Fund Manager Summary on Bega Cheese Ltd (ASX:BGA)
Bega Cheese Ltd (ASX:BGA) has recently been in the spotlight due to its Strategy 28, which aims to enhance its branded product offerings and leverage efficiencies in production. Fund manager Antares Capital initially viewed BGA favorably, highlighting its capacity to improve gross margins and position itself for potential acquisitions, such as Fonterra's Australian assets, which could provide additional value beyond current earnings potential. However, a shift in sentiment occurred by October 2025, as worsening drought conditions in south western Victoria prompted Antares to sell its position, indicating concerns over near-term operational challenges and risks to growth. This suggests that while Bega has clear strategic pathways and opportunities, environmental pressures and market conditions warrant caution for potential investors.
Commentary From The Managers
There are 4 insights from 2 fund managers regarding their investment in Bega Cheese Ltd (ASX:BGA) available on Thesis Tracker.
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Updates are made available to members within 12 hours of being released. The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Antares Capital
31 Oct 2025
$5.31
Summary
- Antares Capital sold their investment in Bega.
- Drought conditions in south western Victoria were a significant factor in the decision.
- The fund manager identified a better near-term opportunity in A2 Milk.
Antares Capital
30 June 2025
$5.46
Summary
- Antares Capital added Bega Cheese Ltd (BGA) to the portfolio in April.
- Positive outlook on Strategy 28, focusing on growing branded businesses like Farmers Union, Tatura, and Vegemite.
- Strategy aims to enhance gross margins while improving asset efficiency to lower production costs.
- Current BGA valuation does not reflect expected earnings growth.
- BGA is well-positioned to acquire Fontera’s Australian food assets, with existing agreements complicating potential bids from others.
- Antares Capital sees this as an option value alongside potential earnings uplift from Strategy 28.
Spheria Asset Management
31 Mar 2024
$4.16
Summary
- Bega Cheese (BGA.ASX) share price was largely flat over the month, underperforming a strong market.
- The company reported 1H24 results in February, showing branded revenue growth offset by weakness in bulk due to low commodity prices.
- There was a late improvement in milk supply, enabling Bega Cheese to exceed market expectations.
- The decline in Australian milk supply in recent years has pressured processors to prioritize market share over industry returns.
- Management indicates potential bottoming out of milk supply decline and easing competition, presenting a key inflection point for the industry.
- Recent improvements in export prices could further benefit the market.
- Despite a stock re-rating in the past six months, improved earnings support Bega Cheese's value outlook.
- Spheria Asset Management continues to hold due to the strong branded portfolio and underlying value of the business.
Spheria Asset Management
30 Sept 2023
$2.49
Summary
- Bega (BGA.ASX) share price fell 16% in September following a weak result in August.
- Spheria Asset Management acknowledges ongoing issues impacting Bega and the dairy industry, including labour supply shortages and inflationary pressures.
- Export prices for milk powders and cheeses have declined, affecting the commodity side of the business.
- Spheria believes these challenges are cyclical and expects a recovery, with some recent signs of pricing improvement.
- The company is shifting from a bulk dairy focus to a predominantly branded model, with 85% of sales having pricing power.
- Future cost reductions and improved export prices are anticipated to enhance the business outlook.
- A reduction in industry milk processing capacity is happening, supported by Saputo's rationalisation of its manufacturing footprint in Australia.
The completeness, accuracy or current status of the investments referenced are not guaranteed.
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Frequently Asked Questions
Who is investing in Bega Cheese Ltd (ASX:BGA)?
Fund managers including Spheria Asset Management and Antares Capital have invested in Bega Cheese Ltd (ASX:BGA).
Why do fund managers invest in Bega Cheese Ltd?
Fund managers invest in Bega Cheese Ltd due to its strong growth strategy focused on enhancing branded products, which typically offer higher margins. The company aims to optimize gross margins while improving asset efficiency to lower production costs. Additionally, Bega's positioning in the market makes it a potential candidate for acquiring Fontera’s Australian food assets, adding to its growth prospects. However, shifts in market conditions, such as drought, can influence fund managers' assessments and investment decisions.
What happened to Bega Cheese Ltd (ASX:BGA)?
Fund managers have expressed varying views on Bega Cheese Ltd, with recent comments highlighting concerns about drought conditions in south western Victoria, which may impact production. Antares Capital noted selling their stake to pursue other opportunities, specifically referencing A2 Milk as a more favorable near-term investment option.
What is the short interest in Bega Cheese Ltd (ASX:BGA)?
The short interest in Bega Cheese Ltd (ASX:BGA) is 1.11% which makes it the 199th most shorted stock on the ASX. Of the 305.4M shares that Bega Cheese Ltd has on issue, 3.4M have been sold short.
What does Bega Cheese Ltd (ASX:BGA) do?
Bega Cheese Ltd. engages in receiving, processing, manufacturing, and distributing dairy and other food-related products. It operates through two segments: Branded and Bulk. The Branded segment manufactures value added consumer products for owned and externally owned brands. The Bulk segment focuses on the manufacture of bulk dairy ingredients, nutritional, and bio nutrient products. The company was founded on July 15, 1899 and is headquartered North Bega, Australia.