Listed investment manager Hunter Hall International (ASX: HHL) has reported a fall in revenue and profits from continuing operations for the full year ending 30 June 2013.
Revenues from continuing operations declined 21% to $21.5 million while profits from continuing operations fell 38% to $4.7 million. The company also announced that Mr David Deverall the current CEO of Hunter Hall – Mr Deverall was previously the CEO at Perpetual (ASX: PPT) – has also been appointed Managing Director.
The firm's fall in revenues and profits was largely caused by a decline in funds under management, which Mr Deverall squarely blames on the underperformance of certain portfolios managed by the firm, including the listed investment company Hunter Hall Global Value (ASX: HHV). Hunter Hall utilises an ethical screening process and concentrates on investing in small to mid-sized capitalisation companies both domestically and internationally. Over the 12 months to June the Hunter Hall Global Value portfolio returned 24.6% which was lower than the 32.8% return of its benchmark the MSCI.
Within the Global Value portfolio, the two largest positions at reporting date were Sirtex Medical (ASX: SRX) and M2 Telecommunications (ASX: MTU). Thanks to their high weighting within the portfolio and their strong share price performances, these two companies helped provide significant contributions to overall performance.
Sirtex Medical was and still is the largest holding and increased in value during the financial year by 97%. Sirtex' share price appreciation was helped along by strong dose sales of its liver cancer treatment, an expansion of its manufacturing capacity in the USA and exciting results from a study which found that there could be a broader application for the company's therapy.
M2 Telecommunications' shares rallied 77% during the year as the firm bedded down the acquisition of Primus Telecom and Dodo. Like its investment in Sirtex, Hunter Hall has had a long association with M2, having first purchased stock in the telecom provider in 2007. This means the total capital gains from owning these two companies are significantly higher than just the gains experienced in the past 12 months.
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Motley Fool contributor Tim McArthur owns shares in Hunter Hall International.
