What was the market reaction to the recent James Hardie announcement regarding the acquisition of US company Azek?

Investors reacted negatively to the deal, causing James Hardie's shares to plummet 14.5% on the day of the announcement, contributing to a significant year-to-date market value loss. Northcape has been trimming its holding in James Hardie.

What is the investment philosophy of Northcape Capital?

Paul highlights the strategy of finding overlooked companies that the market dislikes for short-term reasons. He believes that focusing on the qualities of individual companies, rather than macroeconomic forecasts, leads to better long-term returns for active managers. The Warakirri Ethical Australian Equities and Concentrated Australian Equities funds, aim to outperform the market over rolling three-year periods with a concentrated portfolio of quality stocks.

What are some recent successful investments?

Parsons highlights successful investments in Qantas and Brambles in 2024. He increased Northcape's position in Qantas after its share price fell in late 2023 due to customer outrage over alleged ticket sales for cancelled flights. This bet paid off as Qantas shares surged over 70%. Similarly, he increased their stake in Brambles after a company-wide operational overhaul, anticipating improved returns on capital, which led to a significant share price increase.

AFR's Monday fundie with Paul Parsons

14 April 2025

The Australian Financial Review recently featured Paul Parsons in their esteemed Monday fundie feature. Paul is a Portfolio Manager in Northcape Capital’s Australian Equities team, the underlying investment manager for Warakirri’s range of Australian Equities funds.

In the article Paul shares key insights gained from his career and deep experience working in investment markets. He discusses his investing approach, and that of the Northcape Australian Equities team, which he joined in 2011.

He shares how Northcape’s value-driven approach emphasises the identification of companies with strong competitive advantages, and examples of where this has approach has proven to be successful with companies such as Qantas and Brambles.

Paul’s strategy, and that of the Northcape Australian equities team, is focused on finding “companies that have been potentially overlooked, that the market doesn’t like for short-term reasons.” He adds, “Something I’ve learned over time is that markets like to overrate thematic growth and underrate competitive advantage…and that the day-to-day news cycle, whether it be tariffs or interest rates or inflections in the economy, tends to have very little impact on investment returns.”

Read the article here: This former short seller backs some of the ASX’s most unloved stocks

AFR's Monday fundie with Paul Parsons

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