Highlights

• Glennon Small Companies held approximately two-thirds of its portfolio in cash as at early November 2026, maintaining a deliberate defensive stance amid sustained rate pressure on small-cap equities.

• Three holdings — Sandfire Resources, Superloop, and Credit Corp — were highlighted as the strongest contributors to recent portfolio performance.

• The company outlined a disciplined deployment plan tied to further declines in the Small Ordinaries index and potential signals from the Reserve Bank of Australia.

• Michael Glennon was re-elected as director with over ninety-six percent Shareholder support, while the remuneration report resolution attracted a more divided vote reflecting normal scrutiny.

Glennon Small Companies Limited (ASX:GC1), an ASX-listed Investment company managed by Glennon Capital Pty Ltd and trading under the ticker GC1, held its 2026 Annual General Meeting on 12 November 2026. Alongside the formal Business of the meeting — which included the re-election of Michael Glennon as director with over ninety-six percent shareholder support — management delivered a comprehensive investor update covering the company's portfolio composition, top-performing positions, the prevailing macroeconomic environment, and the specific conditions under which additional capital deployment is expected to occur. The company confirmed that approximately two-thirds of its gross Assets were held in cash as of early November, a deliberate positioning decision in a period of elevated interest rates and sustained pressure on Australian small-cap equities. As a listed investment company focused on small and emerging companies, GC1's willingness to hold a large cash position is a function of its value-orientated investment philosophy, which prioritises capital preservation in uncertain conditions over maintaining full market exposure.

Portfolio Composition and Recent Performance Drivers

Three positions were singled out as the principal contributors to portfolio performance during the period under review: Sandfire Resources, a mid-tier copper producer with operations in Spain and Botswana; Superloop, an NBN broadband provider growing at the expense of incumbent carriers; and Credit Corp, Australia's largest publicly listed Debt purchaser and consumer lender. The investment in Sandfire was described as benefiting from the structural case for copper linked to electrification demand, combined with the miner's low-cost operational profile across its two principal mines. A meaningful portion of the Sandfire holding was sold down during the period, with gains already banked, while the remaining position was held on a trailing stop. Superloop's performance was broadly in line with the thesis underpinning the initial investment, though the manager noted that the market had by then largely priced in the anticipated growth, limiting further upside beyond their assessed valuation. Credit Corp, whose US collections business improved materially over the year and whose annual profit reached a record level, saw its shares move above the manager's assessed Intrinsic Value by year-end, prompting a partial reduction in the position consistent with the manager's discipline of exiting positions that exceed their valuation targets.

Macro Environment and Small-Cap Market Conditions

The macroeconomic environment described at the meeting was characterised by sustained Interest Rate pressure. The Reserve Bank of Australia had raised the official cash rate for a fifth time in calendar year 2026 at its November meeting, though the split vote among board members was noted as a possible indication that the rate cycle was nearing its peak. Small-cap equities, as measured by the Small Ordinaries index, had underperformed large-cap peers over the preceding twelve months, a dynamic the manager attributed to the disproportionate impact of higher borrowing costs on smaller companies with less access to deep capital markets. Looking at the sector landscape, areas identified as benefiting from tailwinds included defence, gold producers, copper, and certain Mining services businesses, while homebuilders, non-bank lenders, and discretionary retail were flagged as facing headwinds from the prevailing rate environment and softening consumer demand.

Investment Strategy and Deployment Signals

Looking ahead to deployment of the significant cash reserve, Glennon described a structured and disciplined plan to increase market exposure incrementally as specific conditions are met. These include further defined declines in the Small Ordinaries index from its prior high and a decision by the Reserve Bank to hold rates without a tightening bias, the latter acting as what the manager described as a likely turning point for small-cap valuations. Each stock purchased would be required to trade below the manager's independently derived valuation with a defined upside target and an identified catalyst with a timeline attached. The disciplined framework — including the use of fifteen percent trailing stops, no averaging down on losing positions, and an exit when the original thesis is no longer valid — was presented as central to capital preservation during the prevailing environment. The company's large cash position, which provides insulation against further index declines while funding future purchases at potentially lower prices, was described not as a failure to invest but as a deliberate tool for entering the market in a more advantageous position when macroeconomic conditions improve. Investors in GC1 should also note that the company's large cash balance, while reducing exposure to further small-cap index declines, also means that the portfolio's near-term performance will be heavily influenced by the timing and sequencing of that capital deployment. The manager's structured approach to deployment — tied to defined index level triggers and macroeconomic signals — is designed to introduce discipline into this process and avoid the temptation to invest prematurely in a market environment where the full extent of rate-driven Earnings pressure on small companies may not yet be fully reflected in prices. The disciplined exit of positions that have exceeded valuation targets, as seen with both Sandfire and Credit Corp, illustrates that the investment framework operates with equal rigour on the sell side as on the buy side. This consistency of process is a key characteristic that the manager presented as central to its approach to generating returns for shareholders of GC1 over a full market cycle.

Key Insights

Looking ahead to deployment of the significant cash reserve, Glennon described a structured and disciplined plan to increase market exposure incrementally as specific conditions are met. These include further defined declines in the Small Ordinaries index from its prior high and a decision by the Reserve Bank to hold rates without a tightening bias, the latter acting as what the manager described as a likely turning point for small-cap valuations. Each stock purchased would be required to trade below the manager's independently derived valuation with a defined upside target and an identified catalyst with a timeline attached. The disciplined framework — including the use of fifteen percent trailing stops, no averaging down on losing positions, and an exit when the original thesis is no longer valid — was presented as central to capital preservation during the prevailing environment. The company's large cash position, which provides insulation against further index declines while funding future purchases at potentially lower prices, was described not as a failure to invest but as a deliberate tool for entering the market in a more advantageous position when macroeconomic conditions improve. Investors in GC1 should also note that the company's large cash balance, while reducing exposure to further small-cap index declines, also means that the portfolio's near-term performance will be heavily influenced by the timing and sequencing of that capital deployment. The manager's structured approach to deployment — tied to defined index level triggers and macroeconomic signals — is designed to introduce discipline into this process and avoid the temptation to invest prematurely in a market environment where the full extent of rate-driven earnings pressure on small companies may not yet be fully reflected in prices. The disciplined exit of positions that have exceeded valuation targets, as seen with both Sandfire and Credit Corp, illustrates that the investment framework operates with equal rigour on the sell side as on the buy side. This consistency of process is a key characteristic that the manager presented as central to its approach to generating returns for shareholders of GC1 over a full market cycle.