Andre Steyn at Steyn Capital Management in Cape Town has had a strong start with his Steyn Capital Fund, gaining a net 19.62% in the five months since inception.
Steyn, a chartered accountant, was most recently with Temujin Fund Management in London and New York, where he managed all non-US investments, including South Africa. He managed a team of four investment professionals running a $2 billion book, with around $100 million in South Africa. Before joining Temujin in 2002, he spent two years with Ziff Brothers.
The fund now has R18.5 million under management, with Steyn looking to reach R300 million, believing that moderate size is a structural advantage in the South African market.
Steyn sees the fund as an all-cap product – investing irrespective of market capitalisation to ensure a wide opportunity set. He sees significant value in mid- and small-cap counters at present, with a focus on stockpicking, looking to identify companies with solid balance sheets and sound business models in the current treacherous business environment.
Steyn’s approach is to use research analysis techniques not readily applied to the South African market. He attributes his strong early start to two main factors: being right on earnings calls on both the long and short sides, and identifying deep-value longs via his intensive research-driven process.
The fund delivered more than 8% in both July and August, followed by a 0.56% gain in September.
It has a wide mandate, given the comparative lack of liquidity locally, and has focused predominantly on long/short equities until now. The portfolio can include credit-related assets, where Steyn is finding equity-like returns in instruments that can protect capital should markets retrace.
The portfolio is fairly concentrated, with around 18 long positions accounting for 97% of capital and a further 28 shorts (-30%), looking to profit from non-consensus, uncorrelated trades. – Oct 2009
