PETER LINLEY HEAD: OLD MUTUAL EQUITIES

Transcription

1 PETER LINLEY HEAD: OLD MUTUAL EQUITIES

2 SA GDP STUMBLES ALONG, SO WHY SA EQUITIES? Emerging countries South Africa World 2 Source: Old Mutual Investment Group, MacroSolutions; IMF

3 THE SOUTH AFRICAN EQUITY MARKET HAS EVOLVED 65% JSE Top 40: % Turnover from offshore over time 60% 55% 50% 45% 40% 35% 30% 3 Source: RMB, Morgan Stanley

4 WHERE HAVE THE RETURNS COME FROM? MARKET RETURNS 3 Years to 30 June 2014 (Annualised) SECTOR RETURNS 3 Years to 30 June 2014 (Annualised) Resources 2% Construction 2% SA Inc 24% Food & Drug Retailers 17% Telecommunication 22% Rand Hedge 29% Technology 28% SWIX 22% Healthcare 38% 0% 10% 20% 30% 40% 0% 10% 20% 30% 40% 50% 60% 4 Source: Old Mutual Equities Source: Old Mutual Investment Group/I-Net

5 A DIVERSE AND EXPERIENCED TEAM Jonathan Larcombe (14 yrs) Randolph Oosthuizen (8yrs) Ian Woodley (20 yrs) Leanne Micklewood (18 yrs) Cavan Osborne (16 yrs) David Lumby (16 Yrs) Philip Short (11 yrs) Peter Linley (29 yrs) Michael Schroder (24 yrs) Graham Bell (36 yrs) Brian Pyle (16 yrs) Neelash Hansjee (3 yrs) Pearlene Govender (7 yrs) Ebrahim Moola (1 yr) Tracy Brodziak (13 yrs) Meryl Pick (2 yrs) 5

6 OUR INVESTMENT PHILOSOPHY Value outperforms over time, but themes driving markets are cyclical Market inefficiencies can be exploited through extensive research and analysis Skilful risk management is critical to long-term success ESG focused companies are more likely to create long-term shareholder value Successfully timing the market is impossible 6

7 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 VALUE OUT-PERFORMS OVER TIME Value 7 Source: Old Mutual Equities

8 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 BUT YOU CANNOT IGNORE OTHER THEMES IN THE MARKET Quality 8 Source: Old Mutual Equities

9 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 BUT YOU CANNOT IGNORE OTHER THEMES IN THE MARKET Sentiment 9 Source: Old Mutual Equities

10 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 BUT YOU CANNOT IGNORE OTHER THEMES IN THE MARKET Growth 10 Source: Old Mutual Equities

11 Dec-97 Jun-98 Dec-98 Jun-99 Dec-99 Jun-00 Dec-00 Jun-01 Dec-01 Jun-02 Dec-02 Jun-03 Dec-03 Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 THE OME APPROACH MODERATES CYCLES AND OUTPERFORMS OME Approach Value 11 Source: Old Mutual Equities

12 FUNDAMENTAL VALUE SUPPORTED BY OTHER THEMES Balanced Perspective 12

13 Valuation POWERFUL INSIGHT DRIVES DEBATE AND STRONG CONVICTION HIGH Evaluate Carefully HIGH CONVICTION BUY Value trap? Diamonds HIGH CONVICTION SELL Evaluate Carefully Avoids Is our valuation missing an opportunity? 13 LOW Confirmation Through Quality, Growth And Sentiment HIGH

14 Valuation POWERFUL INSIGHT DRIVES DEBATE AND STRONG CONVICTION HIGH 14 LOW Confirmation Through Quality, Growth And Sentiment HIGH

15 Feb-09 Jun-09 Oct-09 Feb-10 Jun-10 Oct-10 Feb-11 Jun-11 Oct-11 Feb-12 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 Jun-14 INVESTORS FUND TOP QUARTILE OVER 1, 2, 3, 4 & 5 YEARS INVESTORS FUND RELATIVE TO PEER GROUP AVERAGE FROM 1 MARCH 2009 Invested R1m in February 2009, current value: General Equity Average: R2.8m Investors Fund: R3.2m SA Consumer Real Estate Steinhoff Naspers Attribution Over 1 Year Sasol v Mining Bidvest Datatec Overweight Underweight 15 Feb'09 Indexed at 100. First return Mar'09 when Peter Linley started managing the fund

16 INVESTORS FUND - HOW IS IT POSITIONED? Top Ten Holdings (% Of Fund) Naspers 11.1 Resources British American Tobacco 8.2 SA Inc Sasol MTN Steinhoff 4.5 Rand Hedge Anglo American Remgro FirstRand 4.3 Overweight Old Mutual 4.0 Neutral Underweight Investec

17 17 NASPERS HAS DEMONSTRATED ITS ABILITY TO REINVEST MATURE CASH FLOWS INTO NEW INNOVATIVE AREAS MONETISE THE INTERNET 85% South Africa

18 NASPERS: TENCENT APPEALING GROWTH COMPANY RMB 2.5 EPS FCF/Share 800 m logged in 2.0 Fastest growing social network 1.5 Strong growth Online advertising Mobile gaming Mobile payments Strong cash earnings Banking? 18 Source: Bloomberg EPS CAGR ( 07-13) = 50%

19 EQUITIES ARE ESSENTIAL TO LONG TERM PERFORMANCE JSE All Share Index JSE All Share Earnings Index Source: I-Net

20 MY DEAR, HERE WE MUST RUN AS FAST AS WE CAN, JUST TO STAY IN PLACE. AND IF YOU WISH TO GO ANYWHERE YOU MUST RUN TWICE AS FAST AS THAT * A tested approach which differentiates us Stable and experienced team Listed equity focus The Investors Fund is our flagship 20 *Lewis Carroll, Alice s Adventures in Wonderland

21 21 REGULATORY INFORMATION Old Mutual Investment Group (Pty) Limited Physical Address: Mutualpark, Jan Smuts Drive, Pinelands, 7405 Telephone number: Old Mutual Investment Group (Pty) Limited (Reg No 1993/003023/07) is a licensed financial services provider, FSP 604, approved by the Registrar of Financial Services Providers ( to provide intermediary services and advice in terms of the Financial Advisory and Intermediary Services Act 37 of Market fluctuations and changes in rates of exchange or taxation may have an effect on the value, price or income of investments. Since the performance of financial markets fluctuates, an investor may not get back the full amount invested. Past performance is not necessarily a guide to future investment performance. The investment portfolios may be market-linked or policy based. Investors rights and obligations are set out in the relevant contracts. In respect of pooled, life wrapped products, the underlying assets are owned by Old Mutual Life Assurance Company (South Africa) Limited who may elect to exercise any votes on these underlying assets independently of Old Mutual Investment Group. In respect of these products, no fees or charges will be deducted if the policy is terminated within the first 30 days. Returns on these products depend on the performance of the underlying assets. Disclosures: Personal trading by staff is restricted to ensure that there is no conflict of interest. All directors and those staff who are likely to have access to price sensitive and unpublished information in relation to the Old Mutual Group are further restricted in their dealings in Old Mutual shares. All employees of the Old Mutual Investment Group are remunerated with salaries and standard incentives. Unless disclosed to the client, no commission or incentives are paid by the Old Mutual Investment Group to any persons other than its representatives. All inter-group transactions are done on an arms length basis. We outsource investment administration of our local funds to Curo Fund Services (Pty) Ltd, 50% of which is owned by the Old Mutual Investment Group. Disclaimer: The contents of this document and, to the extent applicable, the comments by presenters do not constitute advice as defined in FAIS. Although due care has been taken in compiling this document, Old Mutual Investment Group does not warrant the accuracy of the information contained herein and therefore does not accept any liability in respect of any loss you may suffer as a result of your reliance thereon. The processes, policies and business practices described may change from time to time and Old Mutual Investment Group specifically excludes any obligation to communicate such changes to the recipient of this document. Old Mutual Investment Group has comprehensive crime and professional indemnity insurance. For more detail, as well as for information on how to contact us and on how to access information please visit