The information, products and services described in this website are intended solely for persons in Australia who are wholesale clients within the meaning of section 761G of the Corporations Act 2001 (Cth). By clicking Confirm below, you confirm that:
The CC Sage Capital Absolute Return Fund had a poor month in August, returning -4.45% versus the RBA Cash Rate return of 0.29%.*
The CC Sage Capital Equity Plus Fund returned 0.77% in August, underperforming the S&P/ASX 200 benchmark by -2.34% which returned 3.10%.*
Reporting season proved to be even more volatile than normal where the portfolio had a few big winners, but a longer tail of losers. Across the Sage Groups^ of Growth, Defensives, Domestic Cyclicals and Resources suffered broadly while Global Cyclicals and Gold were bright spots. In this reporting season, the moves on beats and misses were larger than normal with moves of ±10-20% common across stocks that were reported, compared with the more typical earnings beats and misses of a few percent each.
While there were a lot of stock specific moves, some broader thematics included a stronger domestic consumer, buoyed by recent interest rate and tax cuts with ongoing softness in the US outside of data centre spend with weakness seen across consumer goods and housing. There was also a material rally in lithium stocks as one of China’s lepidolite mines didn’t have its operating licence renewed.
The Global Cyclicals Sage Group delivered strong results where there were short positions in companies exposed to US construction, including James Hardie Industries (ASX: JHX -25%) and Reece (ASX: REH -15%). Building and renovation activity in the US has been soft as mortgage rates have remained high and affordability low. Both companies have also been dealing with product mix and competition issues, but importantly valuations had also become very stretched. Gold was also a strong contributor with Evolution Mining (ASX: EVN +22%) and Newmont Corporation (ASX: NEM +16%) both being lifted by a strong gold price which was boosted by President Trump’s attempts to fire a member of the US Federal Reserve.
In the Growth Sage Group, there was a successful winner in Life360 (ASX: 360 +16%), but a long-held position in Telix Pharmaceuticals (ASX: TLX -31%) offset those gains. Telix announced a set-back with the U.S. Food and Drug Administration (FDA) for its kidney cancer diagnostic drug Zircaix. The FDA requires further analysis to confirm the comparability of the treatment produced under scaled up manufacturing to that which was used in the trial. It has now had a couple of disappointing regulatory setbacks with a more bureaucratic FDA, but these are more timing related and the stock is trading well below the intrinsic value implied by the continuing commercial success of its other products Illucix/Gozellix. An underweight position in domestic employment platform Seek (ASX: SEK + 15%) was a headwind as the market gained comfort that its new pricing strategy was beginning to drive yield growth, while a long position in WiseTech Global (ASX: WTC -15%) also dragged as the market digested the integration of the lower margin E2Open acquisition and lower near-term price rises ahead of a new pricing structure.
In the Defensives Sage Group, pair trades in NextDC (ASX: NXT +13%) vs Goodman Group (ASX: GMG -2%) and Origin Energy (ASX:ORG +9%) vs AGL Energy (ASX: AGL -13%) negatively impacted the portfolio. Origin Energy has received a tail wind from the valuation of its stake in the Kraken technology platform, while its energy markets business performed slightly better than AGL with better generation availability in the second half of 2025. Goodman Group was largely in line with expectations, but NextDC rose sharply after announcing a new equity partnership model for data centre rollouts that was well received. The need for NextDC to continually raise capital was a core part of the relative thesis, and hence that position has been closed.
In the Resources Sage Group, Mineral Resources (ASX: MIN +31%) was a negative as it continued to bounce along with all the lithium names, as licensing issues in some of China’s lepidolite mines drove a big squeeze across the complex, while a long position in Pilbara Minerals (ASX: PLS +54%) offset part of the move. Another long position in Iluka Resources (ASX:ILU +23%) was also positive as the US government effectively set a floor price for rare earths, while a hedge in Lynas Rare Earths (ASX: LYC +32%) partly offset this.
Across the Domestic Cyclicals Group, Eagers Automative was underweight (ASX: APE +41%) and a long position in Domino’s Pizza Enterprises (ASX: DMP -17%) were the main negatives. Eagers was strong as the company hinted that gross margins had bottomed and that the order book for new car sales remained strong, although the stock has now seen a significant expansion in its valuation multiples. Domino’s talked to right sizing the business with store closures and cutting costs, but with a lack of top line sales momentum early in the new year, the market was in no mood to listen. Positive contributors included a long position in Qantas (ASX: QAN +8%) which reported strong results, and Ampol (ASX: ALD +9%) which also benefitted from acquiring EG Group’s fuel distribution network.
The Australian economy appears to be picking up, with interest rate and tax cuts flowing through to credit growth and spending. The US economy however is harder to read given the gyrations in trade, without the spend on AI and data centres it seems more likely to be heading towards stagflation. The market focus on earnings quality without regard for valuations has been dominating, but is unlikely to persist indefinitely. We believe some unloved stocks with manageable issues and reasonable cash generation will prove worthwhile investments over the medium term. New investment opportunities are emerging with the improving domestic economic picture with plenty of funding opportunities in overcrowded trades. Many of the portfolio’s core positions are performing well and continue to be held with high conviction.
The S&P/ASX 200 Accumulation Index returned 3.1% in August. It was also a big month for smaller companies, with the ASX Small Ords up over 8% while the S&P/ASX 50 was up only 2%, one of the largest gaps on record. Thematically, growth stocks were under pressure as the market began to question whether AI was as much a threat as an opportunity for software companies.
Australian retail stocks moved higher, particularly the smaller ones left behind in the march of Wesfarmers and JB Hi-fi. Several blue chip ASX stocks saw heavy falls during the recent reporting season, among them CSL, Woolworths and James Hardie. In commodities, lithium stocks rallied while US policy changes continue to lead to large gyrations with rare earth miners up. The gold price found new highs at the end of month supported by growing concerns over political interference with the US Federal Reserve.
In terms of the Sage Groups, strongest benchmark performance came from Gold (+20%), REITs (+9%), Resources (+8%) and Domestic Cyclicals (+7%), while Growth was largely flat and Global Cyclicals (-2%) and Defensives (-4%) were both negative, weighed down by weak results from James Hardie, Reece, CSL and Woolworths.
Read the monthly reports for additional commentary.
Please keep me up to date with the latest Fund updates and investment insights.
