Listed Investment Company (LIC) Contango Microcap Ltd (ASX: CTN) has a solid track record of outperforming the market with the company achieving an annualised total shareholder return (TSR) of 12.6% over the past five years to the end of March 2015. For comparison, the S&P/ASX Small Ords accumulation index has actually gone backwards by 0.3% per annum over the same time frame.
While reviewing the top holdings in a portfolio may be interesting – in Contango's case the top two holdings are Villa World Ltd (ASX: VLW) and Slater & Gordon Limited (ASX: SGH) – keeping a keen eye on what a well-regarded fund manager is actually buying and selling can be far more insightful.
Here are four important portfolio moves made within the Contango Miocrocap portfolio in the March quarter of 2015.
New addition: Sandfire Resources NL (ASX: SFR) – The copper and gold producer has been added to the portfolio due to Contango's positive stance on the copper price in coming periods. Despite a recent run up in the share price, the stock is still down over the past 12 months.
Topping up: Mayne Pharma Group Ltd (ASX: MYX) – A popular pick amongst small cap managers, Mayne has undertaken a company transforming acquisition and restructured its business model, which Contango believes will result in strong earnings growth.
Topping up: Godfreys Group Ltd (ASX: GFY) – A recent listing to the ASX but a long-established brand when it comes to vacuum cleaner retailing. Contango has been attracted to the stock due to its "strong dividend yield of 8% fully franked and p/e of 9.5x which looks cheap in a market that is close to fully valued."
Selling down: Austbrokers Holdings Limited (ASX: AUB) – Contango removed this leading insurance broker from the portfolio during the March quarter citing increased competition and pressure on rates which it believes is an industry-wide problem, not company specific.
