Why a $12.6bn merger saw Ausbil swap one gold miner for another

ResMed has also landed on his watchlist, with Condoleon pointing to the sleep-health giant's dominant position in a market with substantial unmet need and a long runway for growth.

Beyond stock picks, the Ausbil Active Sustainable Equity Fund portfolio manager shares a deep dive into the fund’s proprietary ESG scoring work, using Lynas Rare Earths as an example of just how layered sustainability analysis can be and why active engagement, not just scoring, is where the real value lies.

In this Q&A, Condoleon explains how the ESG Scoring Spectrum works, why the fund preferred Genesis Minerals as its gold equities exposure, and why it’s important to invest and not speculate.

What’s your most recent investment and why? 

Genesis Minerals (ASX: GMD). The company recently announced an acquisition of Vault, which is expected to deliver potential synergies. We have a high level of confidence in the management team who have consistently delivered on market expectations. 

We are excited about the potential for the merged entity in being able to generate earnings growth potential for investors.

Which investment did you add to your watchlist this week? 

We recently added to ResMed (ASX: RMD), a global leader in sleep health, specialising in the development, manufacturing, and distribution of medical devices for treating sleep apnoea and other chronic respiratory conditions. 

In our view, the company has a strong market position in the sleep apnoea device market (servicing significant unmet need) and is exposed to long-term growth drivers.

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

We recently sold Evolution Mining (ASX: EVN), which had done remarkably well with the ramp-up in the gold price over the last few years, in order to fund the new position in Genesis Minerals. We retained exposure to the gold equities sector.

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

My favourite chart is one that we have started to produce here at Ausbil in our ESG and sustainability research on companies – our ESG Scoring Spectrum, shown here for Lynas Rare Earths (ASX: LYC).

Lynas Rare Earths is a vertically integrated source of rare earths and critical minerals that are integral to the production of high-strength magnets, supporting a trend of increasing energy efficiency, electrification, battery storage, semiconductors and renewable energy.

This is my favourite chart, not because it is for Lynas, but because this chart demonstrates the real complexity that sits behind our ESG and sustainability assessment of companies.

ESG and sustainability analysis of a company is complex. Companies are exposed to multiple ESG domains, and there is usually never a simple view that captures everything that matters. We believe that it is important to assess companies holistically on their ESG and sustainability credentials, including whether their practices are improving, how they compare with peers, and how they compare to global best practice standards. 

It is important to understand that almost every company will show up exceptions or weaknesses, but for us, this is where the real action occurs, and where we believe active engagement can make a difference. It is active engagement that holds it all together, in the actioning of the empirical analysis underpinning our view on any company, especially the exceptions.

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

Having been long-term supporters of CSL’s (ASX: CSL) business, we were pleased to see the company rerate from what we considered a materially oversold level. It reached a recent low PE of 9x, which we viewed as attractive for a global plasma business.

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

We continue to like the outlook for the materials sector, which has come under selling pressure in the last week or two. While there is volatility in the sector, we see the potential for superior earnings growth in FY26 and FY27 and for solid global growth, despite the recent oil price shock, in critical minerals. In our view, these factors may support a re-rating in prices.

What first drew you to markets or this sector and what continues to keep you inspired today? 

I was fascinated by the stock market from a young age. As soon as I discovered the powerful wealth-creating effect of compounding returns, I was hooked. Managing other people's wealth is a privilege, and I am inspired by the people I work with and meet in my work.

What’s one piece of advice you’d give to new investors? 

Invest, don’t speculate. For many investors, equity investments are best approached with a long-term mindset, and compounding returns can be a powerful principle when applied consistently.

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

I am a kinaesthetic person, so I tend to like exercise like walking or jogging as I find that action is restorative for the body and the mind.

Rapid fire! 🔥

What is your favourite investing book? 

One Up on Wall Street by legendary investor Peter Lynch.

What is your favourite investing or finance/markets related podcast? 

FT News Briefing.

What’s the first thing you read each morning? 

The AFR.

What is your favourite restaurant? 

My local Japanese.

What’s something people are surprised to learn about you? 

I’m not sure, you would have to ask them.

Think there’s a better pick? Prove it. Share your rapid-fire book, podcast, and daily read in the comments.

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