Building on its successful 11-year track record, Laurium Capital continues to grow its team and product range, despite tough markets. Headed by Murray Winckler and Gavin Vorwerg and with offices inJohannesburg, Cape Town and London, Laurium is adding a further two people to its headcount this year, with Junaid Bray joining the investment team onNovember 1 after almost six years at Argon Asset Management.
Bray was Argon’s head of equities from January 2016, and was previously a senior investment analyst at the Abu Dhabi Commercial Bank for five years. He is a CFA charter holder with a Bachelor of Business Science (finance) from the University of Cape Town.
Portia Ngcobo joins Laurium in October, having spent the past five years at Deutsche Securities’ prime broking division in Johannesburg, where she was a senior client service associate. She has a diploma from the Durban University ofTechnology.
Laurium now has R25 billion under management from both foreign and domestic investors, comprising around 14% (R3.3 billion) in hedge fund assets and a further 14% in Africa long-only mandates, with the remainder in South African long-only mandates. Its product range includes long/short, aggressive long/short and market-neutral South African hedge funds, as well as a range of South African long-only equity mandates (flexible, balanced, equity and stable), its new income fund, and pan-African funds. Its retail hedge funds are now daily priced and being made available on variousLISP platforms.
Next to launch in the fourth quarter will be a US-dollar denominated African bond fund, building on the team’s existing strengths across the continent. Thefund will be managed by fixed income portfolio manager Jean-Pierre du Plessis,who joined in January, together with Africa specialist Paul Robinson.This follows its extension into the multi-asset space, with its two most recentfund launches comprising the Laurium Stable Prescient Fund, which launched inMarch, and the Laurium Income Prescient Fund, which went live in December.Laurium’s new hires bring its team to 24 people, including 13 charteredaccountants and 14 CFA designations. The company has a three-year plan toobtain a credible B-BBEE rating, focusing on bringing diversity to the investmentteam, preferential procurement with service providers and suppliers andincreased involvement in socio-economic development and consumer educationinitiatives.
Winckler notes that since inception, returns across all Laurium funds havebeaten their benchmarks with lower volatility. Its longest running fund, theLaurium Long Short Prescient RI Hedge Fund, has delivered a net annualised10.8% since launch in August 2008 with a standard deviation of 7.5%, comparedwith 6.9% from the benchmark STeFI.
The Laurium Aggressive Long Short Prescient QI Hedge Fund, which caters toqualified investors, has gained a net annualised 15% since inception in January2013, and the Laurium Market Neutral Prescient RI Hedge Fund has delivered anet annualised 9.4% since January 2009.
Laurium’s investment team focuses on identifying and taking advantage ofeconomic cycles and market trends to deliver superior long-term investmentreturns while managing risks.
They seek to identify companies whose share prices differ materially fromintrinsic valuations, based on longer term, through-the-cycle cash flows andearnings, acknowledging that shorter-term inefficiencies present tradingopportunities.
Winckler notes that the past five years have been the toughest period for theSouth African market in decades.“The SWIX has generated 3% per annum on a five-year total return basis, but ifyou take out Naspers, it is slightly negative,” he says, noting that Laurium’s newincome fund, its lowest risk product, was attracting investors in thisenvironment.
With more than US$17 trillion of global bonds now reflecting negative yields, henoted that South African bonds remained attractive, even if rates fell in the shortterm.
On the equity side, Winckler said the team has been trading more actively in adifficult environment.
“The market is trading a low levels, which suggests there will be a rebound in theshort term,” he said. “But the macro environment is not good, growth is subduedand signs are that we are coming to the end of a 10-year bull market globally.”“SA Inc continues to look attractive on valuations, and largely prices in the weakgrowth dynamic in the economy,” he said. “It is still difficult to see where growthwill come from but some counters have been smashed way too much. Forexample, banks are quite cheap, with Absa offering a 7% dividend yield.Domestic industrials are also cheap, although it is difficult to see where growthwill come from.”
Longer term, he noted that problems would persist in the South Africaneconomy, with high debt levels at state-owned enterprises and increasingunemployment rates, particularly amongst the youth.The team retains positions in heavyweight stocks such as Discovery and Naspers,as well as Sasol, which has detracted from performance this year. Having hadshort exposure to the property sector, it was now adding on the long side.Banking exposure is meaningful, retail allocations remain defensive, and itretains exposure to diversified resources and global consumer names. Telecomstocks are also starting to look more attractive with small and mid-cap ideascoming to the fore.
Winckler adds that historical data makes the case that equities deliver realreturns over time, and the team continues to find good opportunities even in adifficult global economic environment.“If our range of funds can continue to beat the market with less volatility, as wehave done since inception, that will be a good result,” he said.
Source - hedgenewsafrica.com HedgeNews Africa - September 2019
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