Portfolio watch: what fund managers have bought and sold

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1 07 Ap ril PSG Casc ad es - Piete rma ritz b urg wa rre n. fo ps g.c o.z a w ww.ps g. co. za/cascad es/ 7 April 2015 The Nikkei Index traded near a two-week high on Tuesday after Wall Street closed positive The Shanghai Index hit a new seven-year high on Tuesday ahead of the quarterly earnings season European equity markets ended mostly unchanged on Thursday as losses among metals and energy stocks offset sharp post-results gains from British retailer Marks & Spencer US markets climbed on Monday as expectations that the US Federal Reserve could delay raising US interest rates a bit longer The JSE opened firmer but closed in negative territory in volatile trade on Thursday, ahead of the Easter long weekend The rand traded steady against the dollar late on Thursday ahead of Friday s US March nonfarm payrolls data The gold price was steady below a seven-week high on Tuesday as the dollar strengthened Oil futures gained more than $1 a barrel on Monday, after Saudi Arabia hiked prices for crude exports to Asia for a second month Articles of Interest Portfolio watch: what fund managers have bought and sold A The Investor feature. Patrick Cairns 31 March :52 (Moneyweb) Although the managers of local unit trusts only publish their portfolios once a quarter, and usually only a few months after the fact, it is a worthwhile exercise to look at which shares top fund managers have been buying and selling. It provides a picture of how they currently view the market. This month we look at three of South Africa s top equity unit trusts the Coronation Equity Fund, Prudential Equity Fund and PSG Equity Fund. By analyzing their portfolios at 31 December 2013 and comparing those with how their portfolios looked at the end of December 2014, we can tell which stocks they bought and sold over the course of last year.

2 The below tables show which counters they bought into, and which they sold out of over the 12 month period. The share must have had a weighting of more than 1% to be considered. The tables also show any substantial changes to positions within the fund. To be reflected, the change must be more than a 0.5% shift in the weighting of the holding which is due to not just price movement. Source: Profile Data During the course of the year the value of Coronation s holding in African Bank was also reduced to zero after starting at more than 2% of the fund. It is not included in the above table due to the unusual circumstances around that share s de-listing. Coronation appears to have rediscovered a taste for consumer-facing shares. It did hold Clicks and Pioneer at the end of 2013, but it not only increased its interest in the latter but added Steinhoff, Foschini and Woolworths as well. The fund also re-balanced its financial sector exposure. It sold down both Nedbank and Standard Bank in preference for FirstRand. It is also worth noting that Coronation reduced its exposure to SABMiller, BAT and Naspers over the course of the year. These three big multinational industrials have played a big part in driving the JSE s performance since The stakes in Naspers and BAT still however stand at over 8% and 7% of the fund respectively. SABMiller s weighting has however been cut from over 5% to below 1.5%.

3 Prudential s portfolio changes present a much more diverse picture. Among the consumer stocks Pick n Pay, Rhodes Food and Foschini were all added to the fund, but Woolworths and Mr Price were on the way out. Similarly, in the financial services sector the fund increased its holding in Peregrine and Old Mutual while lowering its interest in Coronation. And amongst the diversified miners, Glencore was in favour, while the fund s exposure to both Anglo American and BHP Billiton was reduced. There is also an interesting contrast here in the way Prudential and Coronation viewed the large multinational industrial stocks last year, although they both reduced their exposure to SABMiller. While Coronation was shedding some of its exposure to Naspers and British American Tobacco, Prudential was picking up more. And conversely, while Coronation was looking to add to its position in Richemont, Prudential was selling.

4 In general PSG s portfolio differs quite noticeably from the two listed above. This is reflected somewhat in the shares that appear in the above table. Among the funds that PSG was buying last year, the two platinum miners are probably the ones that stand out. PSG is not the only value investor that has been sniffing around this sector. It should be noted that although PSG has sold some of its exposure to Anglo American, it hasn t been a significant drop. Most of the change in the weighting is due to the fall in the company s share price. PSG nearly doubled its stake in Capitec during It saw the sell off after African Bank s collapse as an opportunity to pick up shares at good value, and the counter is now the largest constituent of its portfolio. Although not reflected in the table above, there were a few counters that PSG actually bought more of although their weighting in the portfolio overall fell because of share price declines. It is a trademark of value investors that if they see value in a company they will buy more as the share price is falling. The four counters in this group are Adcorp, Eqstra, Metair and Metmar. PSG also made substantial changes to its portfolio of international equities, but these are not shown as only JSE-listed shares are considered. Across the three funds, seven stocks were bought by one and sold by another. These opposing positions are shown in the table below: Across the three funds, seven stocks were bought by one and sold by another. These opposing positions are shown in the table below:

5 Disclaimer: The opinions expressed in this document are the opinions of the writer and not necessarily those of PSG Konsult and do not constitute advice. Although the utmost care has been taken in the research and preparation of this document, no responsibility can be taken for actions taken on information in this newsletter. Should you require further information, please consult an adviser for a personalised opinion.