Hearts and Minds Investments Limited reported a significant contraction in returns for the year ended 30 June 2026, with total comprehensive income declining 76% to $29.6 million from $124.8 million in the prior year. The investment portfolio generated returns of 5.2% after expenses and before taxes, a sharp decline from the 25.5% achieved in the previous year, reflecting a challenging investment environment and some large adverse moves in the portfolio alongside mixed performance across holdings.
The composition of returns reveals a more complex picture than the headline figures suggest. The portfolio delivered $73.7 million in realised investment gains, which includes $9.9 million in dividends and other income, but this was offset by $18.4 million in unrealised losses. This divergence between realised and unrealised returns highlights the volatility experienced during the year, with certain positions generating significant paper losses despite the portfolio’s overall positive returns. The Conference Portfolio performed well despite some volatility, though this was partially counterbalanced by mixed results in the Core Portfolio.
The company’s net asset value contracted from $786.7 million at 30 June 2025 to $773.9 million as at 30 June 2026. This $12.8 million reduction reflects the impact of comprehensive income of $29.6 million offset by fully franked dividends paid to shareholders of $42.4 million. Net tangible assets per ordinary share declined to $3.38 from $3.44, though the company maintains a pre-tax NTA position of $3.67. The post-tax NTA of $3.38 carries a net tax liability of $0.29 per share, predominantly relating to unrealised gains in the portfolio.
The dividend remains a notable feature of the company’s investment proposition. HM1 paid fully franked dividends of 18.5 cents per share during the year and has declared an increased final fully franked dividend of 10.0 cents per share payable in October 2026. This dividend commitment reflects the board’s confidence in maintaining its policy of fully franked payouts, subject to prudent cash management and adequate franking credits. Shareholders can reinvest dividends through the Dividend Reinvestment Plan at market-based pricing.
Since its inception in November 2018, the company has generated a compound annual pre-tax investment return of 10.7%, demonstrating that the current year’s performance sits below this longer-term trajectory. HM1 continues to direct 1.5% of net tangible assets annually to Australian medical research organisations, a commitment funded through pro bono support from fund managers and board members. Investors should monitor portfolio composition changes and the company’s ability to sustain its dividend policy through market cycles, particularly given the significant unrealised losses recorded during the year. This announcement is price sensitive and has been flagged as material by the ASX.
View the full ASX announcement (PDF)
About Hearts and Minds Investments Limited (ASX: HM1)
Hearts and Minds Investments Limited is a listed investment company on the Australian Securities Exchange that manages a concentrated portfolio of approximately 25 to 30 Australian and international listed securities selected as high-conviction investment ideas. The company operates a unique model where it donates 1.5% of net assets annually to support Australian medical research organizations instead of charging traditional management fees. Approximately 35% of its investment portfolio is allocated based on recommendations from fund managers presenting at its annual Sohn Hearts & Minds Investment Leaders Conference.
If you would like to discuss this announcement or how it might affect your portfolio, request a callback or call us on 1300 889 603.
