LHC Capital has reported a 14 per cent return over the past three months, driven by a resurgence in key stock holdings and a strategic investment in Queensland’s Dalrymple Bay Infrastructure. The Sydney-based firm, known for its contrarian investment approach, benefited from a well-timed entry into Dalrymple Bay, a major metallurgical coal export terminal. LHC Capital is a short-selling firm that makes controversial bets and backs turnaround projects. They also manage investments in a variety of sectors.
The fund initiated its position in Dalrymple Bay following a sell-down by US private equity giant Brookfield Infrastructure last month. According to LHC, Dalrymple Bay, whose terminal is used by mining giants such as Anglo-American and Glencore, has already contributed positively to the fund’s performance. Shares in Dalrymple Bay have surged over 20 per cent since Brookfield’s sell-down in June. LHC’s chief investment officers, Stephen Aboud and Marcus Hughes, anticipate further gains due to the upcoming quarterly rebalancing of the S&P/ASX 200 Index, expecting Dalrymple Bay to be added, driving passive buying and attracting larger institutional investors.
LHC highlighted the company’s attractive fundamentals, citing predictable and low-risk cash flows and EBITDA margins of 95 per cent in the past financial year. The fund’s recent performance outstripped the S&P/ASX Small Ordinaries Accumulated Index, which rose by 8.6 per cent over the same period. For the full financial year, the hedge fund achieved a return of 26.8 per cent. The top contributors to the quarter’s success included Life360, WiseTech, Pro Medicus, Hub24, and TechnologyOne.
LHC also noted the positive impact of Life360’s $US320 million convertible note raise, which strengthened the company’s balance sheet and attracted recognition from US institutions. The fund maintains a bullish outlook on TechnologyOne, expecting the software provider to sustain its growth due to its market dominance and exposure to artificial intelligence. As of the quarter’s end, LHC’s gross exposure stood at 102 per cent, with net exposure at 56 per cent, and the top five positions comprising 40 per cent of total assets.
