The Small Cap index is lying to you with Andrew Mitchell
Summary
Andrew Mitchell of Aflia discusses the extreme dispersion in the Australian small-cap market, driven by AI and resource themes. He analyzes the recent reporting season, noting that weak outlooks have tempered earnings expectations despite strong balance sheets and buybacks. The conversation covers the AI data center buildout, labor shortages, and specific holdings like Codan, highlighting how active managers navigate volatility to find earnings inflection points.
Topics discussed
AI capex paradox and small cap market dynamics
Introduction to Ophir Funds and track record
Sector dispersion: Resources vs Software
Macro drivers: Currency debasement and thematics
Reporting season takeaways and EPS outlook
Corporate balance sheets, buybacks, and dividends
AI infrastructure and Australian data center buildout
Challenges in managing underperforming stocks
Political risks and anti-data center sentiment
Southern Cross Electrical and grid infrastructure
Labor shortages and inflationary pressures
Market volatility and reaction to earnings
Regime change: EPS misses vs beats
Ophir's global investment philosophy
The research process: Scuttlebutt and insights
Navigating the global small and mid-cap universe
Identifying edges in commodities and consumer
Portfolio construction and downside protection
Case study: Codan's gold detectors and drones
Closing remarks and disclosures
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