Hi {{first_name}}
The Laser Beam Fund returned +3.3% net in September. Since launch on 1 July the fund is up 8.5% net (+39% annualised) while holding an average cash balance of 68% and an average net exposure of 23%.
MSCI AW is the MSCI All World in Australian dollars. Our upside capture ratio is 130% with beta at 0.2. We have not had a down month yet, so there is no downside capture. A positive up/down capture ratio and steady compounding remain the focus.
INVESTMENT STRATEGY
We run a concentrated global long short portfolio built for volatile, mispriced markets. We hold 5 to 20 positions, cut losers quickly, and let winners compound. Shorts are used mainly for hedging. Ideas come from deep fundamental work and our AI engine that flags regime shifts and trend changes early. Read more about our strategy on the website.
MACRO BACKDROP
Global growth is accelerating and monetary policy is supportive. Rate cuts offshore will help, but fiscal policy is now steering the cycle in a period of fiscal dominance, as the US government is determined to “run it hot.” The goal is to inflate away the debt, meaning inflation is likely to stay structurally higher.
Companies are spending billions on the AI build out, driving genuine growth through investment in chips, data centres, power, infrastructure, and talent. Much of big tech’s free cash flow is being reinvested to stay competitive in AI, and these firms will need to deliver meaningful returns for that spending to be justified — a point still up for debate across much of the sector. Stock selection is critical.
PORTFOLIO POSITIONING
At month end we were 45% long, 25% short, with only 20% net exposure. The short side is mainly a Nasdaq futures hedge and a small Palantir put. Offshore equity exposure is fully hedged back to AUD.
Performance in September was broad based, led by Alibaba (+1.2% to NAV), Alphabet (+0.8%), and Reddit (+0.6%). The Nasdaq hedge and Nvidia put detracted (-0.5% each) and Amazon (−0.4%) also weighed on returns. Options remain a cost effective way to protect gains while volatility stays low.
THEMATICS AND KEY POSITIONS
AI leverage (9%) – AMD (5%) is our largest position in this theme. Nvidia remains at the centre of the AI hardware ecosystem, but AMD is now benefiting from the second wave of data centre expansion as hyperscalers diversify suppliers. The earnings leverage is yet to be fully reflected in valuations. We realised profits in Google and Reddit after strong rallies and are watching both for potential re-entry
Energy demand (7%) – Talen Energy (6%) and an emerging copper explorer (2%). The rapid build out of AI infrastructure is lifting baseload power demand and driving multi-year grid investment, which supports merchant power pricing and related assets. Talen is well placed to benefit from higer US electricity prices and improved contract visibility.
China resurgence (7%) – JD.com (5%) and Alibaba (2%). We trimmed Alibaba after a strong rally and rotated into JD.com, which trades around 10x forward P/E with mid-teens EPS growth potential and a leading logistics platform.
Trading (5%) and Value (14%) opportunities – We hold two compelling short term trading opportunties. Profits from strong performers have been recycled into four select value opportunities that combine solid earnings growth with discounted valuations.
OUTLOOK
The AI cycle remains our core opportunity. It’s reshaping industries and driving earnings growth at attractive entry points. We also see support for a longer commodities upcycle since supply constraints, rising energy demand, and infrastructure build outs underpin prices.
With a global mandate we can go where the risk reward is most compelling: we own global tech leaders in USA, undervalued commodity exposure in Australia, and selective China growth on the Hang Seng.
The Nasdaq hedge stays on to protect gains and maintain flexibility if volatility returns. Our approach is consistent: be selective, keep cash ready, and act when the skew is favourable.
OPERATIONS
From 1 November we will adopt daily unit pricing to improve transparency and operational efficiency. The change adds about 1bp per month to costs. For example, September would have been 3.26% instead of 3.27%. Although the change to fees is immaterial, because it was not included in the IM, I have to remind you that you are free to redeem at any time.
Please download the NAV app (iPhone or Android) to view daily performance from 1 November. These daily figures will also feed into a client dashboard to see top holdings and live net exposure, along with performance.
Thank you for the referrals in September, and welcome to our new investors. The fund remains open for now. I’m confident we have the right structure to compound over the long term and am personally increasing my investment in the fund in October.
Please email or call any time if you’d like more detail.
Regards
Portfolio Manager
The Laser Beam Fund
