L1 Long Short Fund Limited has reported a robust turnaround with a $415 million net profit for the half-year ending December 2025, declaring a fully franked interim dividend of 3.6 cents per share.
- Half-year net profit of $415 million reversing prior losses
- Profit before tax climbs to $587 million
- Strong returns driven by resources, gold, and domestic cyclicals
- Fully franked interim dividend increased to 3.6 cents per share
- Performance fee entitlement of $151 million recorded
Strong Financial Rebound
L1 Long Short Fund Limited has delivered a striking financial performance for the half-year ended 31 December 2025, posting a net profit after tax of $415 million. This marks a significant reversal from the prior corresponding period, which recorded a loss of nearly $75 million. The company’s profit before tax reached $587 million, underscoring a strong recovery and effective investment strategy execution.
Market Conditions and Investment Strategy
The improved results were supported by more favourable market conditions compared to 2024, with easing style headwinds and broader market leadership. L1’s benchmark-unaware, value-oriented long-short investment approach capitalised on a wider array of mispriced opportunities. Notably, long positions in resources, gold, and domestic cyclicals such as Mineral Resources, Westgold Resources, and Flight Centre contributed significantly to returns. The short portfolio also added value by targeting overvalued or structurally challenged companies.
Dividend and Capital Management
Reflecting the strong earnings, the Board declared a fully franked interim dividend of 3.6 cents per share, payable on 20 March 2026. This is a slight increase from the previous interim dividend of 3.5 cents, signalling confidence in ongoing cash flow generation. The Dividend Reinvestment Plan remains active, allowing shareholders to reinvest dividends into new shares without discount. Meanwhile, the company’s net tangible asset backing per share rose substantially to $3.9987 before tax, highlighting enhanced shareholder value.
Performance Fees and Share Buy-Back
L1 Long Short Fund recorded a performance fee entitlement of $151 million for the period, reflecting the fund’s outperformance relative to its high watermark. Despite having an on-market share buy-back program authorised for up to 10% of shares, no buy-backs were executed during the half-year, with management retaining discretion to act when market conditions are favourable.
Outlook and Positioning
The investment manager remains committed to a disciplined, research-driven process, confident that the current portfolio offers compelling value both in absolute terms and relative to broader equity indices. The company is positioned to navigate ongoing macroeconomic uncertainties and capitalise on potential market dislocations, continuing its trajectory of strong medium-term returns.
Bottom Line?
L1 Long Short Fund’s strong half-year results and dividend increase set the stage for continued investor interest amid evolving market dynamics.
Questions in the middle?
- How will ongoing macroeconomic uncertainty impact L1’s long-short strategy performance?
- Will the company activate its share buy-back program given current valuations?
- How sustainable is the elevated performance fee amid potential market volatility?