Moving on from Catapult
Investing in unloved and underappreciated stocks is rarely comfortable. It often means doubting what other investors believe and backing ideas others dismiss. Our journey with Catapult Sports (ASX: CAT) was an exercise in patience and conviction that has now rewarded us handsomely. Yet this investment has now come to an end - the Fund sold the last of its shares in Catapult this week.
Forager’s first purchase of Catapult shares was June 2021 at $1.90 per share. Almost two years later, in April 2023, we were adding to the Fund’s investment between $0.70 and $0.80. With the share price north of $6, it has been a wonderful investment for Forager investors and anyone who played along.

It’s not the first investment on which we have made those sorts of returns. Gentrack (ASX: GTK) and RPMGlobal (RUL) have been similar-sized winners in recent years. Yet Catapult is the stock where we best applied 16 years of lessons to truly optimise a successful investment:
1. Low Initial weighting. The initial weighting was less than 2% for several years. This allowed us to more easily cut the investment with limited damage had our contrarian view been proven wrong.
2. Adding on strength. We added to that low initial weighting on good news, even after the price had risen. While paying $1.50 a share after seeing $0.70 isn't easy, building confidence in a thesis allows for a crucial counter to the risk-minimisation of a low initial weight. At its peak, Catapult was more than 10% of the Fund.
3. Capturing the upside. We held a higher-than-usual portfolio weighting to capture the maximum upside as Catapult moved from a relatively unknown stock to an ASX300 member with major investment bank research coverage.
4. Winding back. And yet we are valuation-driven investors. There is a point when higher stock prices create a valuation at which future returns no longer meet our minimum thresholds. This is where we have arrived with Catapult.
And so our journey has come to an end.
In the weeks after recording Livewire’s innovation episode of Buy Hold Sell, Catapult was a surprise replacement for Gold Road in the ASX200 index. That sent the share price up another dollar, leaving the company sporting a market capitalisation in excess of $2bn. This price-agnostic index buying was a good opportunity to exit the last of our holding.
It still has the same bright future we hoped for when making our first investment four years ago. But today’s valuation reflects a bright future and a bit more. We have barely changed our numbers over the four-year holding period, meaning time and sentiment alone have driven the share price to its current level.
There are plenty of scenarios where Catapult shareholders do well from here and I would love to see this Aussie business become a massive global success. Catapult is our best ever example of optimising the profit from a successful investment. But at Forager we excel at finding the unloved and underappreciated, and at these prices it is time for us to focus on finding the next one.
To find out where Forager is redeploying capital in today’s market, register for our upcoming September quarterly report.
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