Good morning, and thank you for joining us for the L1 Long Short Fund Investor Webinar. My name's Mark Landau. I'm the Joint Managing Director and Chief Investment Officer of L1 Capital. Today, I'd like to give you an update on portfolio performance, how we're seeing the macro environment, some themes that we're exposed to, and also some of our favorite stocks. Turning to portfolio performance. Over the calendar year to date, the portfolio has been relatively resilient. It's down roughly 1% for the calendar year compared to -4% for the Australian index and -20% for the MSCI World. As our investors would know, we invest both globally and in Australia, so we provide both indexes as a reference point. Over the past three years, portfolio performance has been strong, returning almost 20% per annum compared to roughly 5% for the Australian market and roughly 6% for the global index. Since inception, LSF has returned roughly 10% per annum compared to roughly 7.5% for the Australian index and just over 6% for the MSCI World. In terms of the strategy since inception, we're running at around 20% per annum compared to roughly 7% for the Australian index and around 6.5% for the MSCI World. Both in absolute and relative terms, we're very pleased with portfolio performance. Since inception in 2014, the strategy has been the best-performing Australian long short strategy, and we're very proud of the returns we've delivered to our clients despite a relatively difficult backdrop, both from a factor point of view in terms of those types of stocks performing well, and also given the volatility in the market with the numerous macro challenges that we've grappled with. In terms of the key stock contributors and detractors for this calendar year, we've provided some of the key contributors as well as some of the key detractors on this slide. Cenovus, which is an energy stock listed in Canada, has been a strong performer for us this year. It's delivered very strong operating results. It's got a low all-in cost structure, and it's been able to rapidly de-gear its balance sheet at current oil prices. Chorus has continued to perform well for the portfolio. It's finally got regulatory certainty. It's delivered very good growth in both dividends and cash flows, and we've started to see the share price respond to that positive news. In terms of Flutter, which is the number one sports betting business in the U.S., U.K., and Australia, they've been continuing to grow their market share in the US, and they're likely to reach profitability much faster than market expectations, which has been a real positive driver of returns over the last couple of months. In the case of Mineral Resources, they've been a beneficiary of stronger lithium prices, a potential separation and listing of their lithium business, and the formal sanction of their Onslow iron ore project. Qantas has delivered very upbeat guidance. It was 150% above market expectations for their first half profit result, and that was driven by both strong domestic and international travel demand that has really been pleasing to see much earlier than market expectations. The last of the positives is Teck Resources, which has delivered robust operating performance along with being a beneficiary of higher coking coal prices. We actually exited the stock in early March and then elected to reinvest after the shares had sold off toward the end of June. On the negative side, Alibaba has been a weak performer for the portfolio. We've had very negative investor sentiment regarding China's economic recovery and obviously the very harsh lockdowns, but we expect the shares to recover as COVID-related restrictions ease in the first half of 2023. In the case of BlueScope, the shares have been weak as a result of the decline in U.S. and Asian steel spreads. Despite the fact the company is going through a tough point at the moment, we expect improvement in Asian steel spreads as China recovery gains momentum. In the case of Capstone, which is a Canadian copper stock, they've obviously suffered as the copper price has fallen on U.S. recession concerns, but we remain very positive about the medium-term growth, both in production and cash flows they are likely to enjoy over the next couple of years. Ramsay shares obviously fell with the end of the takeover discussions with KKR. We believe there continues to be some really large upside from a value unlock if they were able to sell their non-core assets or to dispose of property. Lastly, in the case of Sandfire, also a copper stock, that also declined due to the fall in the copper price and also higher power costs in Spain. We believe the company is well-placed to improve its cash flow dramatically in FY 2024 as their Motheo mine commences production. Turning to the economy. One of the most important things that's happened over the last 12 months has been the surge we've seen in U.S. CPI. U.S. inflation had been tracking at just under 2% for many years, and all of a sudden, CPI is now over 8%. That has led to a dramatic increase in the Fed funds rate, where we've seen the most aggressive policy tightening that the U.S. central bank has done in more than 40 years. Lastly, we've seen a withdrawal of liquidity from the most aggressive injection of liquidity as a result of COVID to the most aggressive withdrawal of liquidity that we've seen in this calendar year. That's been the defining impact on equity markets and also bond markets. The increase in interest rates we've seen this calendar year, along with the withdrawal of liquidity, has had a profound impact both on equities and bonds. In terms of equities, we've seen the Nasdaq decline close to 30% this calendar year, the MSCI World Index is down 20%, and the S&P 500 is down 18%. In a very unusual way, the bond market has provided no safe haven. Bonds have actually suffered their worst fall in almost 100 years. The bond market, as you can see on this chart, is down 20% for the calendar year, which is by far the worst year it's experienced in our generation. Turning to the market outlook. We believe that unfortunately, equities are gonna remain volatile and difficult over the coming 12 months. If you cast your mind back to March 2020 when COVID hit and panic was at a maximum, we're actually very bullish on the market. We felt that valuations looked incredible. Corporate earnings were likely to surprise on the upside. Interest rates were falling to record lows. Policy stimulus was massive. You had very cheap energy, heightened M&A activity, and you had excessive fears about COVID and the outlook. As a result of that, we had a net long of around 100-120, which is the highest net long that we've ever had in our strategy all the way back to 2014. It was a very unique time to buy stocks at amazing prices. If you cast your mind forward to today, the situation is very different. Valuations today are full. Corporate earnings have much more downside risk. We have rising interest rates and a reduction of liquidity in the system. The energy crisis is very real and unlikely to go away anytime soon. A much more difficult M&A environment. Lastly, the tail risk from geopolitical events have much more downside and are much harder to predict. As a result of that, our net long today is tending to track between 40% and 50%. As of today, it's in the low 40s. Since the start of 2022, we've obviously been reducing our net long very methodically over that period as we see rising risks in the market and lower returns. But one thing that's very important to emphasize is that we don't need the stock market to go up to generate positive returns for our clients. So turning to the Fed and whether they're likely to do a policy pivot, we've been consistently saying that we felt the likelihood of a pivot is much lower than what the market was pricing in. If you listen to whether it's Powell's speech at Jackson Hole at the end of August, or you listen to his comments only a week or two ago, at the FOMC press conference, both of them were unequivocally hawkish. In the case of his Jackson Hole speech, he said, "We are taking forceful and rapid steps to moderate demand so that it comes into better alignment with supply and to keep inflation expectations anchored." Most importantly, he said, "We will keep at it until we are confident the job is done." That wording is exactly the wording of Paul Volcker's autobiography, Keeping at It, and I don't think that was a coincidence that he chose to use those words reminiscent of Paul Volcker and his very hawkish attempt at fighting inflation. What we've also seen in that speech is Powell say that he recognizes that this period is gonna cause significant pain for households and businesses, but it's the right decision and he won't be put off course as a result of being concerned about the prospect of a U.S. recession. What he's much more concerned about is fighting inflation at over 8%. More recently, in the beginning of November, he said, "It's very premature in my view to think about or be talking about pausing our rate hikes. We have a ways to go." If you take Powell at his word, that shows no sense of deciding that he's suddenly gonna start cutting interest rates or injecting liquidity into the system. For that reason, we believe that this cycle is genuinely different to previous cycles, where when the economy was starting to show that there were signs of weakness, we would typically see a Fed policy response of interest rate cuts and injections of liquidity into the system. This cycle will be genuinely different. Turning to the U.S. economy. When we look at the U.S. economy today, we believe that the economic indicators are flashing red. The U.S. 30-year fixed mortgage rate is now over 7%, the highest levels in 20 years. It's increased from only 3% only nine months ago to 7% today, and that sudden move in rates has not been felt in the economy yet, but you know it's coming. The second thing is the yield curve is now inverted, and it's the most inverted it's been in the last 40 years. Yield curve inversion has been a very reliable predictor of U.S. recession, and what we're seeing today is that all parts of the yield curve are inverted, which is a sign of a very weak economic outlook for the U.S. economy. What does this all mean for markets? Essentially, it means that the investment playbook of the last decade is unlikely to work going forward. Over the past decade, equities, bonds, property all benefited from falling interest rates, and we saw the best-performing parts of the market tended to be in long-duration assets, which were the biggest beneficiaries of lower rates. Growth stocks, momentum stocks, yield stocks were really the best place to invest. As you can see from the chart on this page, Nasdaq was the best performer over the last decade. Momentum stocks were outperformers versus the index, and yield stocks such as rates also outperformed the index. As we look forward, we believe the world has changed. We're in a period of higher interest rates and higher inflation. The Fed put is no longer in effect to provide a safety net to investors, and we think we're about to see the biggest rotation in sector leadership that we've seen in over a decade. Those old economy sectors that are very unfashionable and have tended to lag over the last decade are likely to be the best performers going forward. Energy, materials, and industrials we feel are very undervalued and look really attractive, while tech, discretionary, and communications look very overvalued and crowded and are likely to underperform on a go-forward basis. We have three enduring and important advantages in the way that we're able to manage the portfolio in such a difficult market backdrop. Firstly, we're able to adjust our market exposure to reflect the risk-reward of the market, and we've used that to really good effect over the last few years. Secondly, we're able to short stocks, so we're able to profit from share prices falling, not just share prices rising. Lastly, we're able to exploit our research and our insights overseas, not just in the Australian stock market. For that reason, we're able to generate returns from all of our investment and market insights, which is a unique attribute of the strategy. One of the benefits of those three advantages that I've discussed on the previous slide is that we've been able to protect investors' capital in falling markets. The long-short strategy's been in existence for almost 100 months, and if you look at the performance of the portfolio in down markets and up markets, there's some interesting observations. The first one is that we've been able to protect close to 90% of investors' capital in falling markets. If you look back on the 37 occasions when the market has fallen, it's typically fallen by around 3.3%. In those same months, our portfolio has only fallen 0.4%. I've just demonstrated very strong capital protection. In the case of up markets, we've been able to keep up with the market of roughly a 3% increase over the 61 months that we've been in existence where the market has rallied. Those returns are in line with the market, despite the fact that we tend to have roughly two-thirds of the market exposure of an index fund. In terms of how we're positioning the portfolio today, there's a very intentional and notable skew towards low PE stocks. We feel that low PE stocks are far better value than high PE stocks, not just in absolute terms, but relative to their 20-year history. High PE stocks remain very expensive, crowded, and unappealing. If you look at how expensive they are versus history, it's quite obvious how extreme this period is. Low PE stocks are now trading at a 59% discount to the market, which is about 13% below its 20-year average. As you can see in this chart, there's only been two occasions where we've been so cheap versus market. On both of those occasions, we saw a very quick period of outperformance for those low PE stocks. In the case of high PE stocks, they're now trading at a 75% premium to the market, which is still thirty-three above its 20-year average. One of the most obvious things from this chart is that high PE stocks have only ever traded at this level once before during the dot-com boom, and we all know what happened after that. One of the things that we are finding appealing at the moment is that there still remains very cheap, low PE, high free cash flow stocks to buy in this market. Our portfolio today has an average PE of 10 times. Our companies generate 7% of their market cap in free cash flow each year. It's a very undergeared set of stocks, and they're generating the same earnings growth as those higher PE stocks that we're actually shorting. On the short side, the companies we're shorting have much lower cash flow, much lower earnings. They typically have worse gearing, and they're also not giving you any extra earnings growth for that multiple. In the case of our short positioning, it's changed dramatically over the last 12 months. I thought it might be worthwhile just giving you a sense of how we've been positioned at various times over that period and where we're seeing the opportunities on the short side today. If you think back about 12 months ago, we were shorting those COVID winners, those companies that were having a one-off benefit from COVID and lockdown. Companies like Peloton and Shopify. Those companies obviously really enjoyed the COVID lockdowns. As the world reopened, online shopping wasn't as popular. Not going to the gym was obviously gonna be a temporary event. We saw those share prices collapse. We then shorted the non-profitable tech stocks. A lot of the companies in that space had insane valuations. There was no prospect of them generating any cash flow or earnings, and we saw a reality check over the last 9 months as those companies' share prices collapsed. Most of those companies are now down more than 70%. Thirdly, we were shorting U.S. retailers back in March, April of this year. We felt that you were likely to see a period of slowing sales growth, but more importantly, very elevated inventories as the supply chain bottlenecks all opened up at the same time and all retailers became overstocked. We saw wide clearance activity, very aggressive discounting, and that led to some major share price falls after profit downgrades. We then moved into the mega cap tech space, where we're shorting both Nasdaq and a number of select very expensive tech stocks. That part of the market has been by far the weakest, and it's been a really good source of offset to some of our longs that have been falling over the last six months. Then lastly, the trucking and logistics space in the U.S. we feel is really ripe for shorts at the moment. The trucking data that we track, along with the industry feedback we've gathered is extremely bearish. We felt like we've hit a major inflection point to the downside, but share prices remain very elevated, particularly compared to pre-COVID levels. In some cases, those shares are still trading 200% above where they were pre-COVID. We are remaining short this part of the market. We feel there's very large earnings misses to come, and we'll be interested to see how they report over the next two quarters. Turning to our portfolio positioning on the long side. There are four key themes that we're exposed to that we feel offer us compelling asymmetric risk reward. The China reopening trade is one that we're very excited by. We feel that China's likely to reopen over the next six months. Investor sentiment is extremely depressed, valuations are very compelling, and you basically couldn't find a part of the world that investors hate more, which always makes it an interesting place to look. We think that reopening is likely to coincide with policy stimulus, which will be very positive both for sentiment and also for operating trends for those Chinese stocks. Secondly, in the resources space, we like the copper and oil stocks for different reasons. In the case of oil, we think there's a structural undersupply of oil, which is likely to keep the physical market tight. In the case of copper, you've got the benefit of this structural boom in electric vehicles, along with the sustainability drive, which is very copper intensive. We feel that you're gonna see strong share price recovery after this part of the market's actually been very weak over the last 4-5 months. In the case of U.S. sports betting, the sector's been under pressure due to near-term concerns over the U.K. regulatory outlook and also the intense competition you've seen in the U.S. sports betting market. We believe that over the next 12 months, there's gonna be a major positive inflection point as these stocks that we're holding enjoy an inflection point in their profitability. They basically go from loss-making to being profitable, and that profitability is gonna surge over the next few years. Lastly, what we would call cash machines. These are low PE stocks that are generating huge free cash flow, undergeared balance sheets, and they've got lots of opportunity to either grow through bolt-on acquisitions or to give you lots of dividends and buybacks. These companies have enormous flexibility. They're in a beautiful position in a higher interest rate world where they have very low debt levels, and we're really excited about the prospects for these companies as well. In terms of the China reopening, we still hear many market commentators that believe China is likely to remain in harsh lockdowns for the next 12 months, if not longer. If you look at China's aviation activity, it's incredibly depressed at the moment. International travel has been tracking at negative 80% versus pre-COVID, basically since the start of 2020. The domestic aviation market is basically half of what it was pre-COVID. Activity levels are absolutely rock bottom. Our detailed research and our discussions with various contacts in China suggest that we're likely to see a reopen in the first half of 2023. Consistent with that, we've recently seen four of China's major airlines announce a purchase of $37 billion of aircraft from Airbus, with deliveries slated for 2023-2027. They obviously wouldn't do that unless they thought the economy was gonna reopen. We also expect to see strong performance from Chinese travel and consumer stocks as a result of policy stimulus that's likely to coincide with this reopening of the economy. To play this theme, we're buying shares such as Alibaba, which has fallen from roughly $300 a share to less than $70 over the last couple years, along with several Chinese travel stocks that are trading at very depressed levels as well. One of the commodities that we're very positive on the outlook for is copper. We feel that it's the forgotten play on electric vehicles. This calendar year, the copper price has fallen roughly 30% as investors became concerned about the likelihood of a global recession. However, when we look at the physical copper market, it's incredibly tight. You can see that inventory levels are at record lows. At the same time, the medium-term outlook for copper looks incredibly positive. The demand for copper is likely to increase due to the energy transition that you can see on the chart now. It's likely to be a structural boom in green energy, which is very copper-intensive. Whether it's electric vehicles, solar, wind, charging infrastructure, or energy storage, all of these applications require a lot of copper, and we're likely to see a multi-decade boom ensue. On the supply side, it's much more difficult to bring on new mines. Mines typically take close to 10 years to come online, so obviously there's gonna be a mismatch between demand and supply as we look forward. For this reason, we've seen takeover activity from the likes of BHP and Rio be very focused on the copper space. BHP recently made a bid for OZ Minerals. Rio Tinto recently made a bid for Turquoise Hill. Both of those are major copper producers. The companies that we really like in this space are Capstone Copper, which is listed in Canada, and Sandfire Resources, which is listed in Australia. One of the other commodities that we're very positive on is oil. We think the oil market is likely to become increasingly tight as we look forward. As people would know, demand in the Western world has recovered quickly and is now already above pre-COVID levels. If we're right about China reopening in 2023, we'll see a further increase in oil demand as Chinese consumers start to drive again and fly again. On top of that, there's been an unusual injection of liquidity into the supply side. The U.S. Strategic Petroleum Reserve has been injecting roughly 1 million barrels a day into the market, but this is set to stop in November after the U.S. has depleted 40% of its reserve. At the same time, OPEC+ is struggling to meet existing quotas. You can see they've not even been getting close to what they're able to produce, despite the fact it's very profitable to produce. Recently, OPEC+ decided to reduce its quota by 2 million barrels a day. Western oil companies have also been reducing their investment in new oil supply by roughly 25% since the start of 2019. Both from a demand point of view and also a supply point of view, we think the outlook for oil is very positive, and we've been playing this through a number of stocks, but some of our key positions are MEG Energy and Cenovus, which are both listed in North America, and Santos, which is an ASX 100 stock. Turning to U.S. sports betting. We believe this industry is one of the most exciting high-growth industries globally. The industry is set to grow at close to 20% per annum all the way out to 2030, and we think we're approaching a major inflection point in 2023, where underlying profitability will finally become apparent. In the case of Flutter, they're leveraging their Australian and U.K. IP to win the battle for sports betting. They're now up to 51% market share in the U.S. market, which is an amazing achievement considering they were close to 30% only a year ago. In the case of Entain, which owns 50% of the BetMGM JV, they've now become the dominant player, the clear number one in U.S. iGaming. We've got the number one player in sports betting and also the number one player in iGaming, and we feel that both of those parts of the market are likely to grow dramatically over the coming five years. Market forecasts go from roughly AUD 3 billion of turnover in 2020 to close to AUD 25 billion by 2025 and more than AUD 40 billion as we get towards the end of the decade. This is a sector that is likely to grow far more than almost any other sector we see globally. The P&Ls that we've given some transparency into were also really interesting when Flutter announced their recent results. What it showed was that in more mature markets, such as New Jersey, revenue growth had been more than 500%, while their operating expenses were only growing at half that rate, roughly 250%. You're starting to see really nice margin expansion. In those states that have been open for a few years, you're seeing close to 20% EBITDA margins, which is really encouraging. As we've said previously, we continue to like Flutter and Entain. We think the outlook for both are exceptional, and they're both trading on very reasonable multiples. You're not buying loss-making companies or companies on ridiculous PEs. The last of our themes that we're exposed to are what we would call cash machines. These are really high-quality companies with exceptional cash flow generation. We think they're really compelling because they not only generate huge cash flows, have conservative balance sheets, strong industry positions, and attractive valuations, but they're also run by proven management teams with strong organic growth options. In the case of Qantas, they've absolutely transformed that business during the COVID period. They've taken AUD 1 billion of cost out of the business, they've really improved their offer on the loyalty side, and they're likely to have earnings that are 75% higher than they were pre-COVID, so approaching about AUD 1 a share if they're able to achieve their management targets. That would put the stock on only a P/E of six with an under-geared balance sheet and a very dominant industry position. In the case of QBE, they're trading on a P/E of 7. They're generating roughly 15% of their market cap in cash flow each year, and they're enjoying very strong premium growth, the likes of which they haven't seen since the early 2000s. This is a company that used to get only 1% or 2% increase in premiums each year. That's now tracking at 8%-10%, while claims are still very modest and not increasing anywhere near those sort of levels. We think these companies, in a world that's becoming more difficult, in a world where higher debt levels are gonna be scrutinized more, we feel that under-geared companies on low multiples with big cash flow generation will be a safe haven and will actually be one of the hottest parts of the market going forward. In summary, we expect to see a major rotation in sector leadership towards old economy sectors and away from growth, yield, and momentum stocks, which have really dominated over the last decade. Despite our cautious macro outlook, we believe that the recent sell-off has been quite erratic and is providing us with a much better than usual set of long and short opportunities. LSF has an enduring advantage of being able to adjust market exposure, short stocks, and invest overseas, something we really appreciate at the moment, given all the erratic and volatile moves we're seeing in the market. We don't need the market to go up to generate positive returns for our investors. We've identified four themes that we think offer a really compelling asymmetric risk reward, the China reopening, copper and energy stocks, US sports betting, and cash machines. While heightened market volatility can be quite unnerving, we believe it's providing us with a much better opportunity set of mispriced stocks and an ideal backdrop to generate long-term performance for our shareholders. Thank you, everyone, for joining us today. We really appreciate your support and your interest in LSF, and we look forward to catching up with you soon.