ALPH
A M
ANAG
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Bespoke solutions:
Tactical & strategic asset allocation
Multi-manager selection
Rebalancing/re-blending
Personalised trading service
Equities, derivatives, SSFs, CFDs, off-shore
Execution for AM
Asset cons.TRADING AM
Traditional & alternative investment management
Skill based, alpha generative performance
INTEGRATED BUSINESS UNITS
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Vunani - Broad Spectrum of Investment Solutions
ASSET MANAGEMENT
Traditional and alternative investment management Long only unit trusts
Long only Personal Share Portfolios
Hedging Facilities
Hedge funds
Local and International exposures Complete array of local products.
Global personal share portfolios.
Large and small cap funds Large cap portfolios with varying investment styles.
Emerging companies portfolio leveraging on Vunani’s institutional research.
Bespoke Portfolios Customizable portfolio management.
Multi Manager Products Asset Allocation and Multi Manager solutions for Financial advisors and pension/provident funds across multiple platforms and
structures.
“Alpha managers striving for outperformance and positive returns at all times. Our approach encompasses qualitative and quantitative consideration.”
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The Vunani Emerging Companies Personal Share Portfolio
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The Opportunity - Small and Mid Caps
Small and Mid-capitalization shares have consistently outperformed large cap shares over time
ASSET MANAGEMENT
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• Diversification
• Risk adjusted returns
• Potentially high growth
• Lower correlations
• Riskier to not have small caps
• The power of well researched small caps
The Opportunity - Small and Mid Caps in Your Portfolio
ASSET MANAGEMENT
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Introducing The Vunani Emerging Companies Personal Share Portfolio
• Fully managed Small and Mid Cap personal share portfolio.
• Managed by the Vunani Private Clients asset management team.
• In a clients very own stockbroking account in their name.
• Available in a voluntary or compulsory account.
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THE INVESTMENT COMMITTEE
ASSET MANAGEMENT
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The Emerging Companies Personal Share Portfolio
Objective:• Outperform the JSE Small Cap Total Return Index.……and the general equity market.
• To provide access to portfolios of well researched and high growth shares that are the giants of tomorrow.
• By investing in smaller less followed shares allow our clients to achieve fantastic returns while diversifying
their portfolios.
ASSET MANAGEMENT
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The Emerging Companies Personal Share Portfolio
Strategy:
• Invest 18-22 shares.
• Outside the Top 40.
• To select the most promising small to medium cap stocks, with selections based on a
combination of, but not restricted to:
– Companies with a great fundamental story
– Turnaround potential
– Strong share price momentum via increased attention from investors
– Strong and proven management team and track record
ASSET MANAGEMENT
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Small and Mid Caps
• We are not punters
•We resist the lure of “hot” penny stocks.
•We invest in quality well researched shares with sound fundamentals.
ASSET MANAGEMENT
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Investment Philosophy
Our investment philosophy is simple yet powerful:• Invest in shares that show both consistent business and share price performance• Focussing on holding quality investments that have the ability to persistently outperform their peers and the overall
market.
Investment Process:• Multi stage investment process utilizes both quantitative and fundamental analysis as key drivers for investment
selection. • Our process remains constant across our local, global and alternative investment portfolios.
Our Investment Process
ASSET & WEALTH MANAGEMENT
1 Total Returnmodel
Select consistent market leading stocks by business and share price action…
2 Multifactor ranking model Active quantitative analysis …
3 Tacticalanalysis Inclusion of exogenous variables …
“We attempt to take advantage of stocks that have the ability to consistently outperform, backed up by our own valuation metrics and calculations”
4 Qualitative analysis Quality of management and strategy …
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This all means nothing without PERFORMANCE!
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2015 Performance
Historical Returns 3-month 6-month 12-month
Emerging Companies PSP 12.25% 18.15% 30.24%
JSE Small Cap (J202) TR -4.52% -8.19% -3.92%
JSE Top 40 (J200) TR 2.51% 1.01% 7.52%
ASSET MANAGEMENT
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2015 Top 5 Performers
Stock Return for 2015
Brait (BAT) 112%
Curro (COH) 105%
Huge Group (HUG) 86%
PSG Group (PSG) 75%
Afrimat (AFT) 74%
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Track Record
0%
50%
100%
150%
200%
250%
-10.0%
-8.0%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Monthly PerformanceEmerging
Small Cap
Cum. Perf.
Cum. Perf.
Year Return2012 45.77%2013 38.35%2014 16.90%2015 30.24%
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Track Record
Comparative Returns Portfolio JSE Small Cap TR JSE Top 40TRDecember 2015 monthly return -0.88% -8.92% -1.11%Since inception 207.06% 88.68% 81.76%Average monthly returns 4.31% 1.85% 1.70%Best month 7.70% 6.23% 10.37%Worst month -3.31% -8.92% -6.73%% positive months 77.08% 68.75% 64.58%Sharpe (RF based on STEFI) 19.32 7.04 4.80 Beta (relative to J202) 0.61 1.00 1.00 Standard deviation 9.41% 9.03% 11.79%Annualized Returns since incep 32.37% 17.20% 16.11%
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The Ultimate Retirement Annuity
Retirement Compliant Emerging Companies PSP returned 23%in 2015.
PSPs within different retirement and tax efficient wrappers.
The original Emerging Companies PSP in a retirement wrapper.
Comply with Regulation 28 rules.
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The Ultimate Retirement Annuity
Only difference to the original:– Inclusion strategically selected property shares and bond exposures.– Individual stock exposures may be capped based on market cap regulation.
Wrappers and structures available on different platforms include:– Retirement annuity portfolios– Retirement income options– Endowment policy– Pension and Provident
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Biggest Holdings Close of 2015
Top 5 Holdings
Curro Holdings 6.59%Super Group 5.83%Santova 5.56%Adapt IT 5.54%Rockcastle 5.24%
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Active Management - Adding Value
• Latest moves in January– TOP 5 already looks different
• Rebalancing – TOR at R5
• Meeting management– HUG
– AEE
• Cutting losses– OMN
• Looking for private placements and lines of stock– SYG
– HUG
• Quality Research– Anthony Clarke
Q&A
ASSET MANAGEMENT
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Michele Santangelo
Portfolio Manager | Vunani Private ClientsFund Manager | Vunani Alpha Managers
Tel +27 (0)11 384-2914 Fax +27 (0) 867547622Cell 0741768626 Email [email protected]
Vunani House, Vunani Office Park,151 Katherine Street, Sandown,Sandton 2196www.vunaniprivateclients.co.za
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Investment Philosophy
Have one! Or follow ours.
How to select shares for the long term:• Invest in shares that show consistent business and share price performance
• Attractively valued companies with strong performance records and an improving earnings outlook that are receiving growing investor attention.
• Consistent and increasing ROE and ROC
• Strong total returns over multiple time frames
• Consistent HEPS and revenue growth
• Competitive advantages
• Healthy macro and sector environment
• Don’t be overly concerned about valuations and theoretical share price targets
These principles still apply for trading stocks in the short term:• Buy the best stocks on the dips and sell the poor quality stocks on the rallies.
• Buy good quality stocks on the breakouts; Sell poor quality stocks on the break down.