Solaris Investment Management, an investment firm overseeing $8.1 billion in assets, has reported its Australian equities long-short fund surpassed its benchmark by five percentage points over the past year. Gus Roberts, co-portfolio manager, noted that both long and short positions were instrumental in this outperformance. The firm manages money for clients, focusing on Australian equities through a long-short fund strategy. This achievement highlights returns driven by astute stock selection, rather than broad sector or macroeconomic bets.
Wealth manager AMP stood out as a significant long position, experiencing an approximate 38 per cent increase. Solaris’s thesis, post a prior short position, centred on the market underestimating AMP’s China pension partnerships and the improving North platform outlook, validated by a July profit guidance upgrade. The fund employs three types of short positions: outright shorts for anticipated declines, funding shorts to finance additional longs, and pair trades that minimise macro risk. Roberts and co-portfolio manager Damien Keune’s extensive experience with short books is a key differentiator.
Key outright shorts included Corporate Travel, successfully exited at a significant discount due to earnings quality concerns. DroneShield and WiseTech Global were also notable shorts, impacted by perceived governance issues, while Orora served as a successful funding short. The recent reporting season saw downgrades generally outnumbering upgrades for earnings and revenue across the S&P/ASX 200, though balance sheets remained robust. Solaris has actively adjusted its portfolio, increasing exposure to gold and lithium and reducing other positions that met original objectives. Genesis Minerals is cited as a preferred near-term opportunity, driven by positive sentiment on gold and its proposed merger.
