A rally in South African retailers is tempting Imara Asset Management’s Chris Botha to sell his Mr Price shares and increase holdings in Glencore on bets a rebound in the global economy will spur demand for metals.
Mr Price, a clothing and homeware chain, gained 86% over the past 12 months to trade at 25 times estimated earnings. Glencore, a commodities trading and mining company with interests spanning copper to coal, dropped 19% in Johannesburg over the period to trade at 12 times profit. Botha is also considering adding more Anglo American Plc and BHP Billiton Plc securities to his 483 million-rand ($41 million) Imara MET Equity Fund.
“It’s the classic switch,” Botha, whose fund has beaten its benchmark over the past five years, said in an interview in Johannesburg last week. “When, we don’t know yet, but it’s something that we are monitoring.”
Imara Asset Management, which oversees $500 million from offices in Angola, Botswana, South Africa and the U.K., plans to own more resource stocks in the equity fund than benchmarks suggest, so commodity shares account for 25 percent of holdings, from 17 percent, over the next six months.
Stimulus from the European Central Bank will help economic growth in the region, the U.S. will probably delay interest rate increases until the first quarter of next year and China will continue monetary easing and infrastructure spending, all boosting the case for base metals, such as aluminum, copper, lead, nickel, tin and zinc, Botha said.
“The world is geared for growth,” he said.
Botha, whose fund can hold a maximum of 35 stocks, also bought shares in Steinhoff International, a furniture maker and retailer, about a month ago on the expectation its European business will benefit from improved consumer spending. He is considering selling shares in Capitec Bank, a lender that surged 63% last year, after exiting MTN Group, Africa largest mobile-phone company, a month ago because dividends will suffer from a drop in the value of Nigeria’s naira, Botha said.
©2015 Bloomberg News