Fund Man­ager

Finweek English Edition - - FUND IN FOCUS - THE FO­CUS OF

the fund is to in­vest in listed com­pa­nies that en­gage in in­dus­trial ac­tiv­i­ties and dis­play the po­ten­tial to grow earn­ings at an above-av­er­age rate. It fol­lows the SIM prag­matic value in­vest­ment phi­los­o­phy, giv­ing the fund a value bias.

Kingston says they are gen­er­ally tak­ing a cau­tious view on lo­cal stocks, which are quite ex­pen­sive at cur­rent lev­els, and where con­di­tions are de­te­ri­o­rat­ing across sev­eral in­dus­tries. Sim­i­lar to its bench­mark (the JSE’s In­dus­trial In­dex), Naspers*, which is trad­ing at a price-to-earn­ings ra­tio of 96.7 times, makes up the bulk of its port­fo­lio. They have a “high de­gree of con­fi­dence in the val­u­a­tion of Naspers”, says Kingston, de­spite the cur­rent volatil­ity in Chi­nese mar­kets. Naspers’s val­u­a­tion is al­most en­tirely made up of its 33.85% stake in Chi­nese in­ter­net gi­ant Ten­cent.

The fund also holds a stake in 58.Com, another Chi­nese in­ter­net group with a ma­jor fo­cus on online clas­si­fieds. Marlo Scholtz, who man­ages the fund with Kingston, says they came across 58.Com as part of their re­search into Naspers – sim­i­larly, their re­search into the lo­cal re­tail groups led them to buy a stake in Botswana-listed Chop­pies be­fore its list­ing on the JSE ear­lier this year. The fund will not in­vest “in­dis­crim­i­nately” abroad, Kingston says.

Lo­cally, the fund is see­ing some op­por­tu­nity in the mid-cap space, Kingston says. The fund has iden­ti­fied a “smat­ter­ing of shares” that of­fer po­ten­tial, in­clud­ing Curro, Dis­tell, Medi­clinic, Chop­pies, Pick n Pay and Adapt IT.

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