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

The fund is run by Kokkie Kooy­man, the co-head of Denker Cap­i­tal (a divi­sion of San­lam In­vest­ment Man­age­ment). In a fairly un­dif­fer­en­ti­ated unit trust sec­tor, Kooy­man’s strat­egy is sub­tly dif­fer­ent. For a start, 20% of the fund’s as­sets are in­vested in the San­lam Global Fi­nan­cial Fund. Apart from AIG in the US, Ageas in Bel­gium and Spare­bank 1 Nord Norge in Nor­way, all of the top 10 shares are in emerg­ing mar­kets. They in­clude shares long held in the port­fo­lio, such as TSKB in Turkey, and un­ex­pected coun­ters, such as TBC Bank in Ge­or­gia.

The global fund con­trib­uted to the lo­cal fund per­for­mance, as the fund gained 5% in dol­lars in April, though the global fund is still barely pos­i­tive for the year to date and shares are still 10% be­low their De­cem­ber 2013 lev­els. Ob­vi­ously it looks much bet­ter in rands.

He says there were ex­cel­lent re­sults from banks such as US Ban­corp, JPMor­gan and In­dia’s Yes Bank. And there have been se­lec­tive re­bounds in April with Adira in In­done­sia gain­ing 21%, San­tander Con­sumer 25% and Sber­bank of Rus­sia 13%.

Many have been grow­ing share­holder cap­i­tal at a high com­pound rate. The US ac­counts for 26% of the global fund over­all, Europe 17%, In­dia 12% and In­done­sia 11%, with fur­ther in­vest­ments in Ge­or­gia, Rus­sia, Peru and Turkey.

An­other dif­fer­en­tia­tor is that Kooy­man has chunky holdings in some sec­ond-tier fi­nan­cial ser­vices busi­nesses such as the JSE (7%) and Sas­fin (5%) He also has a 2.5% hold­ing in Trans­ac­tion Cap­i­tal.

Kooy­man says the medium-term out­look for SA fi­nan­cial shares re­mains bleak, with in­fla­tion, ris­ing un­em­ploy­ment and a ris­ing oil price all con­spir­ing to make life tougher, though a re­ver­sal in flows back to emerg­ing mar­kets might help the rand.

The fund ben­e­fited from the re­cent re­bound in shares such as San­lam — in which its 9% hold­ing is well ahead of the peer group — and Stan­dard Bank.

Kooy­man says March and April have high­lighted the dan­ger of sell­ing when mar­kets fall and shows that qual­ity com­pa­nies rerate mostly when sen­ti­ment turns. He has, how­ever, re­duced the hold­ing in Dis­cov­ery for com­pany-re­lated rea­sons as well as Ned­bank and Bar­clays Africa be­cause of un­cer­tainty about their im­me­di­ate share­hold­ing and be­cause of the po­ten­tial over­hang.

He has also sold off Alexan­der Forbes, which he de­scribes as dis­ap­point­ing, and the way in which its CEO Ed­ward Kieswet­ter was let go with­out proper suc­ces­sion plan­ning was not good eth­i­cally.

In the mean­time, Kooy­man has built up the large San­lam po­si­tion over 24 months — he is ex­cited by the firm’s prospects in In­dia. The hold­ing in the JSE Ltd was built up over eight months, as it looked un­der­val­ued rel­a­tive to peers such as Deutsche Borse, the Moscow ex­change and Bovespa in Brazil. It is a share with very lit­tle risk, as it has no bad debt or in­ter­est rate risk and it was mis­priced.

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