Cadence Opportunities Fund delivered a standout FY26 with profit after tax soaring 279% to $5.66 million and a 30.3% fund return, prompting a fully franked final dividend and a special payout.
- Profit after tax rises 279% to $5.66 million
- Fund outperforms All Ordinaries Accumulation Index by 24.6%
- Declared fully franked 7.5c final and 2.0c special dividends
- Net tangible assets increase to $2.26 per share
- Strong operating cash flow of $15.3 million
Record Profit and Fund Performance
Cadence Opportunities Fund Limited (ASX:CDO) has posted a remarkable profit after tax of $5.66 million for the year ended 30 June 2026, a 279% jump from the prior year. This surge was driven by a 202% increase in revenue to $10.57 million, reflecting strong realised and unrealised investment gains. The fund delivered a 30.3% return for FY26, outperforming the All Ordinaries Accumulation Index by 24.6%, with its share price including dividends and franking credits up 41.0% over the year.
Dividend Boosts and Shareholder Returns
The board declared a fully franked final dividend of 7.5 cents per share payable on 15 October 2026, alongside a fully franked special dividend of 2.0 cents per share payable on 23 December 2026. Together, these dividends yield a 7.4% fully franked return and a 10.5% gross yield when including franking credits. The company’s profits reserve stands at 73 cents per share, enough to cover over four years of dividends at current rates, supported by 16.2 cents per share in franking credits.
Portfolio Shifts and Market Positioning
Gold and precious metals stocks were key contributors to the fund’s performance, benefiting from a gold price rally that peaked at nearly US$5,600 per ounce in January 2026. Top performers included Predictive Discovery, Robex Resources, Kingsgate, and Endeavour Mining. However, as the gold price retreated in the second half of the year, Cadence trimmed over 80% of its gold and resource holdings, resulting in an elevated cash position at year-end.
More recently, Cadence has been selectively investing in high-quality businesses that experienced sharp share price corrections, including CSL, Cochlear, Pro Medicus, and A2 Milk. These companies, once market favourites, now trade at valuations aligning with Cadence’s fundamental criteria, presenting potential turnaround opportunities.
Capital Management and Share Buy-Back
The fund continued its on-market share buy-back program, approved for up to 800,000 shares, which began in October 2025 and is scheduled to run until October 2026. This buy-back strategy supports capital management objectives, balancing debt levels and shareholder returns. Net tangible assets per share improved to $2.26, up from $2.04 the previous year, while net assets rose to $35.58 million.
Outlook Amid Market Volatility
Chairman Karl Siegling likened current global market conditions to the 1970s, citing elevated inflation, geopolitical tensions, and resource nationalism. He expects ongoing volatility and the unwinding of crowded trades, with opportunities emerging in quality companies temporarily out of favour. Cadence plans to maintain its disciplined investment process to navigate these challenges.
Bottom Line?
Cadence’s record profit and robust dividend policy underscore its resilience, but investors should watch how the fund adapts to unfolding market volatility and evolving portfolio opportunities.
Questions in the middle?
- How will Cadence balance elevated cash levels with fresh investment opportunities amid market uncertainty?
- Can the fund sustain its dividend payouts if gold and resource stocks remain subdued?
- What impact might ongoing geopolitical and inflationary pressures have on Cadence’s portfolio composition?