Fund manager

Finweek English Edition - - FUND IN FOCUS - Fund manager Er­rol Shear

de­scribes their ap­proach as be­ing “prag­matic value”, which means they look for un­der­val­ued com­pa­nies that have su­pe­rior re­turns and cash flows. “There are not many of th­ese around at the mo­ment,” says Shear.

The f und’s Class A units have mean­ing­fully out­per­formed the bench­mark since in­cep­tion, post­ing an­nu­alised re­turns of 22.4% vs the All Share’s 18.3% per an­num. This has come about as a re­sult of pick­ing some out­stand­ing per­form­ers, as well as avoid­ing mis­ery.

“When we looked at Mr Price in 2008 [dur­ing the global fi­nan­cial cri­sis] the com­pany was trad­ing at R12/share, with a sin­gle digit priceearn­ings ra­tio. Not even seven years later, the share is at R250/share. That’s a more than 20-fold re­turn on in­vest­ment.”

A more r ecent suc­cess stor y − even be­fore t he Swiss f r anc ap­pre­ci­ated − is Medi­clinic. “The share rose 33% last year, and we think it ’s a very well-man­aged com­pany. It ’s ef­fi­cient and has been a steady and solid in­vest­ment,” says Shear.

An­other bright spot for the fund has been in­vest­ing in the banks. Bar­clays Africa Group rose 45% last year, and Shear was quick to point out that this in­vest­ment was made on the ba­sis of the group be­ing the cheap­est (on a price-to-book ra­tio) of all the ma­jor banks.

Buy­ing a good com­pany on the back of bad news worked well with Tiger Brands, too. The share was up 42% in 2014. Bad news re­gard­ing the Dan­gote ac­qui­si­tion pro­vided Shear with an op­por­tu­nity to get in. “We thought it was cheap rel­a­tive to its long-term value and are very pleased with how it has per­formed.”

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.