Coronation Fund Managers’ small-cap fund is boosting its stake in Northam Platinum as a similar fund at Investec Asset Management dumps the miner hit by an 11-week strike for shares in a shipping company.
"We've added Northam as a small position," Siphamandla Shozi, who helps oversee the Coronation Smaller Companies Fund, said by phone from Cape Town on Monday. "We like the prospects of the platinum sector."
South Africa, which relies on metal exports for more than half its foreign-exchange earnings, is beset by labour disputes at the world's largest platinum mines, including those run by Anglo American Platinum, Impala Platinum and Lonmin.
Northam, lost R750-million rand in revenue during a strike at the turn of the year that contributed to a first-half loss, the Johannesburg-based company said February 6.
"We've sold out of Northam," Richard Middleton, who oversees the Investec Emerging Companies Fund, said by phone from Cape Town on Monday. "Given the strike and how long the strike was going to take to resolve and how much it will cost them at the end of the day, we thought we should sell out of it."
The fund is buying Grindrod as Africa's biggest shipping company expands into railways and the rest of the continent, Middleton said. The company bought railway constructor Racec Group and delisted it from the Johannesburg Stock Exchange in November. Grindrod operates the Motala harbour in Mozambique’s capital Maputo.
"For Grindrod’s growth potential we're looking at between 15% and 20% a year for the next couple of years," Middleton said. "If the US, European Union and China keep growing, shipping rates should recover quite nicely."
The Coronation Smaller Companies Fund returned 16% over the past 12 months, the second best-performer in its class, according to Morningstar Research. Investec's Emerging Companies Fund rose 15% over the period and has returned 24% over the past five years compared with a 20% return at the Coronation fund, according to data compiled by Bloomberg.
Northam's stock has gained 2.5% this year through Monday's close, while Grindrod has dropped 4.9%.
Grindrod declined to comment on its growth potential because it is in a closed period before releasing results on February 27, the Durban, South Africa-based company said in an emailed response to questions. Northam doesn't comment on where institutions choose to invest their funds, the company said in an email. – Bloomberg