Fund manager in­sights

Finweek English Edition - - FUND IN FOCUS -

Co-fund manager Pa­trice Ras­sou thinks in gen­eral the lo­cal mar­ket looks quite over­val­ued. “We don’t see a lot of value in the industrial space – it’s the most over­val­ued part of the mar­ket. There is some value in fi­nan­cials and we like spe­cific po­si­tions in re­sources. We also think there is some value in the small cap space.”

Ex­ploit­ing its abil­ity to in­vest off­shore, the fund has been clever at find­ing cheaper com­pa­nies in key in­dus­tries over­seas and in­vest­ing in th­ese in lieu of the more hand­somely-priced lo­cal coun­ters. Co-manager Michael Can­ter­bury says:. “We iden­ti­fied a com­pany, Valiant Phar­ma­ceu­ti­cals, which was trad­ing on a low mul­ti­ple as a re­sult of try­ing to ac­quire a com­peti­tor. We in­vested on the ba­sis we thought it was cheap rel­a­tive to our lo­cal phar­ma­ceu­ti­cal stocks. Once the po­ten­tial ac­qui­si­tion fell through, the stock re-rated and is now up over 50% in US dol­lars terms.”

An­other ex­am­ple Ras­sou cites is in the listed prop­erty space. “The sec­tor has been very much in favour and looks quite ex­pen­sive. But look­ing off­shore a while back we man­aged to find a French prop­erty com­pany yield­ing 7% in eu­ros, which com­pared ex­tremely favourably with our lo­cal coun­ters.”

The fund’s largest hold­ing re­mains Naspers*. “From a risk man­age­ment per­spec­tive, we didn’t want to take a bet ei­ther way. So while it is big in the fund, rel­a­tive to its weight­ing in the fund’s bench­mark, it is not large at all.”

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