Our objective is to generate medium- to long-term capital growth for investors through achieving attractive returns. As discussed in Our Benchmark, we measure our performance relative to the JSE All Share Total Return Index. Notably, the performance fees hurdle is the JSE All Share Total Return Index +2.5% i.e. we do not earn any performance fees unless that hurdle is beaten on a five-year rolling basis.
Our opportunity is to achieve this result through having a structure with maximum flexibility. It has been set up to take advantage of various factors, as detailed below:
The legal structure of the investment entity (a South African Qualified Investor Hedge Fund) means that income taxes and capital gains taxes are deferred for an indefinite period within the fund.
The relatively small size of the fund means we can make meaningful allocations to opportunities not available to larger investors, both from an impact and timing perspective. We invest patient capital from an investor base with a long-term view and with a 3-month notice period for redemptions. This allows us to invest in less liquid companies that larger funds are forced to avoid.
We do not trade for the sake of it. Churn is kept to a minimum, as we only transact when it makes sense to do so. We don’t ever HAVE to do anything to justify the fund’s existence.
As a management team, we are also involved on a day-to-day basis with a range of other businesses in South Africa, providing us with on-the-ground information and experience of business conditions. This helps us source investment opportunities and understand the real underlying economics of most companies.
The structure is able to make private or unlisted investments which we execute sparingly and where we have intimate knowledge of the underlying entity.
By operating through the right structure, we believe we have the optimal platform through which to execute our various long and short strategies across a broad range of asset classes.