Total Shareholder Return
Total Shareholder Return is a measure of investment performance from a shareholder’s point of view. It is measured by the change in share price plus distributions received. The Total Shareholder Return figures are calculated assuming reinvestment of all distributions.
Total Shareholder Return is compared with returns from the Small Resource Index, which although generally larger and more advanced companies is the closest index to Lion’s portfolio, as well as the All Ordinaries Index which reflects the broader market. In both cases, the accumulation indices are used (which assumes the reinvestment of dividends).
Long-term view: essential to achieve long-term outperformance
- The resources market is cyclic and volatile, and the share prices of junior resource stocks can fluctuate according to many factors over the short-term. Short-term investments in junior resource stocks are often premised on speculation about a commodity price, the outcome of exploration or a transaction, or market sentiment, all of which are unpredictable and uncertain. Whilst many investors and money managers attempt to profit from short-term volatility, the returns available are tremendously unreliable.
- Over the longer term, history has shown that carefully selected junior resource companies can experience a positive value re-rating as they progress from explorer to producer. The likelihood of this occurring is enhanced by backing high-quality people.
- There is still uncertainty involved, which is why diversity through a portfolio is required.
- Investors hoping to capture project development type of value re-rating need to be able to take a long-term investment view.
- Because Lion is a long-term investor, our investment performance is skewed towards long-term returns.