Celebrating 12 years of success, financial journalist Malcolm Rees caught up with Murray Winckler and Gavin Vorwerg, co-founders of Laurium Capital to discuss their journey, tactics, and successes.
Murray started his career as an industrial analyst with Ivor Jones Roy and co. before joining Deutsche Bank in 1995 where he worked for 12 years. Murray was CEO of Deutsche Bank South Africa for three years and during his nine years prior to this, Murray held various positions at Deutsche SA including: Head of Global Markets (Debt and Equity) and Head of Research. During his tenor, Deutsche Bank held top ratings across all areas.
Gavin joined Deutsche Bank in 1998 as an equity analyst. He spent three years with Deutsche Bank in London responsible for strategic equity structuring in Africa (including SA), Middle East, and Central Europe before moving back to South Africa to start Laurium Capital with Murray.
Murray and Gavin started Laurium, possibly at the worst possible time, during the 2008 Lehman Brothers saga and the housing markets collapse in the USA. However, being sure minded and persistent, the Laurium Partners survived the onslaught of the economic collapse and grew their fledgling enterprise into a multi-billion asset management business.
Now Celebrating their 12th anniversary in August this year, they are showing no signs of slowing down. Laurium has grown to R26 bn in assets under management and provides a suite of long-only and hedge fund strategies which invest in South Africa as well the as the rest of the African continent to both local and international investors.Their track record that has taken them from strength to strength, surviving and excelling in some of the most competitive environments.
So, what is the secret to Laurium’s success?
It has to do with their core principles. Firstly, the company says that they do not have a factory or any machinery, and instead are completely focussed on the people that they employ. Part of their success has been to cultivate an environment that places the company’s and employee’s ethics in alignment with one another. The result is that the team becomes a highly functional unit, capable of executing their mandate with accuracy and passion.
“We cannot emphasise how demanding working in this space is,” Gavin added. “We have been very careful in selecting our team to make sure that they are the right fit. Our team are hungry, driven, and passionate, as is expected; however, they also operate with the utmost integrity and honesty. To back this up, all our clients’ investments run concurrently and in parallel with our own. It’s how we keep our checks in place. There is no better way to invest than with experts who put their money into the same investments as its clients. Furthermore, we have no interest in investing in spurious and technical trends. We need the fundamentals to make sense,”
Strategies and markets?
When starting Laurium, Murray and Gavin, opted to focus the business initially on hedge funds only, with the launch of the Laurium Long Short Prescient RIHF in 2008. Being experts in the space, knowing the flexibility, variety of tools and opportunities, resulted in the first five years of healthy growth, laying the foundation for impressive gains going into their future. However, unlike their contemporaries, Laurium’s focus was Pan African. Their goal: to be the African investment house, offering opportunities to their clients spanning from Cape Town to Cairo. And clearly this has paid off Being CFA’s and CA’s has also worked very much in their favour when regarding the type of analysis that they employ. Bottom-up fundamental research and valuations is the core of their philosophy, with top down views. In addition to this, they have the skills and experience to take advantage of special situations and trading opportunities, which differentiates them from their competitors. Couple that with an extensive knowledge and strong relationships in South Africa and the rest of Africa, one can start to see how this team has developed an eye for opportunities.
“Shifting our focus from hedge to long only funds became a necessity as the hedge fund industry in South Africa failed to expand, with the launch of the Laurium Flexible Prescient Fund in Feb 2013,” says Murray. “As our capabilities have grown with additional hires to the investment team, we have been able to expand our product range across the risk spectrum and now have a full suite of funds for investors.”
And how about Africa?
There is a benefit to being a smaller, nimble boutique investment firm in Africa. Simply put, the ‘Beta’ narrative that exists out there regarding Africa is that it is risky, and that the only viable long-term solutions for investing in the continent are to invest with companies that have other international inputs. This approach is standard and adopted by some of the other big players.
“We have however, developed what we call the ‘Alpha’ narrative regarding investing in Africa. In essence, Africa’s markets are incredibly inefficient. And in this inefficiency lies the chalice. We are able to use our unique research and hedging capabilities to fully capitalise on opportunities in the African markets. We have to be nimble and adaptable, which is something our larger competitors are unable to do.
“We do understand that the African market is a difficult and volatile space, but the African continent remains under researched, 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 support and producing solid results”. 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 the 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.
The Laurium team has consistently used their research methods to guide their decisions. As has been stated, it is the company’s core principles and philosophies that set it apart from its competitors. The edge that the team gets is incomparable and setting their goals on markets that would otherwise be ignored, has guaranteed their success. Their on-the-ground, deep research and tireless approach truly has made a high-yielding concoction for investments into the great African opportunity.