WEBVTT 1 00:00:00.404 --> 00:00:04.568 You're listening to Strictly Business Podcast with Lindsay Williams. 2 00:00:05.308 --> 00:00:11.874 Welcome, and today we are in conversation with Hannes van den Berghe, Portfolio 3 00:00:11.874 --> 00:00:13.874 Manager for the 91 Equity Fund. 4 00:00:13.874 --> 00:00:18.359 Another quarter's gone by, Hannes, another extraordinary quarter of volatility, which 5 00:00:18.359 --> 00:00:20.359 we'll come to later. 6 00:00:20.359 --> 00:00:22.122 In fact, we'll come to all aspects of the last quarter later. 7 00:00:22.262 --> 00:00:24.104 But let's reflect on the past 12 months. 8 00:00:24.124 --> 00:00:28.628 It seems to be, looking through the literature, that the Equity Fund 9 00:00:29.248 --> 00:00:35.431 had a tale of two halves doing well up until the end of last year 2024 2025 10 00:00:35.431 --> 00:00:37.431 completely different 11 00:00:37.431 --> 00:00:42.635 challenging environment and also challenging compared to the index what 12 00:00:42.635 --> 00:00:44.635 happened yeah thanks lindsay when we 13 00:00:44.635 --> 00:00:47.578 look for investment opportunities we like to invest in stocks where you have good 14 00:00:47.638 --> 00:00:54.582 earnings growth and we like stocks where the earnings growth are getting revised 15 00:00:54.582 --> 00:00:56.582 higher so we like companies whether they are what people define as 16 00:00:56.582 --> 00:00:58.744 sa in companies banks and retailers or or resource companies, or global companies. 17 00:00:59.284 --> 00:01:01.485 where you have the earnings profiles improving. 18 00:01:02.066 --> 00:01:06.708 In the last two years, 2023, and for a big part, the initial part of 2024, 19 00:01:06.709 --> 00:01:10.470 companies struggled to find earnings growth profiles that were improving. 20 00:01:10.510 --> 00:01:16.274 I mean, if we just cast our minds back to 2023, it was load shedding and high 21 00:01:16.274 --> 00:01:18.274 interest rates, 22 00:01:18.274 --> 00:01:20.136 low consumer confidence, lady R, port disruption in South Africa. 23 00:01:20.616 --> 00:01:26.280 And coming into 2024, we were all nervous about the political environment and 24 00:01:26.280 --> 00:01:28.280 government of national unity. 25 00:01:28.280 --> 00:01:28.918 Earnings profiles didn't improve. 26 00:01:29.138 --> 00:01:34.162 In fact, it was sentiment that was driving deratings and reratings more than anything 27 00:01:34.162 --> 00:01:34.242 else. 28 00:01:34.242 --> 00:01:38.687 And as you say, we got to a point in the second quarter of last year where we said, 29 00:01:39.067 --> 00:01:43.191 our analysts started to say their earnings numbers have bottomed out. 30 00:01:43.471 --> 00:01:47.375 They're starting to see earnings upgrades coming through for some of the SA stocks. 31 00:01:47.376 --> 00:01:52.920 And that gave us an opportunity to say, going into the election, sort of May, June 32 00:01:52.920 --> 00:01:54.920 last year, 33 00:01:54.920 --> 00:01:59.255 The downside skew was limited versus quite high upside opportunities. 34 00:01:59.256 --> 00:02:04.557 So we positioned the fund well, sort of out of the second quarter, third and 35 00:02:04.557 --> 00:02:06.557 fourth quarter last year, 36 00:02:06.557 --> 00:02:11.580 at very good periods where earnings profiles were improving, sentiment was 37 00:02:11.580 --> 00:02:13.580 improving, people were upgrading GDP expectations in South Africa. 38 00:02:13.580 --> 00:02:17.823 We started to get interest rate cuts in South Africa, and load shedding was 39 00:02:17.823 --> 00:02:19.823 something that we've all sort of forgotten about. 40 00:02:19.823 --> 00:02:21.124 So an improving infrastructure with improving sentiment. 41 00:02:21.644 --> 00:02:24.006 was what helped us to find opportunities. 42 00:02:24.066 --> 00:02:30.190 Our analysts went from finding only 10% to 15% of our universe of stocks that we 43 00:02:30.190 --> 00:02:30.451 cover, 44 00:02:30.451 --> 00:02:36.975 having them on buys, to more than half of the universe, close to 60% of the stocks 45 00:02:36.975 --> 00:02:38.975 in our universe went to buys because of that. 46 00:02:38.975 --> 00:02:43.200 And that, from a bottom-up, gives us a bigger universe to select from when we 47 00:02:43.200 --> 00:02:45.200 have improving earnings growth profiles. 48 00:02:45.200 --> 00:02:47.200 It's an interesting one, isn't it? 49 00:02:47.200 --> 00:02:51.646 Because, I mean, that government of national unity sort of mini-euphoria, was 50 00:02:51.646 --> 00:02:53.646 just a fleeting moment in time, 51 00:02:53.646 --> 00:02:55.646 as it turned out, Hannes. 52 00:02:55.646 --> 00:02:57.350 I mean, I thought it would have gone on for a little bit longer, and unfortunately 53 00:02:57.350 --> 00:02:59.350 it didn't. 54 00:02:59.350 --> 00:02:59.432 And again, we'll come to that in a little while. 55 00:02:59.472 --> 00:03:04.316 But volatility has been the watchword in the first quarter of 2025. 56 00:03:04.317 --> 00:03:07.579 Global markets and local markets, very, very volatile indeed. 57 00:03:07.899 --> 00:03:14.724 Some optimists, some would say cockeyed optimists, say that the market is 58 00:03:14.724 --> 00:03:16.724 bottoming out now, the volatility, yeah, 59 00:03:16.724 --> 00:03:18.968 there'll be a little bit more, but the worst has passed. 60 00:03:19.364 --> 00:03:20.125 Do you believe that? 61 00:03:20.905 --> 00:03:21.605 Jeez, yeah. 62 00:03:21.605 --> 00:03:23.247 What a first quarter we've had this year. 63 00:03:23.407 --> 00:03:28.951 I think there are people who, over the past Easter weekend, were already looking 64 00:03:28.951 --> 00:03:30.951 forward to chasing to the end of the year. 65 00:03:30.951 --> 00:03:32.574 It's been a lot has happened in one quarter. 66 00:03:32.814 --> 00:03:35.236 Decades happened in such a short time. 67 00:03:35.736 --> 00:03:38.158 Not only in South Africa, also globally. 68 00:03:39.259 --> 00:03:41.821 It's too soon to say where the markets have bottomed. 69 00:03:41.822 --> 00:03:43.442 I think we're going almost through phases. 70 00:03:43.702 --> 00:03:45.984 We are in a phase of absolute fear. 71 00:03:46.504 --> 00:03:53.308 markets like to go through these fear and greed phases and everybody's very 72 00:03:53.308 --> 00:03:55.308 concerned and and it's because of the uncertainty that 73 00:03:55.308 --> 00:04:00.292 nobody exactly knows what next headline we're going to be hit with you know what 74 00:04:00.292 --> 00:04:02.292 happens tomorrow what happens after this what is this just the 75 00:04:02.292 --> 00:04:04.694 mid-cycle slowdown or is this going to cause a full-blown recession so 76 00:04:04.734 --> 00:04:11.338 people are in this period of we don't exactly or uncertainty is quite high and 77 00:04:11.338 --> 00:04:13.338 trying to figure it out then we will go to a period i I think 78 00:04:13.338 --> 00:04:15.960 as we know more, as the facts settle down more, as these trades... 79 00:04:16.380 --> 00:04:23.243 negotiations play out as the government of national unity agree to a budget and 80 00:04:23.243 --> 00:04:25.243 hopefully further path forward on 81 00:04:25.243 --> 00:04:26.584 how they can stick and still commit to the growth reform in South Africa, 82 00:04:27.125 --> 00:04:30.546 then we'll be able to position ourselves for the cycle, 83 00:04:30.646 --> 00:04:37.349 which at this stage it was a cycle till the end of last year of interest rates 84 00:04:37.349 --> 00:04:39.349 going lower and growth starting to improve, 85 00:04:39.349 --> 00:04:41.210 not only in South Africa but having trend and above trend growth globally. 86 00:04:41.951 --> 00:04:45.933 So I think this period of heightened uncertainty creates An opportunity, 87 00:04:45.953 --> 00:04:52.437 what we saw in COVID and what we saw in previous periods of concerns around Asia 88 00:04:52.437 --> 00:04:54.437 and concerns around 89 00:04:54.437 --> 00:04:59.381 financial, global financial crisis is That gives you an opportunity to buy stocks 90 00:04:59.381 --> 00:05:01.381 where the sentiment goes so 91 00:05:01.381 --> 00:05:02.882 negative and the fundamentals of the stock actually doesn't deteriorate that much. 92 00:05:03.343 --> 00:05:07.144 So this, in previous cycles we've seen, also in the 91 Equity Fund, 93 00:05:07.765 --> 00:05:10.766 tends to lead to a period where alpha is more abundant. 94 00:05:11.126 --> 00:05:15.768 And through good stock selection, you can actually outperform your benchmark in the 95 00:05:15.768 --> 00:05:17.768 period that follows. 96 00:05:17.768 --> 00:05:22.051 Yeah, I go back to my comment about it being a moment in time, the optimism, the 97 00:05:22.051 --> 00:05:24.051 GNU optimism that is. 98 00:05:24.051 --> 00:05:28.095 a fleeting moment and that's borne out by the fact that retailers especially in 99 00:05:28.095 --> 00:05:28.115 south africa 100 00:05:28.396 --> 00:05:34.321 are back at pre-election multiples what's it all about was it about that specific 101 00:05:34.321 --> 00:05:36.321 event and then people said well 102 00:05:36.321 --> 00:05:37.464 that's passed and there are cracks in the gnu or is it all to 103 00:05:37.544 --> 00:05:42.208 do with the basics i.e valuations of these stocks yeah 104 00:05:42.228 --> 00:05:48.914 what what hurt our fund and our positioning over the first quarter of 2025 105 00:05:48.914 --> 00:05:50.914 what was our position in retail as mr price for 106 00:05:50.914 --> 00:05:55.683 sheenie truarts where we We did a lot of work and we continue to do the work on 107 00:05:55.683 --> 00:05:57.683 what we define as the SA consumer wallet. 108 00:05:57.683 --> 00:06:01.787 Our view is that with labor and wage inflation increases to salaries and wages, 109 00:06:02.908 --> 00:06:08.251 anything from four to six percent, we've had a bit of extra job creation in the 110 00:06:08.251 --> 00:06:10.251 third and fourth quarter of last year, 111 00:06:10.251 --> 00:06:12.894 people returning to the tourism and services sectors, financial services, also 112 00:06:12.894 --> 00:06:14.894 in the construction sector. 113 00:06:14.894 --> 00:06:16.894 So jobs got created. 114 00:06:16.894 --> 00:06:19.299 That helps to increase the size of the wallet, the sort of purchasing power of 115 00:06:19.299 --> 00:06:21.299 the South African consumer. 116 00:06:21.299 --> 00:06:24.862 And then On the expenses side of the South African wallet, people forget that 117 00:06:24.862 --> 00:06:26.862 interest rates are lower. 118 00:06:26.862 --> 00:06:27.203 So the interest costs have actually gone backwards. 119 00:06:27.563 --> 00:06:28.824 It's lower than last year. 120 00:06:28.825 --> 00:06:34.307 And also if you look at fuel prices, which has come down quite a lot due to the lower 121 00:06:34.307 --> 00:06:36.307 oil price and slightly stronger rent, 122 00:06:36.307 --> 00:06:37.529 that is a negative number. 123 00:06:37.589 --> 00:06:44.072 So you've got expansion in the consumer wallet of greater than 6%. Actually, our 124 00:06:44.072 --> 00:06:46.072 numbers show 8% 125 00:06:46.072 --> 00:06:47.054 increase in spending power from a consumer perspective. 126 00:06:47.055 --> 00:06:48.575 So our view is that... 127 00:06:48.775 --> 00:06:52.437 If you look at the fundamentals of the retailers, it actually looks quite good. 128 00:06:52.717 --> 00:06:56.079 We attended a conference and spoke to all of them about a month or so ago. 129 00:06:56.159 --> 00:07:01.902 They're talking about 10% plus growth in top line, and they're telling us that 130 00:07:01.902 --> 00:07:03.902 there's less promotional activity, 131 00:07:03.902 --> 00:07:04.964 which means they're selling at a better price, therefore better margin. 132 00:07:05.304 --> 00:07:10.807 So if you have margin improvement plus a decent top line, that's a very good 133 00:07:10.807 --> 00:07:12.807 earnings growth environment. 134 00:07:12.807 --> 00:07:16.611 What happened over the first quarter was, again, sentiment, as you rightly 135 00:07:16.611 --> 00:07:18.611 mentioned, made these stocks derate. 136 00:07:18.611 --> 00:07:21.735 The earnings profile of the stocks moved by 1%, 2%, 3%, but the stocks are down 137 00:07:21.735 --> 00:07:23.735 30%. 138 00:07:23.735 --> 00:07:28.360 It's because of that additional concern, not only government of national unity, but 139 00:07:28.360 --> 00:07:30.360 also global tariffs and trade wars, 140 00:07:30.360 --> 00:07:32.360 which has caused a derating. 141 00:07:32.360 --> 00:07:35.927 So we actually think the fundamentals of not only the retailers, also the banks, 142 00:07:35.927 --> 00:07:37.927 look very good and very strong. 143 00:07:37.927 --> 00:07:41.391 The sentiment has taken them to levels where, as you say, they look like you 144 00:07:41.391 --> 00:07:43.391 should be topping up at these levels. 145 00:07:43.391 --> 00:07:45.391 Yeah. 146 00:07:45.391 --> 00:07:47.391 Let's talk about something that has always been... 147 00:07:47.391 --> 00:07:51.017 something that you and I have been interested in over previous interviews, 148 00:07:51.017 --> 00:07:53.017 and that's gold. 149 00:07:53.017 --> 00:07:55.879 I was sitting watching telly the other day, as I do, watching business programs, 150 00:07:55.879 --> 00:07:57.879 as I do, 151 00:07:57.879 --> 00:07:58.660 and I saw 3,500 gold. 152 00:07:58.661 --> 00:08:01.682 And I thought, gosh, I better go to the optometrist because these glasses are 153 00:08:01.682 --> 00:08:03.682 failing me. 154 00:08:03.682 --> 00:08:05.443 But no, there it was, $3,500 an ounce. 155 00:08:05.463 --> 00:08:10.906 It's captured the imagination of central banks, professional investors, 156 00:08:11.466 --> 00:08:13.226 the man and woman in the street. 157 00:08:13.487 --> 00:08:16.628 Now, you've always had a little bit more than your competitors. 158 00:08:16.648 --> 00:08:18.309 And that's the impression I get anyway. 159 00:08:18.690 --> 00:08:21.091 It's obviously stood you in good stead, I'd say. 160 00:08:22.212 --> 00:08:27.275 Yeah, gold is always a hot topic to debate. 161 00:08:28.756 --> 00:08:33.679 What's happening globally is, and what's happened over the first quarter is 162 00:08:33.679 --> 00:08:35.679 phenomenal, as you've mentioned. 163 00:08:35.679 --> 00:08:39.903 Some of the gold stocks have gone up over three months, 60 to 70 percent, as things 164 00:08:39.903 --> 00:08:41.903 stand today, harmony. 165 00:08:41.903 --> 00:08:43.704 gold, the share price has doubled from the 1st of January to April this year. 166 00:08:44.224 --> 00:08:47.365 Similarly, Anglo gold and gold fields are up close to 100%. 167 00:08:47.665 --> 00:08:53.607 So what we had in our portfolio as 6% to 7% literally doubled, which is now 12% to 168 00:08:53.607 --> 00:08:53.627 13% 169 00:08:53.647 --> 00:08:56.307 in the portfolio because of the share price moves. 170 00:08:56.908 --> 00:09:03.509 Essentially, people were talking $2,500, $2,600, and people were forecasting $3,000 171 00:09:03.509 --> 00:09:05.509 for the gold price. 172 00:09:05.509 --> 00:09:07.509 Now they're talking $3,500. 173 00:09:07.509 --> 00:09:08.791 We've actually seen analysts come out with a $4,000 gold prediction. 174 00:09:10.371 --> 00:09:14.572 What's happening is that people, through all this data of straight wars 175 00:09:14.572 --> 00:09:16.572 uncertainty, 176 00:09:16.572 --> 00:09:17.433 have taken a view on safe havens. 177 00:09:17.633 --> 00:09:19.634 And they've decided that the U.S. 178 00:09:19.714 --> 00:09:21.874 dollar for one, maybe even U.S. 179 00:09:21.934 --> 00:09:28.656 treasuries, those that are sort of common in God and places to hide, are not so safe 180 00:09:28.656 --> 00:09:30.656 and secure because of, 181 00:09:30.656 --> 00:09:33.418 you know, can we trust, can we not trust what is happening politically between the 182 00:09:33.418 --> 00:09:33.678 U.S. 183 00:09:33.678 --> 00:09:34.518 and the rest of the world? 184 00:09:34.758 --> 00:09:36.859 And they're moving the money to where they now believe. 185 00:09:37.275 --> 00:09:44.145 the money would be safer and gold has clearly been identified as not only for us 186 00:09:44.145 --> 00:09:46.145 as investors or retail 187 00:09:46.145 --> 00:09:51.155 investors looking to invest it but also for central banks across the world where 188 00:09:51.155 --> 00:09:53.155 they are looking to shore up their reserves to make sure that they've got 189 00:09:53.155 --> 00:09:55.155 enough on 190 00:09:55.155 --> 00:09:57.155 their balance sheet. 191 00:09:57.155 --> 00:09:59.155 Clearly, they've identified gold as one of those places or assets together. 192 00:09:59.155 --> 00:09:59.331 Long may it continue, although it does look a little bit stretched at the moment. 193 00:09:59.351 --> 00:10:00.891 That's my opinion, not 91's. 194 00:10:00.892 --> 00:10:07.094 When looking at your offshore component in your portfolio, let's have a look at US 195 00:10:07.094 --> 00:10:09.094 exceptionalism. 196 00:10:09.094 --> 00:10:09.395 I mean, I talked about fleeting moments earlier on. 197 00:10:09.775 --> 00:10:14.277 This is a throwaway phrase because it has been thrown away by many. 198 00:10:14.477 --> 00:10:19.959 Do you think it's just sort of hiding in the shadows and ready to come out again as 199 00:10:19.959 --> 00:10:21.959 Trump weaves his magic? 200 00:10:21.959 --> 00:10:23.959 Or do you think it really has gone? 201 00:10:23.959 --> 00:10:25.113 Yeah, we reduced our U.S. 202 00:10:25.173 --> 00:10:26.614 exposure coming into the year. 203 00:10:26.634 --> 00:10:29.336 So in January, and I'm not going to claim victory on this at all, 204 00:10:29.657 --> 00:10:36.301 but our view was that there was concerns about a slightly sort of a growth slowdown 205 00:10:36.301 --> 00:10:38.301 in the U.S., 206 00:10:38.301 --> 00:10:40.301 this U.S. 207 00:10:40.301 --> 00:10:42.301 exceptionalism theme and concerns around that. 208 00:10:42.301 --> 00:10:43.967 And with the sort of rest of the world, potentially fiscal stimulus in Europe, 209 00:10:43.968 --> 00:10:50.671 and we saw that in Germany and the Chinese standing ready to support their economy to 210 00:10:50.671 --> 00:10:52.671 continue to achieve four and a half or five 211 00:10:52.671 --> 00:10:54.671 percent growth. 212 00:10:54.671 --> 00:10:58.333 We took a bit of a view and we said the differential, the growth differential is 213 00:10:58.333 --> 00:11:00.333 shifting from US exceptionalism to other parts. 214 00:11:00.333 --> 00:11:02.416 And we went underweight US, we reduced the US trade in January. 215 00:11:03.196 --> 00:11:06.959 Now what has happened post-liberation day and the tariff announcements, 216 00:11:07.459 --> 00:11:11.682 tariffs essentially in our minds are a tax being levied on imports and exports. 217 00:11:12.423 --> 00:11:15.805 So the big demand from the US consumer is getting affected. 218 00:11:15.825 --> 00:11:19.828 So you're going to have less demand because of essentially a tax on everything 219 00:11:19.828 --> 00:11:21.828 that they want to import. 220 00:11:21.828 --> 00:11:24.222 And the rest of the world has to deal with the supply disruption because what they 221 00:11:24.222 --> 00:11:26.222 rooted to the U.S. 222 00:11:26.222 --> 00:11:28.222 has to go into other places. 223 00:11:28.222 --> 00:11:32.807 So we took a view and we said the European sort of framework have already started to 224 00:11:32.807 --> 00:11:34.807 stimulate and 225 00:11:34.807 --> 00:11:36.807 support. 226 00:11:36.807 --> 00:11:38.807 And that's coming off an incredibly low base. 227 00:11:38.807 --> 00:11:42.913 And you look at China and their potential support and additional support that they 228 00:11:42.913 --> 00:11:44.913 can further provide to deal with the sort of 229 00:11:44.913 --> 00:11:45.434 consequences of the tariffs and trade wars. 230 00:11:45.955 --> 00:11:48.196 Made us tilt the portfolio more into other. 231 00:11:48.496 --> 00:11:54.199 regions and geographies, and also from a stock perspective, what we were looking 232 00:11:54.199 --> 00:11:56.199 for and continue to look for are stocks that, 233 00:11:56.199 --> 00:12:00.683 even though you're going through the trade war and tariff disagreements, which 234 00:12:00.683 --> 00:12:02.683 companies have got purchasing pricing power? 235 00:12:02.683 --> 00:12:08.367 Which of these companies are in a position where they can deal with the extra 236 00:12:08.367 --> 00:12:10.367 essential tax or tariffs through adjusting their 237 00:12:10.367 --> 00:12:10.428 prices and still maintain their margin? 238 00:12:10.448 --> 00:12:15.071 And then also important to remember, certain companies are not exposed to the 239 00:12:15.071 --> 00:12:17.071 manufacturing sector. 240 00:12:17.071 --> 00:12:19.071 They are exposed to the services sector. 241 00:12:19.071 --> 00:12:22.796 If you look at a tech company, Amazon is very much exposed because they need to 242 00:12:22.796 --> 00:12:24.796 import 30% to 40% 243 00:12:24.796 --> 00:12:26.796 of their products from China. 244 00:12:26.796 --> 00:12:28.796 So they're very exposed. 245 00:12:28.796 --> 00:12:30.662 But a company like Microsoft is a completely different business model 246 00:12:30.662 --> 00:12:32.662 because they essentially don't manufacture. 247 00:12:32.662 --> 00:12:38.227 So which company's telecommunication company provides a service and doesn't 248 00:12:38.227 --> 00:12:40.227 necessarily produce or manufacture a 249 00:12:40.227 --> 00:12:42.227 product? 250 00:12:42.227 --> 00:12:46.318 Pricing power as well as exposure from which sectors you sit in is super 251 00:12:46.318 --> 00:12:48.318 important in how we now 252 00:12:48.318 --> 00:12:50.318 decide on the equity allocation. 253 00:12:50.318 --> 00:12:51.042 Let's have a look at your offshore stock picks, first of all. 254 00:12:51.282 --> 00:12:54.445 You've been talking about certain companies that might even be tariff-proof. 255 00:12:55.285 --> 00:12:58.688 But have your picks done better or worse than the benchmark? 256 00:12:59.469 --> 00:13:02.611 We've done well on the offshore side, and credit here to Rana Khan, 257 00:13:03.192 --> 00:13:08.036 who helps and sort of holds my hand in navigating us through our offshore 258 00:13:08.036 --> 00:13:10.036 selection. 259 00:13:10.036 --> 00:13:12.539 We leverage off what our global colleagues does on a global scale, 260 00:13:12.799 --> 00:13:18.743 and we can also see certain geographies where we invest in Europe only or in China 261 00:13:18.743 --> 00:13:20.743 only or in emerging markets only, 262 00:13:20.743 --> 00:13:21.745 see those investment ideas that they generate. 263 00:13:22.066 --> 00:13:27.850 So we've been able to allocate out of manufacturing and more into financial 264 00:13:27.850 --> 00:13:29.850 services as an example. 265 00:13:29.850 --> 00:13:35.655 We're slightly concerned about consumer discretionary, so you really have to sort 266 00:13:35.655 --> 00:13:37.655 of think about how you allocate capital there. 267 00:13:37.655 --> 00:13:39.655 And as I said, focus more. 268 00:13:39.655 --> 00:13:41.655 on services companies. 269 00:13:41.655 --> 00:13:44.654 So we've been quite fortunate in how we've reduced our exposure to some of the US 270 00:13:44.654 --> 00:13:46.654 tech stocks, as I've mentioned, 271 00:13:46.654 --> 00:13:50.656 to go underweight and allocate that sort of capital into Europe and other emerging 272 00:13:50.656 --> 00:13:52.656 markets. 273 00:13:52.656 --> 00:13:53.877 Let's see what's come in and gone out. 274 00:13:53.917 --> 00:13:56.377 In other words, have you trimmed some of your holdings? 275 00:13:56.397 --> 00:13:57.938 Have you got rid of some of your holdings? 276 00:13:57.958 --> 00:14:01.399 Have you brought new ones in or added to the ones you already had? 277 00:14:02.139 --> 00:14:02.839 What have you done? 278 00:14:03.639 --> 00:14:06.060 Yeah, we reduced stocks such as Nvidia. 279 00:14:06.220 --> 00:14:10.263 We've trimmed Amazon, as I've mentioned, because tariffs and trade wars are not 280 00:14:10.263 --> 00:14:12.263 great for them. 281 00:14:12.263 --> 00:14:15.446 We've increased some of our financials, our banks in the European sector with some 282 00:14:15.446 --> 00:14:17.446 of that capital. 283 00:14:17.446 --> 00:14:20.530 We were in a position where we went from overweight U.S. to 4% underweight U.S. 284 00:14:20.910 --> 00:14:23.672 and reducing some of those U.S. manufacturing companies. 285 00:14:23.712 --> 00:14:26.695 We were in a position where we could reduce Apple even further. 286 00:14:27.915 --> 00:14:30.437 We were underweight Apple and we said, well, there's a little bit left. 287 00:14:30.517 --> 00:14:35.421 We can just reduce that to very much close to zero and allocate some of that capital. 288 00:14:35.921 --> 00:14:38.343 into companies in other spaces and other geographies. 289 00:14:38.663 --> 00:14:44.427 On the South African side, we were in a position where we had gold and we said 290 00:14:44.427 --> 00:14:46.427 maybe we should add here and there. 291 00:14:46.427 --> 00:14:49.311 Out of December, we were slightly concerned because the Federal Reserve said 292 00:14:49.311 --> 00:14:51.311 they're not going to 293 00:14:51.311 --> 00:14:52.393 cut interest rates as aggressive as people thought and usually that 294 00:14:52.773 --> 00:14:56.956 withdrawal or less liquidity and what people thought is not a good read-through 295 00:14:56.956 --> 00:14:58.956 for gold. 296 00:14:58.956 --> 00:15:03.961 So we were mildly underweight relative to the benchmark, but in January, February, 297 00:15:03.961 --> 00:15:05.961 we were able to add to that gold trade, so we were quite fortunate. 298 00:15:05.961 --> 00:15:07.961 And now we allocated there. 299 00:15:07.961 --> 00:15:09.961 On the SA Inc. 300 00:15:09.961 --> 00:15:11.961 space, as I've mentioned, it's been a volatile quarter. 301 00:15:11.961 --> 00:15:13.961 Some SA Inc. 302 00:15:13.961 --> 00:15:15.961 stocks are down 30%. 303 00:15:15.961 --> 00:15:17.961 Gold stocks have doubled on the other side. 304 00:15:17.961 --> 00:15:19.961 So it's quite wide dispersion in performance. 305 00:15:19.961 --> 00:15:21.961 But on the SA Inc. 306 00:15:21.961 --> 00:15:23.961 side, talking to some of these companies, we've actually added to the likes of 307 00:15:23.961 --> 00:15:25.961 Pepcor. 308 00:15:25.961 --> 00:15:27.505 We've continued to add to the likes of Fushini, topped up on even more Capitec as 309 00:15:27.505 --> 00:15:29.505 we saw the right opportunities. 310 00:15:29.505 --> 00:15:31.769 Also in the insurance space, we own Sunlum Discovery and Outsurance. 311 00:15:32.141 --> 00:15:36.564 So where we saw some pullbacks there, we were able to add to some of those 312 00:15:36.564 --> 00:15:38.564 opportunities in stocks. 313 00:15:38.564 --> 00:15:43.367 We reduced some of our resources, Anglo-American, because if you go through 314 00:15:43.367 --> 00:15:45.367 a trade war growth slowdown, 315 00:15:45.367 --> 00:15:47.590 that tends to, from a demand side perspective, not be great for resources 316 00:15:47.590 --> 00:15:49.590 stocks. 317 00:15:49.590 --> 00:15:51.112 So we were able to sell a bit of our Anglos. 318 00:15:51.132 --> 00:15:53.193 We own zero BHP bulletin and Glencore. 319 00:15:53.613 --> 00:15:59.957 We'd rather allocate those to companies where the earnings growth profiles are 320 00:15:59.957 --> 00:16:01.957 still looking strong, even though there's tariffs and trade wars out there. 321 00:16:01.957 --> 00:16:03.957 Final question, Hannes. 322 00:16:03.957 --> 00:16:05.957 Are you happy with your current positioning? 323 00:16:05.957 --> 00:16:06.539 Yes, I think we've got a portfolio that looks different. 324 00:16:07.399 --> 00:16:13.001 We've got quite a big exposure to, like I said, the SA consumer, banks, insurers, 325 00:16:13.001 --> 00:16:15.001 and retailers. 326 00:16:15.001 --> 00:16:15.962 On the global side, as you've mentioned, the U.S. 327 00:16:16.022 --> 00:16:20.883 exceptionalism is opening up into a broader rest of the world trade, and 328 00:16:20.883 --> 00:16:22.883 that's great for stock pickers. 329 00:16:22.883 --> 00:16:27.385 So the fact that we could divest from that very concentrated market where everything 330 00:16:27.385 --> 00:16:29.385 was driven by a few stocks. 331 00:16:29.385 --> 00:16:29.927 to allocate to other opportunities. 332 00:16:29.928 --> 00:16:35.752 And if you think about it on a global scale, Acqui has got these, let's call 333 00:16:35.752 --> 00:16:37.752 them seven or eight big stocks in it. 334 00:16:37.752 --> 00:16:42.397 So anything else you put into your portfolio is an off-benchmark position on 335 00:16:42.397 --> 00:16:44.397 a global scale because you've got quite a big tail of smaller 336 00:16:44.397 --> 00:16:44.639 positions that represents the Acqui benchmark. 337 00:16:44.960 --> 00:16:48.843 So if we take 1% and 2% positions, that's 1% and 2% away from benchmark. 338 00:16:49.123 --> 00:16:56.089 And as this rally is broadening out to other geographies, other sectors outside 339 00:16:56.089 --> 00:16:58.089 of the Magnificent Seven, that's great for stock. 340 00:16:58.089 --> 00:16:58.530 picking and for alpha generating opportunities. 341 00:16:58.890 --> 00:17:00.290 Hannes, thank you very much for your insight. 342 00:17:00.310 --> 00:17:03.211 Very good luck with the next three quarters of 2025. 343 00:17:03.451 --> 00:17:07.692 That was Hannes van den Berg, portfolio manager for the 91 Equity Fund. 344 00:17:08.152 --> 00:17:15.094 The views and opinions expressed in these podcasts are those of Lindsay Williams and 345 00:17:15.094 --> 00:17:17.094 various contributors and do not reflect the policy, 346 00:17:17.094 --> 00:17:18.835 position or opinion of any other agency, organisation, 347 00:17:19.176 --> 00:17:23.817 employer or company associated with StrictlyBusinessPodcast.com. 348 00:17:24.277 --> 00:17:31.240 Assumptions made on the analyses are not reflective of the position of any other 349 00:17:31.240 --> 00:17:33.240 entity other than the speaker or the author, 350 00:17:33.240 --> 00:17:36.723 and since we are critically thinking human beings, these views are always subject to 351 00:17:36.723 --> 00:17:36.823 change, 352 00:17:37.003 --> 00:17:39.564 revision and rethinking at any time. 353 00:17:39.864 --> 00:17:42.285 Please do not hold us to them in perpetuity.