A View on the Macro

While Contact’s investment philosophy is executed through a bottom-up process focusing on quality business who produce strong cash flows, have strong balance sheets, are well managed and provide an attractive valuation, the Ex50 Fund’s absolute objective means we are conscious of broader economic conditions that can impact returns.

January’s equity market drawdown was focused on the high multiple stocks while the remainder of the market has held up quite well such that the net result has been the index’s multiple moving largely sideways. Overall, markets locally and globally do not scream cheap on conventional metrics, and in fact according to a certain investor’s pet measure, they are wildly expensive. The valuation metrics of Contact’s Ex50 Fund are in line with the market despite the absence of the large and low multiple Resources and Banks stocks.


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