Key new hires as Laurium builds team

Building on its successful 11-year track record, Laurium Capital continues to grow its team and product range, despite tough markets. Headed by Murray Winckler and Gavin Vorwerg and with offices in Johannesburg, Cape Town and London, Laurium is adding a further two people to its headcount this year, with Junaid Bray joining the investment team onNovember 1 after almost six years at Argon Asset Management.

Bray was Argon’s head of equities from January 2016, and was previously a senior investment analyst at the Abu Dhabi Commercial Bank for five years. He is a CFA charter holder with a Bachelor of Business Science (finance) from the University of Cape Town.

Portia Ngcobo joins Laurium in October, having spent the past five years at Deutsche Securities’ prime broking division in Johannesburg, where she was a senior client service associate. She has a diploma from the Durban University ofTechnology.

Laurium now has R25 billion under management from both foreign and domestic investors, comprising around 14% (R3.3 billion) in hedge fund assets and a further 14% in Africa long-only mandates, with the remainder in South African long-only mandates. Its product range includes long/short, aggressive long/short and market-neutral South African hedge funds, as well as a range of South African long-only equity mandates (flexible, balanced, equity and stable), its new income fund, and pan-African funds. Its retail hedge funds are now daily priced and being made available on various LISP platforms.

Next to launch in the fourth quarter will be a US-dollar denominated African bond fund, building on the team’s existing strengths across the continent. The fund will be managed by fixed income portfolio manager Jean-Pierre du Plessis, who joined in January, together with Africa specialist Paul Robinson. This follows its extension into the multi-asset space, with its two most recent fund launches comprising the Laurium Stable Prescient Fund, which launched in March, and the Laurium Income Prescient Fund, which went live in December. Laurium’s new hires bring its team to 24 people, including 13 chartered accountants and 14 CFA designations. The company has a three-year plan to obtain a credible B-BBEE rating, focusing on bringing diversity to the investment team, preferential procurement with service providers and suppliers and increased involvement in socio-economic development and consumer education initiatives.

Winckler notes that since inception, returns across all Laurium funds have beaten their benchmarks with lower volatility. Its longest running fund, the Laurium Long Short Prescient RI Hedge Fund, has delivered a net annualised 10.8% since launch in August 2008 with a standard deviation of 7.5%, compared with 6.9% from the benchmark STeFI.

The Laurium Aggressive Long Short Prescient QI Hedge Fund, which caters to qualified investors, has gained a net annualised 15% since inception in January 2013, and the Laurium Market Neutral Prescient RI Hedge Fund has delivered a net annualised 9.4% since January 2009.

Laurium’s investment team focuses on identifying and taking advantage of economic cycles and market trends to deliver superior long-term investment returns while managing risks.

They seek to identify companies whose share prices differ materially from intrinsic valuations, based on longer term, through-the-cycle cash flows and earnings, acknowledging that shorter-term inefficiencies present trading opportunities.

Winckler notes that the past five years have been the toughest period for the South African market in decades. “The SWIX has generated 3% per annum on a five-year total return basis, but if you take out Naspers, it is slightly negative,” he says, noting that Laurium’s new income fund, its lowest risk product, was attracting investors in this environment.

With more than US$17 trillion of global bonds now reflecting negative yields, he noted that South African bonds remained attractive, even if rates fell in the short term.

On the equity side, Winckler said the team has been trading more actively in a difficult environment.

“The market is trading a low levels, which suggests there will be a rebound in the short term,” he said. “But the macro environment is not good, growth is subdued and signs are that we are coming to the end of a 10-year bull market globally.” “SA Inc continues to look attractive on valuations, and largely prices in the weak growth dynamic in the economy,” he said. “It is still difficult to see where growth will come from but some counters have been smashed way too much. For example, banks are quite cheap, with Absa offering a 7% dividend yield. Domestic industrials are also cheap, although it is difficult to see where growth will come from.”

Longer term, he noted that problems would persist in the South African economy, with high debt levels at state-owned enterprises and increasing unemployment rates, particularly amongst the youth. The team retains positions in heavyweight stocks such as Discovery and Naspers, as well as Sasol, which has detracted from performance this year. Having had short exposure to the property sector, it was now adding on the long side. Banking exposure is meaningful, retail allocations remain defensive, and it retains exposure to diversified resources and global consumer names. Telecom stocks are also starting to look more attractive with small and mid-cap ideas coming to the fore.

Winckler adds that historical data makes the case that equities deliver real returns over time, and the team continues to find good opportunities even in a difficult global economic environment. “If our range of funds can continue to beat the market with less volatility, as we have done since inception, that will be a good result,” he said.

Source –  HedgeNews Africa – September 2019