NEDGROUP INVESTMENTS VALUE
This fund often buys shares at the same time as the other value funds but it is less inclined to sell early. The fund is managed by Foord Asset Management, which at times has had returns similar to the value managers but which more recently has taken on the characteristics of a momentum manager. While many of its competitors have sold their interest in Steinhoff, Nedgroup Value still has a large 8,5% holding in the share. Co-fund manager Brian Davey says the fund uses value screening tools, looking for shares with below-average PEs and aboveaverage dividend yields. Expensive shares in the Foord Equity Fund such as Aspen and SABMiller are excluded from the Value Fund. “But we do not believe the entire portfolio has to be in bombed-out shares. Many of our value shares are closer to realising their value and will soon be ready to be harvested. Shares such as RMB Holdings and Woolworths were acquired when they offered better value than today and Foord has been happy to ride the shares. Santam, while not cheap, is seen as a value share by the Foord team as it has been successful at unlocking value through special dividends and it has used its capital well by expanding into related businesses such as the MiWay direct insurer. The fund also holds an untraditional value share in retailer Truworths, which Davey says has been a disappointment recently. It has been slow to react to international competition but nonetheless still has more than sufficient value to justify a holding.
A more conventional value share in the portfolio is Sasol, which Foord has been buying recently on the back of a relatively new leadership and a less parochial outlook under CE David Constable. Another share which has added value has been Bidvest, where Brian Joffe has consolidated a number of unloved industries such as bathroom services and office supplies. Nedgroup Value is the only one of the five funds to choose BHP Billiton in preference to Anglo American.
It has a comparatively light 16% in resources, mainly in Billiton and Sasol. Apart from RMB Holdings, its largest bank holding is in Standard Bank, which arguably is a value share as it shifts from being an emerging market bank, with a large London office, into a pan-African bank, and it has scope to improve margins from their 2014 lows. Davey says the fund remains well positioned in a diversified group of quality value shares and is well positioned for long-term outperformance. The fund last year was a solid 1,4% ahead of the general equity average and over 10 years it has been 2,2% ahead on an annualised basis.