Eley Griffiths kicks off new mid-cap strategy with $25m in seed money

afr.com:

It’s off to the races for Sydney small caps investment house Eley Griffiths Group’s foray into the mid-cap land.

David Allingham and Ben Griffiths.  Ben Rushton

Street Talk understands Eley Griffiths’ David Allingham and Tim Serjeant began trading out of their new strategy this week, with $25 million in seed capital raised from existing backers and a recommended rating from Lonsec.

It has now opened to new investors.

Over time, the fund is expected to grow towards its $2 billion capacity and help the firm stay invested in stocks that have done well but sailed out of its traditional small-cap mandate. Preparations for the new strategy were reported by this column in May.

The portfolio includes 34 names, across old lovers and new flames. Among the mix is Carsales, which Eley Griffiths backed in its $811 million float in 2009 but had to leave behind as the company swelled to an $11 billion market capitalisation – and past its small companies mandate. It’s back as the mid-cap strategy’s biggest position.

Worley, Fisher & Paykel Healthcare, Genesis Minerals and Boral are also crossing over to the new fund, while Block Inc, a2 Milk, Orica, Lynas Rare Earths and Domino’s Pizza are Allingham and Serjeant’s brand-new high conviction bets. Fund managers GQG Partners and Pinnacle Investment Management are also in the portfolio.

The firm has been pitching Serjeant’s resources investing background as a differentiator in the mid-cap space. The resources sleeve is understood to be underweight lithium and skewed towards uranium miners such as Paladin Energy and gold stocks.

It’s the third fund out of Eley Griffiths stables in more than 20 years and would sit alongside the billion-dollar small companies fund and the $300 million emerging