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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.
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HEDGENEWS AFRICA October 2012