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news THE QUARTERLY JOURNAL OF THE AFRICAN ALTERNATIVES AND HEDGE FUND COMMUNITY OCTOBER 2012 u VOL 2 Nº1 u WWW.HEDGENEWSAFRICA.COM Nigerian earnings growth contributes to Sustainable Capital’s performance M auritius-based Sustainable Capital added a net 9.1% in September to its long-only Nigerian Fund, amounting to a net 27.5% over the quarter. The fund’s exposure to Nigeria’s financial sector contributed more than 5% of September performance and more than 19% to the fund’s third-quarter gains. Breweries and cement companies contributed close to 2% in the month and more than 5% in the quarter. Gaetan Herinckx, co-manager of the fund, said that despite the recent rally in Nigerian stocks, valuations remain cheap as recent market performance has been driven by earnings growth. Based on 2012 estimated company earnings, dividends and book value, he believes the price earnings, price-to-book and dividend yield of companies are at the same levels or lower than in 2011, before the recent stockmarket rally, which supports Sustainable Capital’s value-based approach to investing. He also warns investors to “mind the gap” when comparing Nigeria to other emerging markets as the Nigerian equity market has lagged other emerging markets by more than 130% since 2000 despite improving fundamentals, declining risk and strong earnings growth prospects. The Nigeria Fund has US$10 million in assets under management and invests in 15 stocks, maintaining turnover below 20%. It aims to provide long-term investors with active equity exposure to Nigeria-dominant companies. Stock selection is driven by company-level fundamentals including revenues, operating cashflows, cash dividends and shareholders’ equity. Sustainable Capital, which is associated with Sanlam Investments, aims to deliver sustainable investment returns from the African continent. It has total assets under management of US$43.9 million across three long-only funds. DISCLAIMER: This publication is for information purposes only. It is not investment advice and any mention of a fund is in no way an offer to sell or a solicitation to buy the fund. Any information in this publication should not be the basis for an investment decision. HedgeNews Africa does not guarantee and takes no responsibility for the accuracy of the information or the statistics contained in this document. Subscribers should not circulate this publication to members of the public, as sales of the products mentioned may not be eligible or suitable for general sale in some countries. Copyright in this document is owned by HedgeNews Africa and any unauthorised copying, distribution, selling or lending of this document is prohibited. HEDGENEWS AFRICA October 2012