Mark du Toit, portfolio manager at OysterCatcher Investments
BUY: Ninety One
Ninety One is a global asset management business that is poised to benefit from growing assets under management and improving market returns. The business is well placed to take advantage of a reallocation of capital away from US assets to other regions. It has offices in 16 countries and a well-established distribution footprint. Ninety One manages both equity and fixed income portfolios, providing a more stable fee base, and 32.6% of the company is employee-owned, helping to align interests with shareholders. This is a great capital-light business that is growing and now pays a 7% forward dividend yield in pounds.
SELL: Vodacom
Telecoms businesses are asset-heavy and require continual capital investment in their infrastructure. This, combined with competitive pressure on pricing, means it is difficult to grow earnings meaningfully over the medium term. The Vodacom share price has rallied 35% on the JSE this year, benefiting from inflows into emerging market equities on the back of a weaker dollar, coupled with a more stable Egyptian pound in the African operations. While telecoms companies such as Vodacom and rival MTN remain investor staples on the JSE, better returns can be found in other South African-listed equities.
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