VGI Partners Pty Limited’s FY19 Investor Letter

VGI Partners Pty Limited is an Australia-based investment management company founded in 2008 by Robert M. P. Luciano. It’s headquartered in Sydney and has offices in New York and Tokyo. The firm offers capital management for family offices, high-net-worth individuals, and VGI Partners Global Investments Limited.

With over 20 years of portfolio management experience, Robert Luciano is an expert in accounting and equity analysis. He started his career in the finance industry when he worked as an accountant at BDO Nelson Parkhill in 1993. Before starting VGI Partners, he worked at Sydney-based company Caledonia Investments for 5 years as Executive Director and Investment Manager. He also held various positions at BNP Paribas and Allianz Equity Management. Luciano holds a bachelor’s and a master’s degrees from the University of New South Wales.

In its FY19 Investor Letter, the firm reported that VGI Partners Global Investments Limited generated a +10.2% net return. The fund’s average monthly gross exposure during the period was 99%, while its average monthly net exposure was 49%.

“Dear Fellow Investors,

For the twelve months ended 30 June 2019 (FY19), VGI Partners Global Investments Limited (ASX:VG1) generated a post-tax net return of +10.2% after all fees.

VG1’s average monthly gross exposure in FY19 was 99% (74% long investments plus 25% short positions), with an average monthly net exposure of 49%. This means that on average for every $100,000 you had invested in VG1 during FY19 we owned $74,000 of equities and sold short $25,000 of equities for a net equity exposure of $49,000.

We set out the above as we believe it is critical for our investors to recognise that VG1’s recent returns have been generated with a substantial cash buffer. This provides VG1 with significant purchasing power to buy high-quality companies at prices that meet our valuation criteria when market volatility inevitably reappears.

VGI Partners’ investment process and philosophy is based firmly on the cornerstone principles of capital preservation and ‘margin of safety’. We are extremely focused on avoiding any permanent loss of capital.

We aim to increase the likelihood of capital preservation primarily through two means. First, by investing in high-quality businesses that are easy to understand and that trade at prices which we believe exhibit a sufficient margin of safety – that is, trading at prices that are significantly below the intrinsic value of the business. And second, by using little or no leverage and keeping prudent cash buffers.”

You can download a copy of VGI Partners Pty Limited’s FY19 Investor Letter here:

VGI Partners Pty Limited’s FY19 Investor Letter

You can also see the list of our 2019 Q2 investor letters and download them on this page.