Coronation Fund Adding Northam as Investec Dumps Miner on Strike
Coronation Fund Managers Ltd.’s small-cap fund is boosting its stake in Northam Platinum Ltd. (NHM) 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 yesterday. “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 labor disputes at the world’s largest platinum mines, including those run by Anglo American Platinum Ltd. (AMS), Impala Platinum Ltd. and Lonmin Plc. Northam, lost 750 million rand ($69 million) in revenue during a strike at the turn of the year that contributed to a first-half loss, the Johannesburg-based company said Feb. 6.
“We’ve sold out of Northam,” Richard Middleton, who oversees the Investec Emerging Companies Fund (INVEMGC), said by phone from Cape Town yesterday. “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 Ltd. (GND) as Africa’s biggest shipping company expands into railways and the rest of the continent, Middleton said. The company bought railway constructor Racec Group Ltd. and delisted it from the Johannesburg Stock Exchange in November. Grindrod operates the Motala harbor in Mozambique’s capital Maputo.
“For Grindrod’s growth potential we’re looking at between 15 percent and 20 percent a year for the next couple of years,” Middleton said. “If the U.S., European Union and China keep growing, shipping rates should recover quite nicely.”
The Coronation Smaller Companies Fund (CORSPEG) returned 16 percent over the past 12 months, the second best-performer in its class, according to Morningstar Research. Investec’s Emerging Companies Fund rose 15 percent over the period and has returned 24 percent over the past five years compared with a 20-percent return at the Coronation fund, according to data compiled by Bloomberg.
Northam’s stock has gained 2.5 percent this year through yesterday’s close, while Grindrod has dropped 4.9 percent. Grindrod declined to comment on its growth potential because it is in a closed period before releasing results on Feb. 27, the Durban, South Africa-based company said in an e-mailed response to questions. Northam doesn’t comment on where institutions choose to invest their funds, the company said in an e-mail.
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