The Bennelong Emerging Companies Fund invests predominantly in micro and small-cap stocks listed on the ASX.
The fund returned 8.9 per cent in May, soundly out-performing its benchmark of the official RBA cash rate plus 5 per cent.
Although micro and small cap stocks can offer exciting growth prospects, they come with greater investment risk.
The fund attempts to mitigate the risks by focusing on higher quality growth stocks, largely from the consumer, financial and technology sectors. It looks to avoid propositions such as minerals explorers, speculative stocks, fads and unproven business models.
Top Holdings
In its May performance update, the fund declared BWX Ltd(ASX:BWX), Smiles Inclusive Ltd(ASX:SIL)and Axsesstoday Ltd(ASX:AXL) as 3 top holdings.
BWX
The BWX share price soared 19 per cent higher in May after the personal care product group received a $6.60 per share management buyout bid.
Before the shock offer, BWX shares were in the doldrums, having fallen from $8 early in the year down to as low as $4.41. BWX shares trade today at $6.02.
Smiles Inclusive
Smiles Inclusive, which operates the Totally Smiles brand, is a recent IPO after raising $35 million in a public float where the shares were issued at $1.
The dental surgery company is aiming to double the number of outlets under its control to 100 by this time next year.
Smiles Inclusive competes with fellow ASX-quoted dentistry roll-ups 1300 Smiles Limited(ASX:ONT) and Pacific Smiles Group Ltd(ASXSQ). Smiles all round!
The Smiles Inclusive share price closed May just 1 per cent above its IPO price, and now trades at 97 cents.
Axsesstoday
The Axsesstoday share price jumped 11 per cent higher in May.
The company is a leading specialist lender to small and medium businesses. The company is growing quickly, with loan receivables increasing by over 180 per cent CAGR since the first half of 2016. Axsesstoday is forecasting double digit earnings growth over FY19.
Writing on Livewire, Josh Kitchen of K2 Asset Management recently said Axsesstoday shares were trading on a one year forward P/E of 12 times, with earnings growth of over 20 per cent per annum in the foreseeable future.
In Mr Kitchen’s opinion, AXL shares offer “outstanding value relative to its peers.” Peers include failed recent IPO Prospa and fallen hero Silver Chef Limited(ASX:SIV). The Silver Chef share price has plunged from a high of around $12 in October 2016, now trading at $3.93.
Last month
In April, as well as BWX, Smiles Inclusive and Axsesstoday, the Bennelong Emerging Companies Fund declared Freedom Foods Group Ltd(ASX:FNP) and CML Group Ltd (ASX:CGR) amongst its top holdings.
The Freedom Foods share price is up 32 per cent over the past 12 months, while the CML share price has doubled over the same period.
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
SQ). Smiles all round!
