Throughout the current Covid-19 and Oil crises we have heard the overuse of Winston Churchill’s famous quote, “Never let a good crisis go to waste”. A crisis is all too often a relative term bandied about in everyday conversation. It may be the loss of one’s job, the breaking down of one’s vehicle or to a lesser degree, the empty milk carton in the fridge first thing in the morning! The Covid-19 crisis is however much more of a leveller, stretching far and wide and impacting most of the global population indiscriminately. If we focus in on crises that affect investment markets, some investors will be more accustomed and more prepared to cope with volatility than others. As South Africans, volatility is feeling more and more familiar, but there are other territories that bear warning labels where most fear to tread. The African continent is such a region which remains under researched, underutilised and if you know where to look, full of opportunity and potential. Many African markets still present frequent inefficiencies, presenting profitable investment opportunities especially in times of heightened volatility. Not many South African investment managers have resourced investment expertise into the African continent.
Laurium Capital has been investing in African equity and fixed income markets since its inception in 2008. Its latest African offering is the Laurium Africa USD Bond Prescient Fund which has been gaining a growing following and producing solid results. As Laurium celebrates its 12th anniversary this year, it owes some of its success to venturing north of the Limpopo river. The investment team’s coverage has always been implemented on a sectoral basis, covering companies and markets in South Africa and the rest of Africa. Having ‘boots on the ground’ experience provides the analysts with valuable perspective on companies that generate their earnings across the continent, as well as how competitors function. This capability has also helped Laurium with shorting in South Africa. In a search for growth, many South African companies over the years have expanded their operations across different high growth markets in Africa.
Laurium’s Pan-Africa expertise has allowed it to be better positioned in identifying South African companies who have successfully expanded as well as those who are prime short candidates due to general difficulties operating in foreign markets. Laurium’s hedge fund DNA has also helped it generate alpha across our strategies, both long and short, as it has capitalized on the market inefficiencies which are still abundant across the universe. One of the less considered positive externalities of working in African markets is the nous, entrepreneurial zest and above all, resilience a team develops. As one member of our team has coined the phrase, ‘Crises are not new to Africa, there is always a crisis somewhere in Africa’, and as an investor, one tries to anticipate where these may next unfold. When getting exposed to a volatile market it is important to keep one’s head, stick to one’s investment case, process and philosophy. This resilience bore fruit for Laurium’s portfolios in Q2 2020, generating considerable upside from the rally in markets.
MICHAEL TITLEY Business Development, Laurium Capital