some background of acorn

As biggest shareholder of WPG. We'd better know more about Acorn. From their website, I couldn't find too much information such as annual return, size of their fund, etc. Very dispoint.

Their website: http://www.acorncapital.com.au/

So I google Acorn and find one interesting article from The Australian, a little bit outdate-September 30, 2009. But it is still worth a read.

http://www.theaustralian.com.au/business/wealth/acorn-capitals-big-idea-pays-off/story-e6frgad6-1225779703488

Acorn Capital's big idea pays off

Sara Rich
From: The Australian
September 30, 2009 12:00AM

WHEN Acorn Capital was launched in 1998 with plans to target the forgotten part of the sharemarket -- stocks too small to be called small caps -- it was such a new concept in Australia that the sector didn't even have a name.

Back then, anything outside the top250 listed companies was not widely researched and it goes without saying that the sector didn't have abenchmark.

Douglas Loh joined Acorn shortly after its launch and helped founder Barry Fairley turn his vision into reality.

"What was interesting was trying to come up with a term tobest describe what we were going to do," Lohsays.

They eventually settled on a term the US had been using, microcaps, and in collaboration with the Australian Graduate School of Management created the Acorn Capital/AGSM Microcap Accumulation Index as a benchmark for the sector.

Today, Acorn says it is the largest specialist microcap investor in Australia. Australian Unity Investments has a 50 per cent stake in the company and is responsible for distribution, marketing and compliance.

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There are more than 1700 microcaps listed on the Australian Securities Exchange with an average market capitalisation of $40 million.

By number they represent 87 per cent of all listed companies, but only 5.9 per cent by market value.

Microcaps are usually at an early stage of corporate development and are often research companies such as biotechs, exploration companies and development stocks that include IT firms. The sector has a very limited exposure to banks, insurance firms and media companies.

The fund Loh manages, the Australian Unity Investments Acorn Capital Wholesale Microcap Trust, was established in February 2001 and has returned 15.32 per cent per annum since inception, while the benchmark has returned 8.95 per cent (as at August 31).

Last year was a tough year for the fund -- it fell about 60 per cent -- because the microcap sector was heavily oversold by nervous investors and many fund managers had to drop the stocks from because of a spike in redemptions. However, in the past six months it has come back very strongly with a return of 71.09 per cent (as at August 31) and Loh believes it has further torise.

"Small and microcap companies tend to perform well in the current investment climate. Even with the sort of performance numbers we have had for the last six months for the microcap sector, it is still below the All Ordinaries index on a relative basis from the peak on October 1, 2007," Loh says.

The fund charges 1.6 per cent per annum in management fees and has about $173m in funds under management.

Investors can access it through various investment platforms or by investing directly with a minimum investment of $1000.

How would you describe the fund?

The fund invests solely in the microcap sector of the Australian sharemarket, which is made up of listed companies that lie outside the top 250 companies.

The lack of research in this sector means value can be created by investing in companies whose potential capital growth is not widely recognised by the market.

How do you value companies?

We use a research-intensive approach not only at the company level but also at the industry and microcap sector level.

Because of the lack of external research about companies in the microcap area, we spend a great deal of time with the companies looking into areas such as the quality of management, cyclical factors, business strategies, competitive strengths, profits and cashflows.

Do you have a cap on the number of shares you hold in a company?

We can only hold up to 15 per cent of a company's issued capital across all client accounts and also limit individual stock holdings to 5 per cent of the portfolio at the time of purchase (this can increase to 7.5 per cent due to price rises).

What investments have been the best performers for you so far?

Some of our best performers over the years have been Summit Resources, Monadelphous, Equinox Minerals and Extract Resources.

A major difference between the microcap sector and the market as a whole is the type and number of companies represented and mining is a good example.

The sector as a whole is much larger than in the ASX250 and mining companies usually make up around a quarter of the fund's weighting.

In Australia, what sectors and stocks do you like most?

As a believer of the China story, I think Australia will continue to benefit from the ongoing demand for energy and commodities, which should also benefit industries servicing the resources sector.

I think it is critical that in the absence of a strong export market for China they build up a sustainable level of domestic demand.

Various assets have taken a beating in the past year. Has that enticed you to buy up?

We are a market-neutral, sector-neutral fund. That means we don't make a bet on the market, we are fully invested at all times and we don't make sector bets either. If a sector's benchmark weight is 10 per cent, the target portfolio weight will be 10 per cent.

The sell-off in certain stocks has made them more attractive relative to others in the same sector and we have taken the opportunity to reposition our portfolios by increasing our exposure to these beaten down stocks.

On a personal basis, I have done the same by increasing my exposure to some undervalued stocks.

What is your investment philosophy?

Only make investments that are commensurate with your personal risk profile and investment horizon.

You should always consider diversification as a means of managing risk.

Where do you see markets heading in the next 12 months?

The market has had a terrific run from its March lows. It wouldn't surprise me to see the market consolidating or pulling back in the near term before trying to push higher.

However, I think market volatility will start increasing again soon.

What do you see as the main themes that will dominate markets in the next 12 months?

Over the past 12 months, capital raisings have dominated the large and mid-cap sector as companies move to deleverage their balance sheets.

Although companies in the microcap sector are less leveraged than their larger counterparts, I expect capital raising activities to increase in the microcap sector as investors' risk appetite returns. We could also see an increase in corporate activity.

Given the broadbased rally we've had over the last six months, some of the easy money has already been made.

For the next 12 months, I expect the market to focus on companies' earnings quality and growth potential, leading to a stock-pickers market.

What do you think of the banks and financial services sector globally?

Following the Lehman Brothers collapse, we have seen governments willing to do anything to prevent a major collapse of their banking sector.

This will come at a cost of increased regulation.

FIVE HOT TIPS

RESEARCH is vital to investment success.

HAVE a realistic expectation of investment returns. There will always be market ups and downs and inevitably you will lose some of the money you have invested.

SEEK professional advice. A good financial adviser will be able to give you clear reasons for making certain investments.

AVOID looking at your investment value on a daily basis. It can drive you nuts.

MAKE sure you have a realistic savings plan in place.