For­eign fling


THE FO­ORD AS­SET MAN­AGE­MENT team doesn’t give a lot away in terms of port­fo­lio com­po­si­tion. So the re­lease of its an­nual re­port by Fo­ord Com­pass – a deben­ture-based in­vest­ment ve­hi­cle – is quite a keenly an­tic­i­pated event. Of course, the re­port gives in­vestors a peek into the port­fo­lio com­po­si­tion of a spe­cialised in­vest­ment ve­hi­cle (some might call it a hedge fund) that has as its aim an­nual growth of in­fla­tion plus 10% and the pay­ment of gen­er­ous dis­tri­bu­tions bi-an­nu­ally.

What makes this year’s an­nual re­port (which cov­ers the year to year-end 2010) even more in­trigu­ing is Fo­ord Com­pass’s dis­clo­sure ear­lier this year that it was more than 90% in­vested in eq­ui­ties – a time when many mar­ket par­tic­i­pants may have been erring on the side of cau­tion. While it’s pos­si­ble that po­si­tion may have changed since year-end, com­ments in the an­nual re­port sug­gest Fo­ord Com­pass is still bet­ting on eq­ui­ties to drive its re­turns.

In terms of the port­fo­lio, the most eye­catch­ing shifts are the marked in­crease in the hold­ings in hy­brid life as­sur­ance op­er­a­tion Dis­cov­ery (500 000 to 1m shares) and fur­ni­ture con­glom­er­ate Stein­hoff In­ter­na­tional (520 000 to al­most 2,2m shares). Fo­ord Com­pass also in­creased its po­si­tions in con­glom­er­ates Remgro and Bidvest, but held its po­si­tion in Bri­tish Amer­i­can To­bacco.

De­spite its over­all in­crease to eq­ui­ties, Fo­ord Com­pass whit­tled down its po­si­tions in prop­erty group Re­de­fine, poul­try group As­tral Foods and fash­ion re­tailer Fos­chini.

Look­ing off­shore, Fo­ord Com­pass’s big­gest sin­gle hold­ing (al­beit spread be­tween two bonds) re­mains in Ed­con Bonds, which were worth R150m at endDe­cem­ber. It also built po­si­tions in An­glo Amer­i­can plc (10 000 shares), Cap­i­tal Shop­ping Cen­tres (190 000), Aussie bev­er­age com­pany Fos­ter’s (1,25m), QBE In­surance (300 000) and Gen­eral Elec­tric (300 000) but re­duced its hold­ing in Fo­ord In­ter­na­tional Trust from 1,57m to 1,16m units.

There’s a dis­tinctly in­ter­na­tional flavour to Fo­ord Com­pass’s port­fo­lio, with more than R600m of the equity por­tion con­sid­ered in­ter­na­tional hold­ings com­pared with around R376m of in­vest­ments in SA.

Of course, if we con­sider Remgro, Stein­hoff, BAT, Dis­cov­ery and Bidvest hold con­sid­er­able as­set bases off­shore, then Fo­ord Com­pass is look­ing like a size­able play on a weak rand.

The writer holds Fo­ord Com­pass deben­tures.

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