FinWeek (April 2014)

By Warren Dick


Heading in the right direction.

While still new and relatively small, the Laurium Flexible Prescient Fund is being run by a team of investment professionals that have been around the block a few times, both by way of investment banking and hedge fund management. As it is a flexible fund, the manager can default to cash if the market looks overvalued, or if there are a lack of good opportunities in which to invest.


TOP TEN HOLDINGS

1 USA Index ETF 9.6%

2 BHP Billiton 5.6%

3 Old Mutual 5.1%

4 Naspers 4.8%

5 FirstRand 4.7%

6 Sasol 4.1%

7 Foschini 3.8%

8 Comair 3.7%

9 Distell 3.6%

10 MTN 3.6%

TOTAL 48.60%


FUND INFORMATION

Benchmark: Consumer Price Inflation (CPI) +5%

Portfolio Manager: Gavin Vorwerg and Murray Winckler

Annual management fee: 1% ex VAT

Minimum Investment: R10 000 lump sum or R500 per month

Fund size (Rm): R177


Graph performance

Fund Manager Insights:

Co-fund manager Gavin Vorwerg says the investment team’s core capability is to perform detailed, fundamental, bottom-up driven equity research, with a valuation orientation. Based on their experience running hedge funds, the fund can also make money from trading. “We are not dogmatic value investors. We think we take a hedge-fund mindset into the flexible fund, by switching into cash when we want to reduce our net exposure to the market,” says Vorwerg. He explains that a hedge-fund mindset refers to being benchmark-agnostic, being able to trade companies that find themselves in special situations, and using the relatively small size of the fund to find invest in smaller companies. “But as you can see from our top 10 holdings, we don’t invest solely in small companies,” he adds.

In terms of the portfolio, the fund favours offshore or rand-hedge exposure as opposed to local exposure at the moment. “If we allocate money offshore [as is the case with the flexible fund] we use a passive index to get the exposure. Currently, the biggest holding in the fund is the S&P 500 ETF.” To date, 50% of the portfolio has offshore or rand-hedge exposure.

Outside of the Top 10, the fund has built a sizable stake in Sephaku Cement, which has a new plant coming on stream with Dangote Cement. “Dangote is coming into an old, established cement industry. And we think they will do well – the company has a low-cost plant that is in the process of coming on stream,” says Vorwerg.

The fund has also been adding to its FirstRand position in recent months. The financial services conglomerate is well run and very conservatively provisioned. The fund is also holding physical platinum by way of the Newplat ETF as 40% of the world’s supply is currently out of commission due to the strikes at Amplats, Implats and Lonmin.

Fund managers: Gavin Vorwerg and Murray Winckler

Why FinWeek would consider adding it

The investment team is well established and highly qualified. The team comprises eight chartered accountants and nine chartered financial analysts, so there is no shortage of intellect. As can be seen from the performance, the fund has delivered in its first year and is off to a cracking start. With an established team in place, the fund offers investors a serious proposition to deliver outstanding results well into the future.