NAV on 2019/07/18
|NAV on 2019/07/17
|52 week high on 2018/09/04
|52 week low on 2019/07/03
|Total Expense Ratio on 2019/03/31
|Total Expense Ratio (performance fee) on 2019/03/31
Sanlam Collective Investments
South African--Multi Asset--Flexible
CPI + 5%
No email address listed.
No website listed.
Sandy le Roux
Baobab SCI Flexible Fund - Mar 19
The Fund has had a positive start to the year, but unsurprisingly has not participated fully in the very strong market rally, in the same way that it did not participate in much of the market declines of 2018. Market noise remains elevated, but we continue to find opportunity in areas that are neglected and uncrowded.
We were fairly active during the quarter putting cash to work in areas where we see excellent long-term value. While much of our buying was into existing holdings that experienced price weakness, we also initiated a few new positions. We have become more constructive on select domestic counters where we are able to buy sound businesses, run by strong management teams at what we deem to be exceptional valuations. While the bulk of our buying has been in the small and mid-cap area of the market, we did use price weakness to add to our position in Old Mutual during the quarter. In our view, Old Mutual is a decent business with a strong footprint that is trading at a very attractive price, supported by a dividend yield similar to the yield of cash in the bank. If we add a management team that should be a little more sensible than their predecessors and an economy that is 'less bad' than in the past five years, we think the bar is set low for Old Mutual to produce long-term returns well in excess of cash in the bank.
Our small size is a key advantage and provides us with a much wider opportunity set than most. This is particularly relevant in the current market environment where smaller domestic companies trade at a significant discount to the rest of the market. While deemed as a more risky part of the market, the risk can be mitigated by being selective in what you choose to own. During the quarter we added to our holding in Master Drilling and initiated new purchases of Trellidor, Hudaco and HCI, all of which are sound businesses with solid management teams, but are trading at what we deem to be very attractive valuations. Offshore markets have been particularly strong with money rushing back into the usual areas. Despite the market strength, we managed to find select areas of price weakness to initiate a new position in Fairfax India and added to existing holdings in Telecom Italia and Teekay Offshore. Fairfax India is an investment holding company that owns some high quality Indian assets, trades at an attractive valuation and has an exceptional capital allocator at the helm. Teekay Offshore is a leading international midstream services provider to the offshore oil production industry, focused on the ownership and operation of critical infrastructure assets in offshore oil regions of the North Sea, Brazil and the East Coast of Canada. Despite producing a solid set of results, Teekay Offshore continued to decline in the quarter, seemingly as a result of some forced selling by an institutional shareholder. Having been recapitalised by Brookfield Business Partners, the business produces stable cash flows from long-term contracts and, in our view, provides a very asymmetrical long-term opportunity.
With local elections around the corner it promises to be an interesting period ahead. While maintaining a flexible and balanced approach, we will continue to take advantage of any stock-specific opportunities that may arise.
The portfolio will adopt a flexible approach and the asset class exposure will be varied depending on opportunities in the market. The portfolio will invest in a range of asset classes including equities, bonds, money market instruments, listed property as well as international equities and fixed interest investments. Each instrument will be selected on a bottom-up basis and based on its individual risk/reward status, and ability to deliver on the long term objective of the fund.
The investment manager will also be allowed to invest in listed and unlisted financial instruments (derivatives) as allowed by the Act from time to time in order to achieve its investment objective.
The Manager shall be permitted to invest on behalf of the portfolio in offshore investments as legislation permits.
Apart from the above, the portfolio may also invest in participatory interests of portfolios of collective investment schemes registered in the Republic of South Africa or of participatory interests in collective investment schemes or other similar schemes operated in territories with a regulatory environment which is to the satisfaction of the Manager and the Trustee of a sufficient standard to provide for investor protection which is at least equivalent to that in South Africa.
For the purpose of this portfolio, the Manager shall reserve the right to close the portfolio to new investors on a date determined by the Manager. This will be done in order to be able to manage the portfolio in accordance with its mandate. The Manager may, once a portfolio has been closed, open that portfolio again to new investors on a date determined by the Manager.
The Trustee shall ensure that the investment policy set out in the preceding clauses are adhered to; provided that nothing contained in this clause shall preclude the Manager from varying the proportions of securities in terms of changing economic factors or market conditions or from retaining cash in the portfolio and/or placing cash on deposits.