Ninety One Plc · LSE:N91
Ninety One — Ninety One Value Fund webinar (April 2020)
30 slides from Ninety One's conference presentation, Apr 30, 2020
Slide 1: Ninety One Value Fund
Ninety One Value Fund John Biccard 30 April 2020
Slide 2: Important information
Important information All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such i
Slide 3: Five key points for today
Five key points for today ‒ Value continues its 12 year underperformance vs growth. Valuation has been no defense in this sell-off ‒ Ninety One Value Fund has fared better than competitors due to our large platinum position that paid off in 2019 ‒ We have sold out of platinum entirely and upweighted
Slide 4: The crisis accelerates growth out-performance
The crisis accelerates growth out-performance MSCI developed markets growth vs Value Source: MSCI, IBES/DataStream, NBER; Minack Advisors, 28 April 2020 4
Slide 5: Ninety One Value Fund Performance
Ninety One Value Fund Performance Annualised performance in ZAR 20% Value A Inc 15% 87.5% FTSE/JSE All Share Index (ALSI) + 12.5% MSCI World NR (ACWI) 10% (ASISA) South African EQ General 5% 0% -5% -10% -15% -20% -25% 1 year 3 years p.a. 5 years p.a. 10 years p.a. Since Inception p.a.* Value A Inc -
Slide 6: Ninety One Value Fund Performance
Ninety One Value Fund Performance Annualised performance in ZAR 20% Value R inc 87.5% FTSE/JSE All Share Index (ALSI) + 12.5% MSCI World NR (ACWI) (ASISA) South African EQ General 15% 10% 5% 0% -5% -10% -15% -20% -25% 1 year 3 years p.a. 5 years p.a. 10 years p.a. 20 years p.a. Since Inception p.a.*
Slide 7: YTD performance
YTD performance Crisis triggered risk aversion still dominant Source: Bloomberg, Investec Securities estimates 7
Slide 8: Not all recoveries off trough lows are born equal
Not all recoveries off trough lows are born equal 50% 45% 44% 40% 35% 30% 32% 25% 28% 24% 20% 21% 15% 16% 10% 5% 5% 0% MSCI World S&P500 MSCI EM ALSI (ZAR) ALSI (USD) SA Inc Basket Global Basket Source: Bloomberg, Investec Securities estimates 8
Slide 9: Broad positioning
Broad positioning Allocation % Stocks Gold 30% AngloGold and DRD (offshore Centamin, Novagold, Fresnillo and SSR) (19% + 11% effective offshore holding Large mid-caps 11% Sappi Wide range including Brait, Oceana, Reunert, Caxton, Cashbuild, Lewis Small-caps 25% and Gemfields Offshore 38% Global Valu
Slide 10: The case for gold
The case for gold
Slide 11: We go into the 'dead stop' moment with unprecedented levels of debt
We go into the ‘dead stop’ moment with unprecedented levels of debt US corporate net debt/GDP and high yield bond spreads Source: Datastream, Societe Generale, 5 March 2020 11
Slide 12: The global monetary policy rate is now well below post-GFC lows
The global monetary policy rate is now well below post-GFC lows Global monetary policy rate (%) Source: Haver Analytics, IMF, national sources, Morgan Stanley Research forecasts; Note: Global monetary policy rates are PPP-based GDP-weighted average for economies under Morgan Stanley coverage., 6 Apr
Slide 13: Current state of G4 central bank balance sheets
Current state of G4 central bank balance sheets Change in Central Banks Balance Sheets (% G4 GDP, 12M change) Source: Haver Analytics, Morgan Stanley Research estimate . Note that the Fed's balance sheet is as of April 22, 2020, ECB balance sheet is as of April 24, 2020, BoJ balance sheet size is as
Slide 14: G4+China headline general government fiscal balance
G4+China headline general government fiscal balance G4+China general government headline fiscal balance (% of GDP) Source: Haver Analytics, CEIC, IMF, national sources, Morgan Stanley Research forecasts; Note: G4+China aggregate is the PPP-based GDP weighted average. Note that China's general govern
Slide 15: Is this deflation or depression?
Is this deflation or depression? Fiscal support has been the largest & fastest in peacetime Source: BofA Research Investment Committee, Global Financial Data, 14 April 2020 15
Slide 16: US headline fiscal balance
US headline fiscal balance US: Headline fiscal balance (% of GDP) Source: BEA. Federal Reserve, Historical Statistics of the United States, Morgan Stanley Research estimates. 29 April 2020 Note that 24.1% of fiscal balance assumes additional $1tn stimulus currently under consideration. 16
Slide 17: Unprecedented monetary and fiscal response; gold appreciates in all currencies
Unprecedented monetary and fiscal response Devaluation of fiat currency Gold appreciates in all currencies Gold shares trade on an attractive 8 times c/f at spot gold price 17
Slide 18: Sappi - lowest ever $ price – half previous cyclical lows
Sappi - lowest ever $ price – half previous cyclical lows 14 12 10 8 6 4 2 Sep-90 Jun-92 Mar-94 Dec-95 Sep-97 Jun-99 Mar-01 Dec-02 Sep-04 Jun-06 Mar-08 Dec-09 Sep-11 Jun-13 Mar-15 Dec-16 Sep-18 Source: Bloomberg, data as at 29 April 2020 18
Slide 19: SA Inc stocks – we remain cautious
SA Inc stocks – we remain cautious
Slide 20: SA is bust
SA is bust General government debt as a % of GDP vs Growth minus 10 year real rate Source: Haver, Bloomberg, UBS, 27 March 2020 Note: Growth is the 4 quarter moving average 20
Slide 21: We remain negative on the Rand and expect only a moderate recovery
We remain negative on the Rand and expect only a moderate recovery once there is a return to a risk on phase Our preferred domestic stocks are those that are export orientated or have offshore operations Ninety One’s value’s export/offshore orientation is as follows Ninety One Global Value 38% Gold
Slide 22: Small-caps: 25% of portfolio
Small-caps: 25% of portfolio Purchase price % of fund Current price (cents) PE DY (cents) Brait 5.1% 400 1200 n/a 0.0% Ocfish 3.0% 6000 6100 11.0 6.0% Caxton 1.8% 520 820 5.5 11.5% Reunert 1.6% 4100 6150 7.2 12.4% Cashbuild 1.6% 14200 21300 8.4 6.0% Gemfields 1.3% 155 280 10.7 0.0% City Lodge 1.3% 2
Slide 23: What happens if yields rise?
Tech and quality stocks are priced off bond yields ‒ US 10 year yield: 0.6% Market cap ($bn) PE DY 1.2 Apple 23 1.1% 1.3 Microsoft 31 1.2% 0.8 Google 31 0.0% 0.5 Facebook 23 0.0% 1.2 Amazon 90 0.0% 5.0 ‒ US is + 60% of MSCI World Index What happens if yields rise? Source: Ninety One 23
Slide 24: Gold sniffs the changing risk
Gold sniffs the changing risk Gold and negative yielding debt Source: Bloomberg-Barclays, Bloomberg; Minack Advisors, 15 April 2020 24
Slide 25: US real M2 growth trend
US real M2 growth trend US Real M2 Growth (%Y, adjusted by headline CPI) Source: NBER, BLS, Federal Reserve Board, Haver Analytics, Morgan Stanley Research, 29 April 2020 Note that the Apr 13 data point is adjusted using March 2020 headline CPI. 25
Slide 26: Very low rates are not good for equities overall
Very low rates are not good for equities overall CAPE vs bond yield best fit lines Source: Bloomberg, MSCI, BLS; Minack Advisors, 28 April 2020 26
Slide 27: Top ten holdings as at March 2020
Ninety One Value Fund Top ten holdings as at 31 March 2020 Top ten holdings (Local) % of fund Top ten holdings (Global Value) % of offshore Sappi 10.8 Centamin 14.1 AngloGold Ashanti 9.5 Platinum ETF 9.9 Brait 5.8 Greenlight Capital 7.4 DRD Gold 5.8 Telecom Egypt 5.2 Oceana 3.4 Novagold 5.2 Caxton a
Slide 28: Outlook
Outlook ‒ Covid-19 means that the world economy has hit a ‘dead stop’ while laden with the highest level of debt to GDP in economic history ‒ The resultant deflationary collapse will be met with QE to ’infinity’ and maximum fiscal stimulus ‒ This will result in the debasement of all fiat money and t
Slide 29: Thank you
Mone” Thank you
Slide 30: Important information
Important information All information and opinions provided are of a general nature and are not intended to address the circumstances of any particular individual or entity. We are not acting and do not purport to act in any way as an advisor or in a fiduciary capacity. No one should act upon such i
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