Old Mutual Investors comment - Sep 10 - Fund Manager Comment27 Oct 2010
We were vindicated in our previously expressed views that the market had sold down many good quality businesses to very cheap levels as fear dominated the behaviour of investors. The benefit of sticking to our position and ensuring the fund was fully invested is reflected in the fact that the fund ended the quarter in a very strong position. Major holdings which outperformed strongly were MTN, Naspers, Old Mutual, Bidvest and Richemont.
The fund remains focused with the 10 largest holdings counting for 60%. While the retail shares have performed strongly, we continue to sell down our position. Local, and many global, retailers are overvalued based on our analysis. Focusing on the undervalued shares and avoiding overvalued momentum shares remains our priority.
Old Mutual Investors comment - Jun 10 - Fund Manager Comment24 Aug 2010
Given the current nervousness in the market, it is not surprising that the shares that are outperforming are 'good quality' companies which are operationally strong and 'defensive' in nature. However, many of these companies are, at best, fully priced. Of this grouping we prefer a company like British American Tobacco (BAT) which offers us a 5% dividend yield, is diversified geographically and provides excellent rand hedge characteristics. This share has lagged the universe of 'quality' companies and besides the attractive valuation, we like the diversification element it contributes to the overall portfolio. Some of the healthcare companies are also attractive 'quality' businesses and we took the opportunity to invest in the new Lifecare listing.
In addition to these 'quality' and more stable businesses, we have a large weighting in a number of shares that are more "contrarian" in nature, which are unloved by the market but offer attractive value. MTN, Sappi and Old Mutual are obvious examples. We expect the markets to settle as investors see continued signs of growth in the global economy, which will be more conducive to unlock value in these shares.
Old Mutual Investors comment - Mar 10 - Fund Manager Comment22 Jun 2010
The recovery in the local equity market continued over the first quarter of 2010 with the FTSE/JSE All Share Index (ALSI) posting a total return of 4.5% (11.4% for the fourth quarter of 2009 and 13.9% for the third quarter). Investor sentiment was driven by improving signs in the local economy, as well as more confirmation that the recovery in the global economy is continuing. In our view, the global environment remains favourably tilted to a continuation of the cyclical upswing we saw beginning in 2009. Interest rates are expected to remain low until the authorities are comfortable that major risks to that recovery have abated. Liquidity remains high and is likely to continue supporting asset price inflation, while goods inflation should remain subdued. Our approach in this market remains focused on picking shares rather than playing any major theme. We are continually looking for shares to invest in that are undervalued to their intrinsic value from a longer term perspective. The fund has strongly outperformed its Domestic-Equity-General unit trust peer group during the past 12 months to the end of March 2010 and was a top quartile performer.
Old Mutual Investors comment - Dec 09 - Fund Manager Comment15 Feb 2010
In our view the global environment remains favourably tilted to a continuation of the cyclical upswing we saw begin in 2009. Interest rates are expected to remain low until the authorities are comfortable that major risks to that recovery have abated. Liquidity remains high and is likely to continue supporting asset price inflation, while goods inflation should remain subdued. Based on this view we continue to manage the fund with low levels of cash as we continue to favour equities over cash. The equity selection bias in the fund remains in favour of the more cyclical shares, including an overweight position in resources shares. Obviously shares are not as cheap as they were 12 months ago, but we continually look for opportunities to build stakes in undervalued businesses and have recently acquired shareholdings in some attractively priced smaller cap companies.