Volatility creates opportunities - here's Luke Laretive's playbook

Markets reward those who can read the cycle, separate noise from signal, and act decisively when opportunities emerge. 

Few Australian advisers embody that skillset as consistently as Luke Laretive, co-founder of Seneca Financial Solutions. 

Luke's philosophy is straightforward: design multi-asset portfolios that protect and grow wealth across generations. That long-term focus informs his work as portfolio manager for the Seneca Australian Shares SMA and Seneca Australian Small Companies Fund. 

Known for his clear investment framework and focus on value, Luke's edge lies in recognising when markets overlook potential or misjudge risk.  

In this Q&A, Luke shares the latest from his investment playbook: from spotting inflection points in unloved software names, to capitalising on cyclical rebounds in industrials, to trimming positions when reinvestment needs erode the risk-reward equation. 

What’s your most recent investment and why?

Siteminder (ASX: SDR).  We bought it at the end of July. If you’ve been following our work, you’ll probably be sick of Ben and I talking about inflecting profitability, but this was a pretty typical “Seneca” setup. A growing, reoccurring revenue software business that the market had fallen out of love with on weak cash flow.

We ran it to ground as we usually do, figured out that revenue growth was likely to be re-accelerating and there was potential for upside surprise on cashflow. 

It reported $14.3m EBITDA on Wednesday, stock traded up as much as 31% on the day. 

Which investment did you add to your watchlist this week?

Regal Partners (ASX: RPL). Looking a lot more affordable and with our constructive view on markets, they’ll likely catch a bunch of performance fees between now and FY26 close. And under the recent methodology changes, it’s also a likely S&P/ASX 300 index inclusion. 

What is the most recent investment you have trimmed or sold, and what drove this decision?

Megaport (ASX: MP1). We bought the stock at $7.32 in November last year (covered on Livewire here) and have made our money riding the accelerating cash flow from undemanding valuations. 

The company is now reporting that it needs to heavily reinvest to continue growing, and at this valuation, that’s not as attractive a proposition as it was for us under $8.

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What’s your favourite chart or data point from this week?

Probably one of the lesser known ASX-listed software businesses in our portfolio, Objective Corp (ASX: OCL) has been transitioning from license to subscription revenue. 

Investors often neglect the shareholder value that can be created in this shift in revenue quality (see Adobe [NASDAQ: ADBE] or Xero [ASX: XRO]) as the textbook examples from history). 

It’s slow moving and requires patience but OCL has returned 30.43% p.a. CAGR for shareholders over the last 10 years (outperforming the ASX All Ordinaries which has done 9.90% p.a.) and is up 61.56% in the last 12 months.

What was your weekly high – a standout market moment or highlight?

Emeco (ASX: EHL). I wish I had more to say on this, but we’ve already laid this thesis out on Livewire on 30 May (here). 

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As Ben says in his article, we picked it up at bottom of the cycle valuations in the 70-cent range, and now the market, post result, is pricing it for the first green shoots. 

It’s still cheap at a 30% discount to NTA and the strong cash flow means a juicy capital return is on the way. 

Still plenty to play out here as the cycle upswing and eventual peak occurs. It’s only on 2.3x EV/EBITDA… It will likely hit more than 6x in that ‘peak’ environment.

What was your weekly low – a market disappointment or challenge from the week?

Imdex (ASX: IMD) shares are down c. 13% from their recent 52-week high, despite peers with similar exposure to the gold sector making new high after new high.

Institutional investors have made a mistake, over-extrapolating the Q4 revenue run rate and implying an inaccurate growth downgrade. 

We think they figure this out soon (hopefully, after reading this) and expect the stock follows the rest of the sector. In the interim, we’ll have to wear the short-term performance hit in our portfolio.

What first drew you to markets or this sector?

From an investing perspective, I just always loved the idea of running a business, so people who ran a business always interested me and owning a share of a business always appealed to me.

In terms of starting a financial services business, I just saw an opportunity. I used to look around my previous firm at guys making 4-to-5-to-600-hundred thousand dollars a year and they worked 4 hours a day, drank during lunch break and just quoted share prices and price targets from the research team down the phone to Mum and Dad investors… seeing that, I was confident I could compete and win clients against that calibre of adviser. 

What continues to motivate and inspire you as an investor?

I’m competitive. And I like making money. 

As a major shareholder in the business and a significant investor in the funds, I’m highly incentivised to generate the best possible returns for myself and our clients.

How do you unwind when you’re not thinking about the market?

We just moved into a new house, so I have a list of chores as long as my watchlist at the moment! We are lucky enough to live near Bells Beach, so I’ll usually surf before work. 

It’s cold, dark, and windy down here, so not quite the same as these handsome, tanned, Sydney fund managers surfing at Bondi Beach before work (😂), but I’d argue there’s no better way to start the day than trying not to drown in the middle of winter in the Southern Ocean.