Forager Funds Management, a Sydney-based firm overseeing $390 million in assets, has detailed its opportunistic approach to global equities. Portfolio manager Gareth Brown highlighted the international shares fund’s 29.2 per cent exposure to technology stocks, primarily concentrated in Japan, amidst recent market volatility. The firm focuses on identifying and investing in businesses with strong economic fundamentals and long-term growth potential, even as the broader market saw a sell-off in artificial intelligence-exposed software firms.
Brown explained that Forager’s Japanese tech investments, which currently form the bulk of their technology holdings, are favoured for being earlier in the shift to subscription models, offering faster growth and lower valuations than US counterparts. Despite being hit hard last quarter due to market correlation, these investments align with Forager’s long-standing minimal exposure to highly valued US technology. Technology now accounts for about a third of the fund, reaching its limit after modest additions in Japan and two new European plays. The firm targets software businesses with modest customer charges, high switching costs, and network effects, prioritising companies that return capital via dividends and buybacks.
Recent portfolio activity includes the successful exit from US-based Comfort Systems, an infrastructure services firm, which more than tripled their investment. Conversely, a disciplined exit from Canadian oilfield tech business Pason Systems occurred after it fell short of original expectations. Forager also seeks overlooked opportunities like Clinica Baviera, a European ophthalmology clinic leader benefiting from an ageing population. Its tight free float and controlling shareholder likely explain why it hasn’t yet attracted a private equity bid, which Forager hopes will continue given its long-term compounding potential. Another value pick is Inchcape, a UK-listed global car wholesaler, which trades attractively and actively returns capital to shareholders.
