L1 Long Short Fund Limited (LSF) Earnings Call Transcript
November 11, 2025
Earnings Call Speaker Segments
Thank you for standing by, and welcome to the Annual General Meeting of Shareholders of L1 Long Short Fund Limited. I would now like to hand the conference over to Mr. Andrew Larke, Chairman. Please go ahead.
Good morning, ladies and gentlemen. We're just going to observe 1 minute silence to mark Remembrance Day. Good morning, again, ladies and gentlemen. My name is Andrew Larke, and I have the privilege of being the Chairman of your company and also of today's meeting. It's my pleasure to welcome you to the 2025 Annual General Meeting of L1 Long Short Fund Limited. It's now 11:01, and as we have a quorum, I declare the meeting open. I would now like to introduce my fellow directors, John Macfarlane, Harry Kingsley, Mark Landau and Rafi Lamm. So present are representatives from Acclime Australia, our company secretarial provider and representatives from Ernst & Young, our company's auditors. Notice of this meeting and the explanatory memorandum was sent to all shareholders, and I propose that it be taken as read. I'll now turn to my Chairman's address. In the 2024-'25 financial year, the investment manager, L1 Capital, steered the portfolio through multiple themes, including speculation over interest rates and inflation, euphoria around AI stocks, passive equity flows towards large cap stocks, both in Australia and globally, an increasingly tense geopolitical backdrop and divergent trends across commodities and markets. Notwithstanding this difficult backdrop, over the 12 months to 30 June, L1 Capital produced a positive net return for the LSF portfolio of 7.2% compared with 13.8% for the ASX 200 Accumulation Index. As of 30 June 2025, on a 5-year basis, the portfolio had returned 21% per annum net, outperforming the ASX 200 Accumulation Index by more than 9% per annum. And since IPO in 2018, it has returned 11% per annum net, outperforming the ASX 200 Accumulation Index by 1.6% per annum. More recently, for the 4 months from 30 June 2025 to 31 October 2025, the portfolio has returned 15.8% net, an outperformance of more than 10% over the ASX 200 Accumulation Index during the period. The company paid an interim dividend of $0.0625 per share fully franked in February 2025 and a final dividend of $0.065 per share fully franked in September 2025, bringing total dividends for the year to $0.1275 per share fully franked, which was an uplift of 8.5% on the prior year. We are committed to growing -- sorry, to continue -- we are committed to continuing to increase fully franked dividends payable to our shareholders. Going forward, the Board has decided to pay dividends on a quarterly basis, commencing in December this year. This morning, the Board declared a fully franked dividend of $0.035 per share payable on 5 December. We expect total dividends to continue increasing in 2026. During the year, senior management of the Investment Manager and your Board members have once again increased their investment in LSF by buying shares on market, a clear reinforcement of their commitment to the company's long-term success. On 1 October 2025, L1 Capital completed its merger with Platinum Asset Management to form L1 Group. This merger is not expected to have any impact on the strategy or management of LSF. L1 Capital's investment approach and team remain unchanged. Lastly, on behalf of the Board and the investment manager, I would like to thank all of our shareholders for their continuing support of the company. It is very much appreciated. So I now turn to the business of today's meeting. I wish to advise that voting on the resolutions will be conducted by way of poll. Shareholders will be able to cast their vote using the electronic voting card. I also confirm that I propose to vote those proxies left to my discretion as the Chairman in favor of all resolutions. Proxy voting received prior to the meeting will be shown on the screen for each item of business to be voted on today. Item 2 of this year's AGM is subject to a voting exclusion as outlined in the notice of meeting. Only shareholders, validly appointed proxies and corporate representatives are entitled to ask questions at today's meeting. We will answer any questions at the conclusion of the formal business of the meeting, including questions for the investment manager. Please note that voting will remain open until 5 minutes after conclusion of the AGM. I also invite you to listen to the upcoming webinar and presentation, which Mark Landau will make on Thursday, 20 November 2025, for which you can register on the company's website. The first item of business is to receive and consider the annual report, together with the directors' and auditor's report for the year ended 30 June 2025. I will now turn to the items of business for which a vote is required. The second item of business today relates to the adoption of the remuneration report. I will now table the outcome of the proxy voting received prior to the meeting. The next item of business relates to the reelection of directors. Item 3.1 relates to the reelection of Mark Landau. I invite Mark now to say a few words.
Thanks, Andrew, and good morning, everyone. My name is Mark Landau, and I'm standing for reelection as a director of LSF. I'm the Co-Chief Investment Officer of L1 Capital, which I cofounded with Rafi Lamm back in 2007. I've been in equity markets for over 20 years, and I've been a Board member of LSF since the formation of the company. I believe that I complement the skill set of the existing Board with my perspectives on both the global and Australian equity markets and opportunities for this company. Thank you for your consideration and for your vote.
Thank you, Mark. I'll now table the outcome of proxy voting received prior to the meeting. Item 3.2 relates to the reelection of Harry Kingsley. I invite Harry now to say a few words.
Thanks, Andrew. Good morning, shareholders, fellow directors and advisers. Thank you for the opportunity to address you at this important AGM and for considering my reelection as a director of L1 Long Short Fund Limited. Over the past 20 years, I've devoted my career to advising Australian and international companies, both listed and private on capital markets transactions, public offerings, mergers and acquisitions and corporate governance. My role as a partner at K&L Gates has enabled me to lead equity and debt raisings for ASX-listed businesses, help innovate Australian companies, navigate global expansion and provide trusted commercial advice [indiscernible] and executives across sectors such as fintech, health, infrastructure, energy and advanced manufacturing. I bring a blend of legal rigor, commercial mindset and collaboration to my work. This stems from my experience both in top-tier private practice and in-house roles, including as General Counsel for ASX-listed companies and as a director in private investment banking. My background means that I understand shareholder needs and always strive to support disciplined risk management, robust corporate governance and exceptional outcomes for investors. As a director, I've remained focused on transparency, engagement and acting in the long-term interests of all shareholders. My commitment is to continue working alongside the Board and management to help drive sustainable value and ensure the fund remains responsive to dynamic markets and emerging opportunities. I'd be honored to have your support for reelection, and thank you for your trust and confidence in L1 Long Short Fund. Thank you.
Thank you, Harry. I'll now table the outcome of proxy voting received prior to the meeting. That concludes the items of business to be voted on at today's meeting. Shareholders are reminded that they can submit their vote online until 5 minutes after close of the meeting. I appoint Ms. Mamata Telang from MUFG Corporate Markets as returning officer for this poll, and the final results will be announced to the ASX later today. That concludes the formal business to be considered at this meeting. We will now address any questions from shareholders. Moderator, are there any questions on the phone lines?
Chair, there are no phone questions at this time.
Okay. Joel, are there any questions on the online platform, please?
Yes. The first question is asked by Mr. Stephen Mayne for you, Chair. Best practice is now to disclose the proxy position to the ASX along with the formal address to offer more timely disclosure to the market. The likes of Origin, NAB, CAR Group, Viva Energy, Webjet, Xero, Myer, Brambles and JB Hi-Fi all do this. Will you adopt this practice at next year's AGM? And have there been any material proxy protest votes against any of today's item of business? If so, was it caused by a proxy adviser recommending an against vote?
Okay. Thanks, Stephen, for the question. Proxies -- lodging the proxies with the ASX, that's -- we don't do that. That's something that we certainly can look into doing for next year's AGM. So let me take that on board, and we'll have a look at that. Second question, has there been any protest vote? No. There hasn't been any protest vote as far as I'm aware. There are very small numbers of against. It didn't look like there was any protest vote to me.
Thank you, Chair. The second question is for Mr. Mark Landau, also asked by Stephen Mayne. Why is Mark serving on the Board when he is not serving on the L1 Group Board, effectively our parent company? Does he need to be a Director of this company to focus on stock picking? And shouldn't we add more independent directors to the Board?
Thanks for your question, Stephen. I guess our feedback from shareholders and from people generally in the market has been supportive of myself and Raf being on the Board of LSF. Obviously, we should do whatever we think is in shareholders' interest. Up until this point, being able to provide perspectives on equity markets and general market trends, we believe has been beneficial to the Board, but we're very open-minded as to what the best course of action is going forward, and we'd be keen to get the views of shareholders and others of the investment community to gauge their perspectives.
Thank you, Mark. The third question is also asked by Mr. Stephen Mayne. I think this one is for Rafi. Well done on forgoing long gold stocks, a big factor in our outperformance. What is the history of our bullish attitude to gold? And did we manage to lighten some of our exposures at the very top of the market before the modest recent decline? Do we remain long-term gold bulls?
Thanks for that question. In general, we are long-term bulls in any specific sector or commodity. We take things as it comes. In terms of performance, gold has been a strong contributor, but performance has been very widely distributed across a lot of stocks and sectors in addition to gold. Yes, we did take some profits in individual names approximately a month ago when things were particularly strong. That being said, for quite some period, we've had a substantial short to gold futures roughly neutralizing the net gold exposure. And so in reality, predominantly what we're taking a view on is the value upside in individual gold names that we have in the portfolio with substantial company-specific operational upside to come over the next year or 2. We remain committed to a lot of those names that we still think have a lot of upside. In terms of the gold price per se, we don't have a strong view about where it's going to go from here.
Thank you, Rafi. The fourth question is from Mr. Stephen O'Reilly. Firstly, congratulations on the continued strong investment performance. I just had some queries re performance fees. Company documents sometimes refer to a fee of 20%, sometimes 20.5% and sometimes 20% plus GST. I wonder if you could clarify the actual fee. Secondly, I thought that performance fees were to be reinvested in escrow LSF shares, but I'm curious as to why the total number of escrow shares is unchanged for FY '24.
Okay. It's Mark here. Probably best for Joel or Andrew to have a go, I think.
Yes. Yes, it's Andrew here. I think the performance fee that's charged to shareholders is 20.5%. So that is correct, but that is net of GST and the RITC. So this is calculated as 20% excluding GST plus the 10% GST less 1.5% of the RITC credits. So that's how it's made up. That's the specific components. If you wanted more detail around that, we could certainly provide that to you through our Company Secretary or through Joel, but that's the precise makeup. In relation to the second part, the investment of performance fees was only required up until a holding of 15% of the shares on issue. So I think we set out in the prospectus in 2018, the conditions upon which that was required, and it was until they hit -- until the guys hit that 15%, which they've now exceeded. So that doesn't apply anymore.
Thank you, Chair. There is another question from Mr. Stephen O'Reilly. Although realizing Mr. Kingsley may prefer not to comment, I wonder if Mr. Kingsley has anything to raise your shareholding to a similar level to the other independent directors.
Okay. So let I'll -- it's Andrew here again. I guess, it is worth noting that we have recently -- and it's going up on our website, I think, today or shortly, if it hasn't already, put in place a formal policy where directors need to own at least 2 years of gross fees in shares to just make sure that we've got that alignment, not just for your current Board, but also any future Board going forward. And so that's just recently been adopted in the last Board meeting. I know -- Harry, would you like to specifically comment in relation to your own shareholding?
Yes, sure. While each director's personal situation is different, this has already been discussed at Board level, as Andrew has indicated. And my intention is to increase my holding to at least that level, if not more, over the next 6 months. So that's an affirmative for me.
Thanks for that. Thanks Harry.
We have another question online from Mr. Stephen O'Reilly. In order to make LSF a more attractive proposition for investors and increase the public appeal of the stock, would the company consider introducing a benchmark for the performance fee?
I guess, the company was set up at the start with clear parameters around the fees that are payable, and that was set out in detail in the prospectus, and I think in pretty much most of our communications since. The fees, while seen as high and with no essential benchmark, people had got their head around that because we look at -- they look at -- 2 things. They look at what is a global standard for these sorts of products. And secondly, and most importantly, what's the performance post fees. So -- and I guess the third point is I can't -- and the independent directors of the company can't change it unilaterally. This is an agreement that we've got in place with the manager. We talk to the manager about the management agreement from time to time. But most relevantly, we look at the after fee performance. So that's a long-winded answer, but the reality is that we won't be changing that threshold.
Thank you, Chair. There are no more questions on the online platform.
Well, look, thanks very much for those questions as well. I appreciate those. Hopefully, we've answered them to your satisfaction. If not, we're happy to expand outside of the meeting as well. But as there are no more questions, I'd like to thank you for your attendance and now declare the meeting formally closed.
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