The Paragon Australian Long Short Fund (formerly Paragon Fund) is a concentrated long/short Australian equities product that is fundamentally driven with a focus on the industrial and resource sectors. Paragon’s own research process and active portfolio management is overlaid with risk management and an overarching focus on capital preservation.
By having the ability to invest in 'strong' businesses ('long') or sell fundamentally 'weak' businesses ('short'), Paragon aims to generate positive absolute returns, regardless of whether the actual market is rising or falling.
A 'long' position will generally exhibit several positive characteristics such as:
- Strong management;
- Sustainable business model;
- Strong fundamentals including but not limited to cash flow, asset values, earnings growth, financial discipline, tight capital structures;
- Positive industry dynamics; and
- Attractive valuation with an asymmetric risk/reward profile and identifiable catalyst.
Conversely, a 'short' position will generally exhibit several negative characteristics such as:
- Weak industry structure and negative competitive dynamics;
- Overvaluation and declining fundamentals such as underlying commodity prices, sales and margins;
- Weak balance sheets, capital structures and risk of equity dilution; and
- Poor financial discipline and capital allocation by management.