Dear Fellow Investors and Friends,
Welcome to my newsletter, where I share my efforts to understand markets and the world around me.
I appreciate you taking the time to read this. Feedback is welcome; feel free to drop me a line. It’s great to start conversations.
Is it 2026 already? Good God, time flies.
Welcome to the first edition of my musings for 2026. For those of you who are new, this letter is where I share my efforts to make sense of the world around me.
I do appreciate you taking the time to read this.
Today is Thursday, January 15th, the 15th day of the year. There are 350 days left until the end of the year. This is my fourth year of writing these letters, and the one thing I have noticed as I count down the days of the year is that time goes by much more quickly than you think it will. Time flies, not caring whether you’re having fun or not.
As is my practice in this first letter of the year, I review the significant events – personal and business related – of 2025.
It was a year of contrasts. In my personal life, after moving into our new home at the end of 2024, I settled into a comfortable routine. Importantly, I managed to streamline my life by further reducing the amount of “stuff” around me. Less clothes, less art, less commuting. Less of everything that ends up exerting control over your time. You don’t own stuff; stuff owns you, and I aim to own even less stuff in 2025.
As my friend Howard Cohen said in his latest letter:
“When you start from needing very little, almost everything feels like a bonus. There’s anticipation and gratitude. When what you consider “normal” quietly creeps higher, there’s very little of either. You move from one thing to the next without really enjoying any of it.”
This year, I aim to continue down the road of needing less.
My business life was much more eventful – I’ll cover that in more detail in a minute. But the backdrop was that the JSE was one of the best-performing markets in the world, up by over 50% in US$ terms. South Africa finally started benefiting from some tailwinds:
- We exited the grey list
- Interest rates declined sharply
- Gold and platinum prices were up sharply
As a result, our growth outlook has improved, and our cost of capital has declined. In investing terms, the value of an asset is the present value of future cash flows. For South Africa, our future cash flows are now larger (higher prospective growth), and these larger cash flows are discounted at lower interest rates, which means their present value is much larger.
Someone once said that discounted cash flow valuations are like the Hubble telescope – move it by one millimeter and you’re in another galaxy. DCFs are just as sensitive to their input assumptions.
So, it should come as no surprise that our markets are doing well. And I agree with the Carpenters when they sang “We’ve only just begun”. The good ship Mzansi is leaving the harbour with very few on board. In 2026, I expect many more to want a berth.
The lack of passengers for this particular ship was once again evidenced by the number of delistings from the JSE. In 2025, 13 companies went private vs. 25 in 2024. The market did attract 6 new listings, so overall, the rate of decline in the number of listed companies is slowing.
Small and mid-cap companies are unloved and undervalued. Institutional investors remain completely absent from the market for smaller companies. In fact, they actively sell any they might own on the basis that they are “too illiquid” and thus pose some form of risk to the institution. Not the client; the institution. Yes, you read that correctly.
It is with this background that I launched an investment consortium just over a year ago, with the principal aim of investing in the small and mid-cap “illiquid” part of the market. To pre-empt my later comments: things have gone well for us.
I continue to believe the South African market is ripe with investment opportunities. There is a lot more going on in the economy than newspaper headlines will have you think, and that, combined with large-scale institutional disinterest – primarily reflecting their clients’ pessimism – creates the opportunity.
This view is reinforced by what is happening in markets globally, where a massive bull market is underway. Metals, equities, property, and even bonds (specifically of the emerging market kind) are all hitting new highs.
In writing this review of 2025, I have kept a quote from Charlie Munger top of mind:
“Never tell anyone about your problems – 90% of people don’t care, and the other 10% are glad you have them.”
So here goes – and I’ll start with the place where the rubber hits the road – the investment returns achieved by the various public market investment strategies that RECM manages.
All these strategies address specific inefficiencies in the local market. I am firmly of the view that investors should index the bulk of their equity exposure and invest outside the index only when opportunities with understandable, uncorrelated returns present themselves.
And that is precisely what RECM specialises in…
Investment returns
1. The MWI Worldwide Flexible Fund (aka the cockroach)
In September 2020, I decided to change the process for managing this fund. Instead of a market-relative fund, it became a fund intended to deliver hard-currency returns above inflation with low volatility. Put simply, a “stay rich” fund. It does so through owning a diversified portfolio of uncorrelated assets and keeping trading down to an absolute minimum.
Last year, it returned 7.6% in rands (roughly 400 basis points above SA inflation), taking its compound annual growth rate since September 2020 to 10.2% p.a., well above our inflation rate over that period of 4.8%.
7.6% might not seem like much, but three-quarters of the fund’s assets are offshore, and the rand appreciated by 15% against the US$ during the year. This brings me to the critical number: the return in US$ terms, which, for 2025, was a solid 22.7%, with US inflation at 2.7%. Since September 2020, the fund has compounded at 10.4% p.a. in US$ compared to US inflation of 4.3%.
Now, to be fair, there are any number of other funds where you could have earned better returns. But those returns come with more risk – sometimes a lot more; risk which you will only find out about after the fact. The MWI Worldwide Flexible Fund (aka the cockroach) had the second-lowest volatility (out of 87) funds in its sector, with around half the average downside risk.
In the current bull market, this vital aspect of the fund gets ignored. But when markets correct, as they inevitably will at some unknown point in the future, this aspect of the fund will be appreciated more.
The fund continues to do what it set out to do almost 6 years ago: protect and grow wealth in real, hard currency terms, and in a low-risk fashion.
2. The Goede Hoop Consortium
I put this consortium of “friends and family” investors together just over a year ago to take advantage of the palpable mispricing of small and mid-sized listed South African companies.
So far, so good.
During 2025, the consortium’s NAV grew by over 30%. The SA small-cap index did 20%, and the mid-cap index 31%. Most global markets did substantially worse. My view is that the rerating of these companies to more realistic levels is just starting; there is more to come.
Either way, the money will be returned to the investors within the next two years – it is not intended to be a permanent fee-earning vehicle, but rather a vehicle to take advantage of a transitory mispricing.
3. Beagle
Beagle is an investment holding company that I started over 15 years ago. It mainly invests in “BEE shares” – that class of shares that only black people are allowed to buy, a quirk of our government’s misguided policies. These BEE shares are generally priced well below those of their ordinary counterparts, despite having the same economics.
The reason for this inefficiency is that most BEE beneficiaries get their shares for free and therefore place little or no value on them, selling them at the first opportunity they get, with no regard for the underlying intrinsic value. To further complicate things, they need to find buyers who are classified as black, which are few and far between.
This leads to a severe supply/demand imbalance.
Of course, supply and demand determine price, not value, which is where Beagle comes in. As it has over 51% black shareholders, it is classified as black and is allowed to buy these shares – which it does, sometimes with the help of non-recourse leverage.
As a result, since its inception, Beagle has compounded at over 25% p.a. However, for the 12 months to the end of September 2025, it grew at a substantially lower rate of just over 5%.
Historically, Beagles’ returns have been quite lumpy, so last year’s low growth is not at all out of the ordinary. Its investment opportunities remain exciting as the abovementioned BEE dynamics remain in place for now.
Shares in Beagle are only available to the staff, friends and family of RECM. One of the biggest investors in Beagle is the RECM Foundation, whose program has benefited tremendously from its investment in Beagle. But more about that later.
4. The RECM Flexible Value Hedge Fund
This is a hedge fund managed by my partner, Jan Van Niekerk. Unlike the cockroach, which is a “stay-rich” fund, the hedge fund is a “get-rich” fund. It is set up to take advantage of mispricings in as wide a range of assets as possible. All in a tax-efficient way. It is also allowed to buy unlisted assets.
The fund had an average year, with returns of 14%, which was marginally above its since-inception annualised returns.
5. The MWI Value Fund
Although this fund does not fall under the RECM umbrella, I do work very closely with its manager, Rudi van Niekerk. I am also personally invested in the fund.
The fund has significant exposure to companies that other large institutional funds can’t buy (because the funds are too big and the companies too small), or won’t buy (due to liquidity constraints, closet index tracking, career risk or the institutional imperative). As a result, the fund portfolio is truly unique and differentiated from typical institutional benchmarks following general equity funds. Importantly, the fund only invests in South African equities. We believe investors who want offshore equity exposure can choose an appropriate manager to do so – they don’t need us to do it for them.
Last year, the fund underperformed the All-Share index, mainly because it did not hold gold shares – a strategy that had worked very well over the previous 10 years. Over those 10 years, the fund returned 6.2% p.a. after all fees and costs, slightly behind the All-Share Index’s 7.2% p.a. Not many funds have managed this – the average general equity fund returned 3.4% p.a.
The prospects for this fund are positive, especially now that things are starting to go South Africa’s way.
6. Outside partnerships
RECM is a partner of Desert Lion Capital, a US-domiciled investment company that invests exclusively in South African stocks. It is managed by Rudi van Niekerk. Desert Lion had a good year, returning 20% in US$ – better than the S&P500! It’s a hard slog convincing offshore investors to invest in South Africa, but Rudi is making a good fist of it, helped by the exceptional returns over the past two years.
In 2025, RECM also partnered with Urquhart Partners, an investment management company headed up by Richard Cheeseman. Their fund is called the RECM SA Special Situations Prescient RI Hedge Fund. It is the only fund dedicated to special situations on the JSE, including spin-offs, buyouts, merger arbitrage, liquidations, and restructurings.
This fund is truly differentiated, with returns largely uncorrelated with those of the JSE/FTSE All-Share Index. We are excited to partner with Richard.
Private Investment Activities
I spend the bulk of my time managing public funds – funds that invest in listed securities, as discussed above. But in Jan van Niekerk and Theunis de Bruyn, I have business partners who invest predominantly in private markets.
1. Calibre Capital
Calibre is an investment company that Theunis started at the same time I began RECM. It has no outside clients, and until recently, only one staff member. We capitalised it by borrowing R1mn in 2003. I deployed it into some listed stocks, made a bit of money, then stepped back, and Theunis started investing in private companies. I stand to be corrected, but in almost 25 years, he has made fewer than 15 investments.
Over that time, he has compounded the NAV per share of Calibre by almost 30% p.a. and today it has a significant balance sheet. With no capital raises, ever.
Last year, Theunis lifted his head above the parapet and made another one of his rare investment decisions. Calibre was part of the consortium that took Ascendis private, a transaction that took 2 years to complete. But that’s how things work in the real world – when you’re dealing with real people and tangible assets, not shuffling pieces of paper into and out of portfolios based on the market’s mood.
I remain a happy minority shareholder in Calibre. In 23 years, we have had no “formal” board meetings, no ESG or DEI policies, no remuneration committees, no transformation policies and no investor roadshows.
Long may it last.
2. Maximus Corp
Maximus is an investment company controlled by Jan. Like Calibre, it has no outside money and only two shareholders. Last year, Jan and I agreed to consolidate all our joint private investments into Maximus. We also took an important strategic decision – we will not remain invested in companies where we are not welcomed and appreciated as shareholders. Life’s just too short.
At the start of last year, we identified three such businesses amongst our holdings, with another one being in the “undecided” camp. During the year, we exited two of them already.
As a result of these developments, our lives have improved tremendously. We are working with companies and people that add value to our lives – just as we hope we are adding value to theirs. A mutual-trust-and-respect environment transcends pecuniary interests. It gives life purpose and meaning. By and large, that is where Jan and I find ourselves now.
Some highlights for the year were the following:
- Flexi Mobility Group continues to build a strong growth engine. It also acquired the licence to distribute Hero motorbikes in the SADC region. Essentially the Toyota of motorbikes, you’ll soon see Hero bikes making deliveries from your favourite store.
- In 2024, we partnered with Capra, a permanent capital vehicle, focused on traditional businesses in high-growth pockets of the South African economy. In 2025, its first investment, Noola, had to relocate its warehouses twice due to growth exceeding expectations. Noola also opened its first two retail standalone stores. Capra also made two new investments last year.
- Outdoor Investment Holdings acquired control of Wildman and opened its first standalone apparel store in Somerset West.
- Goldrush was awarded the licence to run the national lottery from June of this year.
- Maximus was instrumental in the delisting of investment holding company, Astoria.
Outside Interests
There comes a time in one’s life when you start taking your foot off the “career” accelerator and start giving back. I chose two avenues to do so:
1. Sake-Liga
I joined the board of Sake-Liga just over a year ago. Sake-Liga’s core mission is to resist what it regards as harmful state economic intervention and state failure, using court action and coordinated business responses.
Last year was a successful one for Sake-Liga across many dimensions. Fundraising accelerated as the number of corporate donations increased. We still must get our message through to listed companies, as, to date, all corporate donations have come from private businesses.
Sake-Liga won several court cases against harmful government policies, specifically BEE policies.
I am excited about the progress Sake-Liga is making in improving business conditions in South Africa.
2. The RECM Foundation
The Foundation focuses its support on early childhood development in some of South Africa’s most disadvantaged areas. We believe that the pre-school years represent the most crucial and formative stage in a child’s life. Without strong foundational skills upon entering school, children face significant and often insurmountable challenges in catching up.
Our aim is to assist our beneficiaries in ensuring access to quality early childhood education within a secure, inclusive and nurturing environment, led by trained educators and caregivers. To this end, we continue to enjoy a close and successful partnership with the Centre for Early Childhood Development, which acts as our service delivery partner on all our initiatives.
2025 was a good year for the Foundation. We maintained our partnerships with three ECD centres in the Western Cape and completed our first capital project in the Eastern Cape — the construction and equipping of a new centre for Angels Daycare.
2025 saw the Foundation’s dividend income increase substantially, and donations were also higher – thanks to some hard work by my wife, Amanda. That, and the quality of its trustees’ input, have put the Foundation in the strongest position it has ever been, able to contribute meaningfully and sustainably to positive outcomes in its chosen field.
In The Media
1. Music
No annual review of mine is complete without a review of what I thought was the best music of the year.
First, the top 10 albums of 2025. The Lumineers produced a goodie after their previous disappointments. Jesse Welles came good on his 3rd album. If you like your Americana gritty and raw, he’s your man. My Morning Jacket and Big Thief always make my top 10 when they release a new album, and this year was no different. Charlie Crockett gave us one of the best country albums in a long time, while Wet Leg upped the ante on their second album with their biting sarcasm, set to music you can dance to. Matt Berninger (of The National fame) broke through his writer’s block with a cultured album of melancholic indie-rock.
The top 3 albums of the year: Geese have been around for a while, but this album exploded out of the starting blocks with the song Trinidad (listen to it on full volume) and kept the standard high for the whole album. According to people who know a lot more about music than I do, Geese are the sound of rock’s future. I agree.
SG Goodman produced one of the stand-out albums of the year. Her distinctive voice lends a hint of vulnerability to her gritty alt-country songs. It really rewards multiple listens.
Finally, my album of the year is The Scholars by Car Seat Headrest. It’s one of those rare things these days: a concept album. It explores the pain of loss and isolation in an intelligent and sometimes even bitingly funny way. The music is dynamic, sometimes even explosive, emphasising the sense of anxiousness which seeps through all the songs on the album. I couldn’t stop listening to this album throughout the year. It was my firm favourite. The band’s name isn’t too bad, either!
Here are the top ten albums on Apple Music and on Spotify.
And here are the top 20 songs of the year on Apple Music and Spotify. I have ranked them from 20 to number one – see if you agree. Car Seat Headrest’s song Gethsemane unsurprisingly comes in at number one.
Finally, here is a long list of my favourite songs from the year, only on Apple Music.
2. Books
I managed to read 13 books this year, almost double the seven I read in 2024. I reviewed them all during the year, so I’m not going to repeat that here. Save to say that the book I enjoyed most was A Town Like Alice by Neville Shute. You can read the review in the newsletter The Placebo Adherence Effect.
This year, I aim to read even more. I only gave up X (neè Twitter) in the second half of the year. This left me with a lot more time to read, which I took – and will continue to take – full advantage of.
Last year, I set myself five goals, which I publicly stated in my Review of 2024. I only achieved two of them. I will leave you to guess which. Someone once said that if you make your goals public, you are more likely to achieve them, which makes me the exception that proves the rule. This year, I will not make my goals public. Let’s see if that changes my hit rate!
3. Annual Reviews
I much prefer reading reviews to forecasts. That’s also why you won’t find me making any – they’re just never worth the paper they’re written on. Preparing for any eventuality is better than forecasting; history is the best tool for this.
Cicero said: “To be ignorant of what came before you were born is to remain forever a child.”
In that vein, here are the best three reviews of 2025 that I have read recently:
- Dan Wang (author of Breakneck: China’s Quest to Engineer the Future) wrote a letter reviewing developments in the economies of China and the USA.
- Brett Beshore, the founder of Permanent Equity, wrote his annual letter, entitled Steady Progress and Self-Reflection. In it, he expands on his investment philosophy and on elements of his personal life. As most investors know, these things are often tightly intertwined. His thinking really resonates with me!
- Finally, I always enjoy Dave Collum’s annual review. His take is curmudgeonly, with mostly out-of-consensus views. A lot of it can be pretty divisive. But he says it like it is, and agree or disagree, he does make some good points.
Hopefully, these reviews can help you prepare for a prosperous 2026. I wish all of you an outstanding year and hope it is filled with joy.
Piet Viljoen
RECM
15 January 2026