IN­VESTEC VALUE FUND

Financial Mail - Investors Monthly - - Analysis: Value Funds -

The largest of the value funds with R4,7bn un­der man­age­ment, though this keeps fall­ing. Manager John Bic­card has a highly con­cen­trated port­fo­lio with 22% in gold shares, 18% in plat­inum and 19% in cash. He re­cently sold out of his po­si­tion in Stein­hoff (once 12% of the fund) and is build­ing one in Sappi which proved to be a good per­former in

2014, with a 29% re­turn. The only sig­nif­i­cant hold­ing in fi­nan­cials is Bar­clays Africa Group, which gained 45% over the year.

Bic­card says there is a deficit of plat­inum, with pro­duc­tion lower than sales. The plat­inum mines are on a record low price to book, en­ter­prise value to rev­enue and price to re­place­ment ra­tios. Bic­card’s view on gold shares is driven in part by val­u­a­tion but pri­mar­ily by his macroe­co­nomic view. In the long term quan­ti­ta­tive eas­ing will con­tinue and as cen­tral banks print money, it will be a cat­a­lyst for the sus­tained up­ward move­ment in the US dollar gold price, he says.

Bic­card sum­marises his in­vest­ment uni­verse as shares trad­ing be­low the rat­ing that they tra­di­tion­ally traded in the past, rel­a­tive to the mar­ket. He also in­vests in shares trad­ing at a dis­count to net as­set value.

The fund has a 25% ex­po­sure to for­eign shares, through the In­vestec Global Value fund, which Bic­card says of­ten looks at shares which are down at least 90% from their peak, such as cell­phone man­u­fac­turer Nokia. An­other is Bri­tish pub owner En­ter­prise Inns, which fell from £3,50 to 20p. Oth­ers in­clude Weight Watch­ers, which fell from $80 to $7 as slimmers turned to free apps. About half of the port­fo­lio is in Ja­pan where many good com­pa­nies have come un­der pres­sure. Bic­card loves the gold theme and has Egyptian min­ing busi­ness Cen­tamin in the fund. Bic­card has a strong fol­low­ing but says he can’t see a change in mar­ket sen­ti­ment in the short term. In­vestors in the fund need to take a long-term ap­proach.

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