How We Outperformed the ASX 200 by 62.7% in Three Years

We write to you at a time when markets are increasingly influenced by a complex macroeconomic backdrop. Persistent inflationary pressures, elevate Hi Eason, *How We Outperformed the ASX 200 by 62.7% in Three Years* We write to you at a time when markets are increasingly influenced by a complex macroeconomic backdrop. Persistent inflationary pressures, elevated interest rates and uneven global growth continue to create dispersion across sectors and asset classes. In such an environment, selectivity is not simply a preference but a necessity. We are therefore offering a complimentary portfolio review. If you would like to arrange a *Free Portfolio Review, please reply directly to this email or click here* ( mark.elzayed@investorpulse.com.au ). Against this backdrop, our Balanced Portfolio has continued to demonstrate resilience and discipline. Year-to-date, the portfolio has returned 2.2%*, outperforming the broader market. Over a three-year horizon, total returns have reached 62.7%* including income, more than double the ASX 200's 46.9%*. Over the past year alone, active management has enabled us to capture a return of 24.8%*, underscoring the value of a selective and research-driven approach. *Past performance is not indicative of future performance Our strategy remains anchored in identifying high-quality companies with strong balance sheets, consistent cash flow generation and pricing power. In periods of tightening financial conditions, such characteristics become increasingly valuable. Companies with robust balance sheets are better positioned to withstand higher borrowing costs, while steady cash flows provide flexibility for reinvestment, dividends and capital management. Equally important, businesses with durable competitive advantages are more likely to preserve margins even as input costs fluctuate. *Recent market dynamics have reinforced our conviction in this approach. Valuations in certain segments have expanded materially, often ahead of underlying fundamentals. As a result, we have taken the opportunity to realise gains where we believe upside is now limited relative to risk.* *Profit Taking: Strategic Exits at Peak Valuations* *Brambles Limited (ASX:BXB) [* *+41.16%* *]:* We are exiting BXB following a stellar *1HFY26* result where statutory profit after tax rose *14% to US$510.8m*. The company upgraded its FY26 Free Cash Flow guidance due to lower pooling capital expenditure and moderated volume growth. With the stock trading at a significant premium and volume growth expectations softening, we are capturing this *41% gain* before the "moderated growth" outlook starts to weigh on the share price. *New Hope Corporation (ASX:NHC) [* *+31.90%* *]:* Our exit is timed with the *1HFY26* earnings report showing massive margin compression, net profit margins dropped to *9.6%* from 28.7% a year ago. While NPAT was $153.4m, it was heavily propped up by a *$128m one-off gain*. Basic EPS has plummeted from $0.40 to $0.06 over the last three halves. We are securing a *31.9% profit* as the underlying earnings quality deteriorates under lower coal prices and rising regulatory costs. *National Australia Bank (ASX:NAB) [* *+22.06%* *]:* We are exiting at near all-time highs following a record *Q1 2026 cash profit of $2.02 billion* (up 16% YoY). While the results were "outstanding," the current share price has compressed the dividend yield to *4.21%* , well below historical norms. By taking a *22% profit* now, we avoid the risk of a valuation "mean reversion" as credit impairment charges begin to trend upward. *Qantas Airways (ASX:QAN) [* *+26.33%* *]:* Qantas delivered a strong *1HFY26* with an Underlying Profit Before Tax of *$1.45 billion* and a healthy 18% domestic margin. However, the company is entering a heavy "fleet renewal" phase with 18 aircraft delivered this half and fuel costs projected to hit *$3.1B+*. We are taking our *26% gain* as the "post-COVID" travel boom normalizes and capital expenditure for "Project Sunrise" begins to peak. *Santos Limited (ASX:STO) [* *+16.30%* *]:* Although Santos is riding a wave of optimism with *Pikka Phase 1* (Alaska) accelerating first oil to Q1 2026, its FY25 net profit fell *33% to US$818m*. We are choosing to take a *16% profit* now. The catalyst of "first gas" at Barossa is largely priced in, and we prefer to exit while spot LNG prices are firming rather than holding through the potential operational risks of a mega-project startup. *Macquarie Group (ASX:MQG) [* *+7.87%* *]:* Following the *Q3 2026 update* , which showed "substantial growth" in Asset Management due to divestment fees, we are locking in our *7.8% gain*. While MQG is innovating with AI-powered customer service, the earnings are heavily weighted to one-off performance fees. With market volatility rising, we are choosing to step aside from this high-beta financial play. *Woodside Energy (ASX:WDS) [* *+28.37%* *]:* Similar to Santos, Woodside has benefited from geopolitical tailwinds. However, with global inventories remaining high and the dividend yield coming under pressure from massive CAPEX requirements for Scarborough, we are securing our *28% return* before the next cyclical downturn in energy prices. *Ventia Services Group (ASX:VNT) [* *+21.18%* *]:* Ventia remains a solid infrastructure performer, but after a significant run-up in price, the valuation has reached our target. We are exiting to reallocate to "deep value" opportunities, securing a *21% profit* from its defensive, long-term government contract book. *Reducing Exposure: Reallocating from Underperformers* *HUB24 Limited (ASX:HUB) [* *-31.42%* *]:* This is a purely technical exit to preserve capital. Fundamentally, HUB24 is thriving, *1HFY26* revenue hit *$246m* with underlying EPS up *63%*. However, the share price has decoupled from these results, and the balance sheet net cash dropped to *$27m* due to regulatory lending. We are cutting this position at a *31% loss* because the market remains "stubbornly bearish" on high-multiple platforms regardless of growth. *Metcash Limited (ASX:MTS) [* *-21.09%* *]:* The *1HFY26* update (Dec 2025) showed group EBIT falling *2.4%*. While Food and Liquor were resilient, Hardware is struggling with positive leverage. Given MTS disappointing performance and the continued pressure on Australian discretionary spending into mid-2026, we are exiting to avoid further downside in the hardware and retail sector. *Stockland (ASX:SGP) [* *-18.86%* *]:* Stockland is currently trading in a weak 52-week range ($3.98–$6.75). Despite a *$0.09 interim dividend* , the interest rate environment has stalled the residential recovery. We are exiting at an *18.8% loss* to reduce our exposure to the capital-intensive REIT sector, which faces persistent headwinds from high borrowing costs. *Universal Store (ASX:UNI) [* *-11.51%* *]:* Youth retail is seeing a sharp pullback. As consumers prioritize essentials over fashion, UNI's margins are under threat. We are cutting the position at an *11.5% loss* to move into more defensive "consumer staple" names that offer better protection against the 2026 economic slowdown. *Service Stream (ASX:SSM) [* *-0.47%* *]:* We are exiting SSM as it approaches "break-even." While the *$9.2bn order book* is a record, substantial holders have been shifting their positions recently (March 2026). We see better risk-adjusted returns elsewhere and are closing the position to maintain portfolio liquidity. *Looking Ahead* We remain focused on maintaining a portfolio that is both resilient and opportunistic. The current environment rewards discipline, patience and a clear emphasis on quality. By continuously reassessing valuations and fundamentals, we aim to protect capital while positioning for long-term growth. *Complimentary Portfolio Review* If you would like to arrange *your Free Portfolio Review, please reply or click here* ( mark.elzayed@investorpulse.com.au ). We would be pleased to provide tailored insights to support your investment decisions. We appreciate your continued trust and remain committed to delivering consistent, risk-adjusted returns. *Example of our Growth Portfolio Review* Sign up to get your personalised report ( mark.elzayed@investorpulse.com.au ) ( mark.elzayed@investorpulse.com.au ) ( mark.elzayed@investorpulse.com.au ) ( mark.elzayed@investorpulse.com.au ) ( mark.elzayed@investorpulse.com.au ) **Free Disclaimer:* The base platform has no monthly fees, however, brokerage fees apply when buying or selling stocks through the platform. Many thanks for reading our updates! Feel free to call us or reply to this email with suggestions. If you have some friends you think would be interested, let us know - we have a referral program available. *Very important & unique disclaimer provided by our legal team* This email and any files transmitted with it are confidential. 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