This Virtual Manager Visit takes us to Steyn Capital Management, an established African and Frontier markets focussed equities investor located in the winelands surrounding Cape Town, South Africa.
Steyn Capital has been investing in African markets since 2009, and manages over USD $700m in South African long/short, and pan-African and global frontier long only funds. All of these mandates are managed with the same value orientated intensive research focus, and all have outperformed their respective markets since inception, with little to no overlap between each other.
Being a good short seller is also an advantage on the long side
Steyn Capital's CEO André Steyn started his investment career as a dedicated short selling analyst at Ziff Brothers Investments, where he applied forensic accounting analysis to ferret out short selling opportunities. This is almost certainly different to any other African or Frontier markets investor and has contributed to his excellent fundamental short selling record, adding over 400% of cumulative alpha on the short side over 13 years at his South Africa long/short fund.
Steyn points out that being a good short seller is also an advantage on the long side, since you can avoid buying potential “short sales”. Steyn Capital is all about applying developed market research techniques learned during his time at Ziff Brothers Investments and Temujin to identify and take advantage of market inefficiencies. This is also why he gravitates towards African and other frontier markets, where is it still possible for intensive research to generate a fundamental edge in a variety of unknown and unloved equities.
Steyn's portfolio at the highest quality ever and lowest valuation since 2011
Africa has excellent demographics, with the number of working age adults expected to increase from 700 million today to well over a billion by 2035. This is in sharp contrast with the majority of the rest of the world, which is seeing declines in working age populations going forward. The implications for future demand for infrastructure and consumer goods is clear. Africa is also seeing rapid urbanization with 25 million people a year moving to cities, which is a further driver of built-in demand. Africa is also home to 30% of the world’s natural resources and 60% of the world’s uncultivated arable land. Much of this unexploited and only now coming into focus for international investors.
Given this highly positive demographic backdrop, Steyn believes investors would be surprised to learn that African investment markets are extraordinarily undervalued, as a result of investor apathy. His Africa fund, up 31% net end of May 2021, is trading at approximately 6x Enterprise Value / EBIT, which is close to the lowest valuation over the decade that the fund has been investing. The key difference this time around is that Steyn's concentrated portfolio of 17 high conviction names is the highest quality that it’s ever been. The portfolio generated a ROIC of 55%, and has a weighted average market share of almost 70%, illustrating the market dominance of these businesses.
Learn more about:
- Steyn Capital's proprietary 15 step research process ensures exceptional research and efficiency
- The attraction of African markets and why it's a multi-decade growth opportunity
- Steyn Capital's four competitive advantages
- Trade examples and current opportunities in Africa
André Steyn is the CEO and Portfolio Manager of South-Africa based Steyn Capital Management, which he founded in 2008. From 2004 to 2008, André was the CEO of Temujin Fund Management UK, the UK arm of a billion dollar New York based hedge fund. At Temujin, André was responsible for all non-US investments comprising a long/short portfolio of approximately USD2 billion.
From 2002 to 2004, André was an investment associate at Ziff Brothers Investments, a multi-billion dollar hedge fund. At Ziff Brothers, he performed fundamental research for the purpose of recommending new investments for the firm's capital, and generated significant alpha by shorting companies with poor earnings quality.
André began his career at Andersen in 1998, completing his Chartered Accountant articles in Cape Town before transferring to the New York Mergers & Acquisitions practice where he advised companies and private equity funds on acquisitions. André is a Chartered Accountant and a Chartered Financial Analyst.
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This Virtual Manager Visit takes us to Steyn Capital Management, an established African and Frontier markets focussed equities investor located in the winelands surrounding Cape Town, South Africa.
Steyn Capital has been investing in African markets since 2009, and manages over USD $700m in South African long/short, and pan-African and global frontier long only funds. All of these mandates are managed with the same value orientated intensive research focus, and all have outperformed their respective markets since inception, with little to ...more
