Federal budget held few demons for small-cap stocks

Robert Frost

The May federal budget was largely considered a benign event for equity markets, and indeed the broader economy. This was understandable given the unusual circumstance of a federal election immediately following the budget and the government not willing to impose any tough new fiscal measures on the electorate so soon before going to the polls. OC did extensive due diligence prior to the budget, checking potential impacts on our stocks and, as expected, the budget held few demons for our companies. At the margin some of our holdings were impacted such as: childcare (e.g. G8 Education – new funding measures being pushed back 12 months), healthcare (e.g. Healthscope – indexation placed on hold), and aged care (e.g. Japara – ACFI funding reduced). Pleasingly, the majority of our stocks were not impacted at all which came as a relief to companies in some sectors, such as novated leasing, which had been impacted by some negative policy in recent budgets (e.g. SG Fleet, Eclipx) and can be vulnerable to changes in government policy. (VIEW LINK)

Robert Frost

Robert was appointed Head of Investments in 2009 and has been a Portfolio Manager since joining OC Funds Management in 2001. Robert is also an Executive Director of parent company, Copia Investment Partners. Robert is responsible for the...


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