing, representing a significant premium to the trust’s net asset value (NAV) of $2.96.
Therefore, I am holding off purchasing shares in OPH until they trade at or below their published NAV.
