Wednesday, October 31, 2007

Stanlib Value Fund

Equinox interviewed Stanlib's Value Fund manager, Lo Giyose, about his Fund. ( The Fund has been very successful over the last year, with a return of over 57%.

Lo Giyose is a colourful fund manager, quoting from famous sports coaches to illustrate hie views and beliefs. His investment style is different from the normal value fund approach, which focuses more on low PE's and high dividend yields. Instead, his approach is to seek out companies whose intrinsic values are underestimated by the market. He investment style may be better classified as Growth rather than Value.

What is interesting is his likes for Construction stocks as well as new listings. He believes the sector still has a long way to go, given the government's R400 bn infrastructural spend. The fund's total exposure to the construction sector is 38%. This exposure has contributed handsomely to the recent success of the Fund.

This contrasts with the largest equity fund in the country, the Allan Gray Equity Fund, which has little, if any, exposure to the construction sector, as it believes the sector is overvalued.

All of the construction companies are now highly rated, wih PE ratios in excess of 20. It will be interesting to see whether Lo Giyose's convictions pay off. Time will tell.