Performance summary

The CC Sage Capital Absolute Return Fund returned 0.94% in July versus the RBA Cash Rate of 0.37%, an active return of 0.57%.*

The CC Sage Capital Equity Plus Fund returned 2.65% in July versus the S&P/ASX 200 Accumulation Index of 2.26%, an active return of 0.39%.*

Energy markets remained volatile in July as prospects for reopening the Strait of Hormuz faded and regional conflicts expanded to involve Houthi forces and Black Sea infrastructure. Consequently, Brent crude jumped 22% to US$89 per barrel. A broad market rotation out of AI and tech stocks further boosted energy and financial sectors.

The Sage Groups^ of Domestic Cyclicals and Global Cyclicals were the main positive contributors to portfolio performance, offset by the Defensives group.

Domestic Cyclicals was the largest contributor to portfolio performance

A long position in Ampol (ASX: ALD +21%) was the single largest contributor to the portfolio. Its Lytton refinery reported more than a threefold increase in quarterly refining margin from the oil crisis, reflecting the obvious pressure from the Strait of Hormuz closure, but also the significant impact that Ukrainian drone attacks are having on Russian refining infrastructure. This more than offset the drag from short positions in several discretionary retail and travel stocks which rallied late in the month after the June quarter inflation print that came in slightly below expectations and revived hopes that the monetary tightening cycle could be over.

Global Cyclicals: Short positions positively contributed to portfolio performance

Global Cyclicals delivered strong performance, primarily driven by profitable short positions. Key contributors included Reece Limited (ASX: REH -7%) which fell, alongside other US housing exposed stocks amid ongoing weakness in the US housing market.

SGH Limited (ASX: SGH -5%) fell as investors took profits following its decision to exit a joint takeover of BlueScope Steel, plus cautious demand forecasts for mining equipment from Caterpillar. Additionally ALS Limited (ASX: ALQ -5%) fell on concerns that recent gold price weakness may impact demand for its services by gold exploration companies.

Resources Group was positive but with wide dispersion

Energy long positions in Woodside Energy (ASX: WDS +17%) and Karoon Energy (ASX: KAR +20%) captured the crude oil rally, and short positions in lithium developers Elevra Lithium (ASX: ELV -22% ) and Liontown (ASX: LTR -43% ) added value. These gains were largely given back by the portfolio’s two largest detractors outside the banks. A long position in Iluka Resources (ASX: ILU -14%) drifted lower on weaker sentiment towards rare earths companies, and a long position in Alcoa (ASX: AAI -17%) fell after the aluminium price pulled back sharply on the news of the Strait of Hormuz reopening and a quarterly earnings miss driven by alumina issues.

Other positives included the Growth group where short positions in Pro Medicus (ASX: PME -20%) and Weebit Nano (ASX: WBT -48%) were the two largest contributors to portfolio performance after Ampol, as high multiple stocks de-rated sharply. These offset long positions in Telix Pharmaceuticals (ASX: TLX -14%) and Zip Co (ASX: ZIP -21%), allowing the group to finish the month on a modest positive note.

Defensives Group was the largest detractor

The portfolio benefited from a long position in Sigma Healthcare (ASX: SIG +7%) but was outweighed by long positions in Goodman Group (ASX: GMG -4%) and NextDC (ASX: NXT -8%) which were weak due to the global sell off in data centres and AI related stocks.

The Yield group also detracted, with a modest short position in the major banks proved costly as the sector rose 8% on what appeared to be global flow rotation rather than any improvement in fundamentals. This drag was partially offset by a long position in AMP (ASX: AMP +34%) and a short in Helia (ASX: HLI -9%). Elsewhere, Gold and REITs were minor detractors, with a long position in Evolution Mining (ASX: EVN -4%) giving back early month gains on higher FY27 cost guidance.

For more detailed commentary and analysis, view the latest performance reports:

• CC Sage Capital Absolute Return Fund monthly report
• CC Sage Capital Equity Plus Fund monthly report

* Past performance is not indicative of future performance. ^ Sage Capital uses a custom grouping system for long and short positions (Defensives, Domestic Cyclicals, Global Cyclicals, Gold, Growth, REITs, Resources and Yield). With a focus on the principal macro earnings drivers for each stock, Sage Groups allow for comparisons to GICS for selecting stocks within a sector.