Flinders Investment Partners has exited a position in online retailer Redbubble despite it being the strongest-ever contributor to its fund.
Redbubble was one of the best-performing stocks for the Flinders Emerging Companies fund last year with returns of 388% during 2020.
Portfolio manager, Andrew Mouchacca, said the fund had held the retailer since inception in 2015 when it was trading at sub-$1. However, it had announced a strategy change earlier this year which meant it would be heavily investing for growth rather than see profits rise.
“Redbubble has been our strongest contributor since inception, it has done phenomenally. But the company announced a change in strategy including investment and we were worried that would constrain the business,” he said.
“We had thought into a different business so we exited it and the share price has fallen since.”
Since the start of the year, shares in Redbubble had fallen 41% and were currently trading at $3.46 as of 25 May 2021.
Meanwhile, the team were a fan of Pinnacle Investment Management which it said was demonstrating “superior growth”. Shares in Pinnacle had returned 150% over the year to 25 May, 2021, versus returns of 30% by the ASX 200.
The multi-affiliate investment group had partnerships with 16 firms including Hyperion Asset Management, Antipodes, Plato Investment Management and Resolution Capital.
“Pinnacle are more expensive than other fund managers but the growth is superior and the strategies that they have to deliver growth are real. It has a distribution team that asset managers are able to plug into and it has grown in the retail space which is where the margin is,” Pinnacle said.
“They are issuing more products and we think they will smash it in their next company results.”
The Flinders Emerging Companies fund had returned 56.7% over one year to 30 April, 2021, according to FE Analytics, versus returns by the small and mid-cap sector within the Australian Core Strategies universe of 54.9%.
