I chatted with Justiné Brophy of AnBro Capital on its USD Unicorn fund investing into unicorns (market valuation above $1 billion) that may in time become the next Alphabet or Facebook. It focuses on technology, healthcare and the consumption sectors with holdings such as Zoom and Shopify. Brophy comments that founding management is important, but so is strong cash generation, which is often not a feature in smaller business, as is a long runway of growth in order to generate significant shareholder returns.
Renewable energy as an investment is missing on the JSE, as are utility investments offering a high and stable dividend yield. Revego Fund Managers is listing as just such an investment on the local bourse, late in the first quarter of 2021, focusing on renewable energy assets in sub-Saharan Africa. Chief Investment Officer Michael Meeser tells us it won’t build the infrastructure, hence reducing the risk, as it offers finance once the asset is operational as an exit for the developers. With a target dividend yield of 10%, this is a listing I am looking forward to. I will speak with Michael again once Revego publishes the listing documents.
The last few years of poor returns on the JSE has induced a surge in offshore investing to capture the stellar returns seen on both the Nasdaq and S&P500. AlphaWealth’s Greg Strachan however cautions that we need to balance our liabilities in the currency in which they exist. Primarily this would be income requirements and keeping assets in rands prevents exchange rate risk when our rand strengthens, as it is prone to do at times and sometimes for lengthy periods.
One of the key benefits of passive investing into exchange-traded funds is the very cheap fees averaging 0.5% and lower. Mianzo Asset Management has launched two new unit trusts with annual fees of just over 0.5%, which head of business development Zukile Nchukane says is very much a competitive advantage, as it comes in around a full percent lower than the industry average.
Also this week:
Sanlam’s Nick Kunze talks about SA moving further into junk, and whether this will hurt the banks. TigerBrands CEO Noel Doyle discusses shrinking margins and the lockdown’s effect on shopping trends. Alpha Asset Management’s Keith McLachlan gives tips on how to find value in small caps.