Sam Kazacos, Investment Specialist takes a deep dive into the Antipodes Global SMID portfolio with James Rodda, Portfolio Manager of the strategy.
Transcript
Hello and welcome to a new series of Antipodes Magnified, where we take a deep dive into the Antipodes Global SMID portfolio. I’m Sam Kazacos, Antipodes investment specialist, and I’m joined today by co‑founder James Rodda and portfolio manager of the Antipodes Global SMID strategy. James, welcome.
“Thanks for having me, Sam.”
The December quarter brought to an end a calendar year punctuated by a myriad of geopolitical and macroeconomic headlines that impacted markets throughout the year. But in the December quarter, broad‑cap global equities finished higher, up 2.7%, outperforming small‑ to mid‑cap companies, with the MSCI All Country World SMID Index delivering 1.4% – a narrative that permeated most of calendar year 2025.
The Antipodes Global SMID strategy delivered 10.2% over the December quarter, an outperformance of 8.8% after fees, bringing to an end a very successful and strong calendar year for the strategy. It delivered 34.8%, or over 24% benchmark‑relative outperformance after fees. The strategy remains top ranked in its peer set since inception.
James, those familiar with the strategy know that the portfolio is a collection of diversified companies across all 11 GICS sectors and all major regions, and from a stock‑count perspective, more diversified than peers with around 70 names. What were some of the key drivers over the quarter?
“Yeah, thanks, Sam. At an index level for SMID, it was what we’ve seen over the last three years –more underperformance versus the large‑cap benchmarks. But again, we were able to deliver strong results, which was good.
“Looking at those 11 GICS sectors, we generated alpha in 10 of the 11. The one we didn’t was real estate, which was a sub‑20 basis point drag – so nothing too wrong, and plenty of things right. Six of the 11 sectors delivered more than 1% alpha for the fund individually, so it was a pretty broad‑based contribution.
“In terms of stock‑specific contributors, Brookdale, which has until recently been the largest holding in the fund – senior living facilities and nursing homes – was very strong. Semrush, a software company, was bought out at an over‑70% premium by Adobe, which was very nice. We also had strong performance in healthcare broadly. No individual names in healthcare delivered huge contributions, but we had three or four smaller‑weight stocks up nearly 50% or more. So that was another area that worked really well for us during the quarter.”
It was a tougher quarter for emerging markets, though. Some exposures in Indonesia and Brazil dragged on performance, making emerging markets the weakest regional area for the portfolio.
“In terms of stocks that were weaker, Chanjet was the leading detractor of alpha. Think about it as the Xero of China – an accounting software provider. That was a large detractor, alongside a similar peer, Free, that we hold in Japan. We continue to lean into software companies that are unloved at the moment, where the businesses are sticky, they’re growing well, and they’re trading at a fraction of long‑term software sector multiples. Both those names fit that bucket. We’ve been adding to Chanjet and adding to Free.
“In the rest of EM, Sendas – think of it like Costco but without the membership model – a Brazilian big‑box grocery retailer, was quite weak as interest rates rose and consumer weakness persisted in Brazil. At the margin, market‑share data hasn’t been as good as we’d like, but we still think it’s a double‑digit earnings grower for many years. It’s trading at 10 times this year’s earnings and six times 2028 earnings, which we think is attractive. With so many mum‑and‑dad smaller retailers in Brazil, it’s inevitable that value players like Sendas continue taking market share.
“The last name I’ll mention on the detractor side is also in emerging markets: Pakuwon in Indonesia – PT Pakuwon. It’s a large mall owner. Think of it like Westfield in Australia, except without luxury tenants. There are only a handful of luxury stores for major brands in all of Indonesia, and none are in these malls. But they run great super‑malls. They buy large land tracts, build a mall, and often surround it with apartments and housing developments.
“The stock is currently trading at a roughly 70% discount to our assessment of net asset value. Even if we value the land bank at zero, it trades at a 13% cap rate, and rents are growing 8% year‑to‑date. The business is sound. On top of that, they have new developments coming by 2030 that we think could be worth the current market cap alone. So again, something we leaned into during the weakness.”
Some of the software names, some of the EM weakness – and the portfolio also tilted a little more cyclically over the quarter and into some defensives. Any other changes?
“Yeah. In general, the defensive weighting in the portfolio is higher than it has been for most of the fund’s life. We think it’s prudent with strong markets. We’ve got about 35% in what we’d consider ultra‑defensive sectors: healthcare, real estate, infrastructure and precious metals. That doesn’t include other defensive areas like software, which we view as growth but with sticky and resilient revenues.
“Where we were adding during the quarter was mainly real estate and infrastructure. We lightened up slightly on precious metals – those stocks have done really well – and with a potential rate‑cut cycle coming, that’s particularly supportive for real estate. We’re buying real estate globally at large discounts to valuations with good cap rates. If the economy weakens, they benefit from rate cuts; if the economy stays strong, they also do fine. Combined with great stock‑specific stories like Brookdale and Pakuwon, we think the risk‑return balance is very attractive.”
Now, it wouldn’t be a start‑of‑year video without me asking for a prediction – one stock to watch this year. If you can pick one!
“Yeah, I might give you two. I like to talk about the top five because that’s where we express conviction.
“Pakuwon, which we just discussed, is now a top‑five position. Another new top‑five holding over the quarter is Chime – effectively a neobank in the US. We’ve done well in neobanks since inception. We had a small position, watched it sell off, waited for catalysts, and then increased the position significantly as it fell. It’s trading at around 12 times 2028 earnings. We think the cost base is fairly fixed, and they’re adding more retail customers each quarter than Wells Fargo or Bank of America – hundreds of thousands of new sticky transaction‑account customers.
“The largest position in the fund is IWG – International Workplace Group. The best analogy is that it’s like WeWork, but seven times larger. It competed against WeWork when WeWork was effectively selling a dollar for 80 cents. Now that WeWork is owned by a more responsible competitor, the industry is going from strength to strength as companies want flexible office arrangements, shifting from capex to opex.
“There’s also a business‑model change: rather than IWG paying for fit‑outs themselves, building owners now do that. Instead of taking 100% of the rent and incurring those costs, IWG takes 15% and the building owner keeps the rest. That makes it a low‑capital‑intensity model. It’s trading at six‑and‑a‑half times 2028 earnings, and we think it can grow 25–30% a year through 2030. It’s very asymmetric – strong industry tailwinds and a compelling company story.”
One to watch this year and beyond. It would be remiss not to mention our own exciting development over the quarter: the opening of the Antipodes Global SMID strategy as an ETF on the ASX under ticker MIDS – the Antipodes Global SMID Active ETF.
And James, that keeps it short and sharp. Thanks for your time today. If you’d like to hear more about the strategy, please reach out to your Pinnacle Investment Management representative or contact us at invest@antipodes.com.
Bye for now.
Stock commentary is illustrative only. Not a recommendation to buy, hold, or sell any security.
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