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Ninety One Global Special Situations
Ninety One Global Special Situations is a high conviction, contrarian value fund focused on buying companies that are cheap and out of favour. It is one of a number of funds that are run by this highly-regarded and well-resourced Value team.
Previously Investec Global Special Situations
Our opinion
Since Steve Woolley and Alessandro Dicorrado took over in 2016, Ninety One Global Special Situations fund has performed well, despite its value style being out of favour. This is an actively managed fund with a high conviction approach. We believe the fund has a strong and repeatable process, which can continue to perform in the future.
Company description
Ninety One is an independent, active global asset manager, managing more than £120.8 billion* on behalf of clients. Established in South Africa in 1991, as Investec Asset Management, the firm started offering domestic investments in an emerging market. In 2020, almost three decades of organic growth later, the firm de-merged from Investec Group and became Ninety One. Today, the firm offers active strategies across equities, fixed income, multi-asset, alternatives and sustainability to institutions, advisors and individual investors around the world.
*as at 30.09.19
Fund manager
Alessandro and Steve have co-managed this fund since the beginning of 2016. Alessandro graduated from University College London in 2004 with a degree in Economics and holds a Master's degree in Finance from the London Business School. He has worked as an analyst in Ninety One's Value team since 2011. Meanwhile, Steve graduated from Nottingham university in 2004 with a first class Master's degree in Mathematics. He joined Investec (now Ninety One) in 2008, having previously worked for the Financial Services Authority.
There is a lot of ‘I don’t want to be the first’ in the market. People are worried about being the first to invest in certain companies – as value investors, we don’t mind being the first
Alessandro DicorradoFund manager
Investment process
Alessandro and Steve start by screening for cheap, out of favour stocks which have fallen 50% relative to their index. This typically leaves them with a list of around 250 stocks to conduct initial due diligence - a list that is then whittled down. The managers analyse a number of factors, including why a company's share price has fallen and what the current market consensus is. They also study the balance sheet and cash flow dynamics. In total, they cover a 30-point checklist. Finally, the analysis is subject to peer review. The resulting portfolio is concentrated, with 35 underlying holdings.
ESG
ESG - Limited
The managers believe that there is a fine line between incorporating ESG risks, and value investing, which they try to tread with this fund. Whilst ESG integration naturally aligns with the fund’s long-term approach, ESG risks can be seen as opportunities for the fund, especially with the contrarian approach. As such, the managers do look at material ESG issues, to allow them to build a picture of a company, but they will use this to identify opportunities as much as they do to exclude stocks. As a result, the portfolio will often contain firms considered ESG laggards.
ESG factors are analysed in the due diligence and analyst report phase of the process. This will help the managers understand the structural ESG risks of a firm, and the valuation the market is applying to it. They will look to factors such as the quality of management teams, carbon emissions and labour issues in the supply chain. If these are deemed as material risks to the business and not considered in the valuation then they will avoid the company, but conversely if there are ESG issues adversely affecting the valuation, and the firm has a comprehensive plan to address this, it could be an investment opportunity for the fund.
Risk
This is a high conviction fund that is well-diversified in terms of geography and sector. Liquidity risk is managed by only investing in stocks with a market capitalisation of $1 billion or more. This fund has a contrarian value bias and there will be periods when this style is out of favour.
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