NAV on 2019/09/18
|NAV on 2019/09/17
|52 week high on 2019/04/23
|52 week low on 2018/12/10
|Total Expense Ratio on 2019/06/30
|Total Expense Ratio (performance fee) on 2019/06/30
Anchor Capital (Pty) Ltd.
FTSE JSE Capped SWIX All Share index
Sean holds a BCom (Hons) and is a CFA charterholder. He carries 12 years of financial market experience having worked as a sell-side analyst at Deutsche Bank and Nedbank, and Portfolio Manager and buy-side analyst at Investec Wealth & Investment. He was awarded two number one ratings in the Financial Mail institutional analyst ratings in 2005 and 2006 for the hotels and leisure sector. The Investec IEB Absolute Return Fund, under his management, won its category in the SYmmETRY Hedge Fund awards in 2007. In addition to managing the Anchor BCI Equity Fund (SA’s top performing general equity fund in 2014), Sean is the CIO and responsible for the investment and research process at Anchor Capital.
Anchor BCI Equity comment - Mar 17
In what proved a tumultuous month for politics in SA, the fund delivered solid gains in March, marginally ahead of the peer group average at +1.5%. Our positioning over the past year has been that of being tilted toward rand weakness, with a significant direct offshore allocation being retained.
This has cost investors over the past year as global appetite for emerging market (EM) assets has pushed the rand to recent highs of R12.30/$, only to be followed by a sharp fall-out in the wake of Jacob Zuma’s actions of 31 March 2017. Following these events, we retain a healthy (17%) direct offshore allocation, with our view that risks to South Africa’s long-term fundamentals have risen dramatically, in the absence of positive leadership, from here.
The bond market movements since 31 March appear to have priced in the S&P downgrade, as well as a fairly benign evolution of SA’s fiscal trajectory, in our view; the risks remain that - absent a political change of direction for the better - domestically-focussed assets in SA will suffer further valuation degradation.
To balance the risk of a positive outcome in this regard in the portfolio, we retain a full weight to SA banks, with our preferred entry points being FirstRand and Barclays Africa. These assets will prove high-beta plays to any positive resolution to SA’s political woes, and are currently very cheap.
Top contributors to relative performance vs SWIX during the month included ADvTECH (+5%), a lack of Netcare (which declined 19% during the month) and Astoria Investments (+6%). Our offshore holdings in aggregate contributed 80bps of the performance during the month, despite the rand ending only 2% weaker month on month, outperforming the MSCI World.
The key detractor from performance during the month was Sun International, which declined 12% following a very poor result (costing the fund 40bps of performance), which fell well short of our estimates. While we still regard the Times Square project as possessing very attractive economics, the debasement of earnings has made the valuation much less attractive, capping upside. We have decided to exit our holdings in Sun International.
The portfolio is constructed from bottom-up, fundamental research with an investment philosophy that favours quality stocks with superior returns on capital, cash flows and pricing power. While acceptable valuation is an important component of the stock selection process, the fund's style is not 'value' - investments will be made in premium-rated stocks where the growth outlook and quality profile warrants it. The fund will also own shares that are often not well researched, yet offer exceptional valuation-driven opportunities. The quality of companies included is judged by rates of earnings growth, return on capital employed, cash conversion and stability of margins. The portfolio may from time to time invest in listed and unlisted financial instruments. The manager may include the following unlisted financial instruments: forward currency, interest rate and exchange rate swap transactions for efficient portfolio management purposes. The portfolio's equity exposure will always exceed 80% of the portfolio's net asset value.