Q3 2023 Global Fund Newsletter

Investment objective

The investment objective is to generate superior returns for Unit holders by investing in global markets, with a focus on reducing risk and preserving capital. More information can be found in the Information Memorandum located at the Fund website.

Applications available here.

Investment Strategy

The Defender Global Fund (Fund) provides investors with exposure to global markets through a long and short strategy. The Fund starts with the Managers global macroeconomic and market outlook, then overlays key thematics which the Manager believes will effect future performance and combines this with a bottom-up investment decision criteria.

Performance Summary


The Defender Global Fund returned +0.1% in Q3 2023.

At the macro level Q3 2023 saw moderating inflation in the developed world, tightening financial conditions (with US 10yr bond yields rising considerably from 3.86% to 4.69% over the quarter) mixed economic data and volatile equity markets, with the S&P500 down -3.6% over the quarter.

The cumulative effect of the above macro conditions and other variables has meant the Defender Global Fund has been holding higher cash levels and has been allocating a greater share of capital to uncorrelated/ alternative investments.

In Q3 we continued to opportunistically invest across our core thematics (Technology, Electric Vehicles, De-Carbonisation, Artificial Intelligence, Special Situations), with additions to Alphabet Inc (Google), Nickel Industries Limited and new additions to the portfolio, Pershing Square Holdings Ltd and CHC Investment Fund III.

Special Situations – Pershing Square Holdings, Ltd

Pershing Square Holdings, Ltd (PSH) is an investment holding company structured as a closed-end fund principally engaged in the business of acquiring and holding significant positions in a concentrated number of large cap companies. Public shares of PSH trade on the London Stock Exchange (PSH.L) and Euronext Amsterdam. PSH has investments valued at ~$13BN as at 30 September 2023, and is managed by the highly regarded Bill Ackman and Nicholas Botta, who are also the largest shareholders (~26%).

PSH has returned +16.1% pa since 2004, with particularly strong returns recently in 2019 (+58.1%), 2020 (+70.2%) and 2021 (+26.9%), indicating a solid understanding of the current market/macro backdrop.

We like both the underlying portfolio of listed companies (which includes Alphabet, Universal Music Group, Chipotle’s Mexican Grill, Restaurant Brands International Inc, Hilton Worldwide Holdings, Lowe’s Companies Inc, Canadian Pacific Kansas City Limited, Howard Hughes Holdings Inc), as well as PSH’s interest rate swaptions (that benefit when interest rates rise) and their ownership of a SPARC which provides optionality for future private companies that might wish to go public.

The other key attraction of PSH is the fact that this basket of high quality/high cash flow companies currently trades at a greater than 30% discount to NAV in the PSH vehicle, so we are gaining exposure to these high-quality companies/positions at a substantial discount.

PSH also has an active on-market buyback with approval to buy up to $100M worth of its own securities, one of many efforts being explored to close the discount to NAV. We take this as another good reason to own this company and have thus initiated a position in Q3.

Finally, we consider that the discount to NAV isn’t sustainable. Since we’ve acquired the position, the discount has expanded from 33% to 38%. It’s inconceivable that Ackman & Botta will accept their personal holdings trading at such a discount indefinitely. For this reason, combined with the on-market buyback we believe that the investment presents an opportunity for significant gains in the future.

Artificial Intelligence (Ai) – Microsoft (MSFT) and Alphabet (GOOG)

We continue to be of the view that some of the biggest gains from Ai will accrue to the large incumbent platforms given their enormous installed base of existing customers, large R&D budgets, strong FCF and armies of talented software developers.

Two of our largest listed positions within this thematic continue to be Microsoft and Alphabet (Google).

As anticipated, Microsoft has recently announced plans to increase the price of its Office suite of products, and importantly to integrate Microsoft 365 Co-Pilot (one of it’s most powerful/useful Ai tools, see here for 90 second video on Co-Pilot: https://www.youtube.com/watch?v=S7xTBa93TX8) into its broader Office 365 suite at a monthly price of +$30 per user. This not only will drive revenue but is also expected to increase the stickiness of the existing customer base.

Alphabet (Google) is expected to continue the rollout of its Ai enhanced products in the coming quarters (including Alphabet’s answer to ChatGPT, Bard, new conversational Ai features in its Search product and Gmail products), and as a reminder Alphabet already has multiple other products in market (Youtube, Google Maps) with a customer base of billions of monthly users.

We expect this Ai product rollout to be a powerful thematic for both companies for years to come. We continue to have meaningful exposure to other Ai beneficiaries (Nvidia, Apple, Amazon, AMD, Meta (Facebook) and Tesla) via our currency hedged Nasdaq (-2.2% in Q3) and S&P500 positions (-3.6% in Q3).

Alternative Investments – CHC Investment Fund III

CHC Investment Fund III (CHC III) is a litigation fund with a highly experienced management team (CEO with over 20 years in the industry) that are co-investors in CHC III, a forecast return of 20%pa, guaranteed repayment of principal, diverse range of cases (14 cases of varying size and type) across commercial, insolvency and class action and importantly a successful track record, with CHC I and CHC II performing well.

We intend to go into more detail on CHC III and other uncorrelated investments in our next quarterly update. As always, we are available for a more granular conversation at any time.

Key Information

Strategy Inception

January 2023

Portfolio Managers

James Manning, Nick Hughes Jones

Net Asset Value

$0.8220 AUD
(September 30)



Management Fee

1% p.a.

Performance Fee

(subject to high water mark)

Sector allocation

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