Laurium Capital

The company was founded in 2008 by Murray Winckler and Gavin Vorwerg with the launch of the Laurium Long Short Prescient RI Hedge Fund and has grown to over R66-billion in assets under management. As the firm’s capabilities have grown, Laurium has expanded its product range and now offers 14 funds across the risk spectrum from low-risk income funds, through to low and high equity asset allocation funds, as well as flexible funds and hedge funds.

Investment philosophy

As a boutique manager, Laurium can capitalise and generate alpha through stock selection and trading opportunities. The team believes that strong fundamental analysis with a valuation bias, complemented by event-driven situations and trading should drive superior performance over time. Laurium’s asset size and lack of bureaucracy enables it to act immediately on market information and implement ideas quickly. The investment team meets every morning to discuss stocks and views of the market and are constantly alert to special opportunities that present themselves from time to time in markets and look to capitalise on these opportunities.

Laurium’s asset size and lack of bureaucracy enables it to act immediately on market information and implement ideas quickly.

What Laurium offers

Laurium has been managing hedge funds since 2008 and has the following hedge funds:

• Laurium Market Neutral RI Hedge Fund
• Laurium Long Short Prescient RI Hedge Fund
• Laurium Aggressive Long Short Prescient QI Hedge Fund
• Laurium Enhanced Growth Hedge Fund (available to SA investors via a ZAR feeder fund)

The Laurium Aggressive Long Short Prescient QI Hedge Fund was launched in 2013 with an annual performance objective of CPI+10, which it has achieved, in addition to significantly outperforming the South African equity market (Capped SWIX) with similar volatility. This fund is available only to qualified investors, has a minimum investment amount of R1-million and trades monthly. The Laurium Enhanced Growth Prescient RI Hedge Feeder Fund was launched on 1 March 2024 and largely follows the same mandate as the Aggressive Long Short QIHF but is structured so that retail investors are now able to access this strategy for a minimum investment amount of R20 000 and with the enhanced benefit of daily liquidity. The mandate differs slightly from Aggressive Long Short, in that the new fund may have an allocation to select international equities.

The team in charge

Laurium’s hedge funds are managed by co-founders Gavin Vorwerg and Murray Winckler, with Matthew Pouncett being the assistant portfolio manager. They are supported by the remainder of Laurium’s 21-strong investment team. Before starting Laurium Capital, Murray was CEO of Deutsche Bank South Africa. Prior to his role as CEO, Murray held various positions at Deutsche SA including Head of Global Markets (Debt and Equity) and Head of Research. During his tenure, Deutsche Bank held top ratings across all areas.

Gavin Vorwerg worked for Deutsche Bank (London) and was responsible for strategic equity structuring in Africa (including SA), Middle East and Central Europe before returning to South Africa to start Laurium Capital with Murray in 2008. Prior to moving to London, Gavin worked for Deutsche Securities SA and was responsible for equity structuring and derivatives in the equities business and was a member of the equities executive committee. Before focusing on structuring, Gavin was an equity analyst, rated number 1 or 2 in Financial Mail in several sectors each year from 2000, thus contributing to the number 1 rating of the overall team.

We have a strong understanding of business fundamentals and market cycles as well as proven valuation skills.

Laurium has a 13-strong inhouse operations team responsible for oversight and reconciliations with outsourced administrators, as well as other operational activities. In addition, there is a team of 10 highly qualified Business Development and Client Service personnel who strive to provide prompt, superior service to the firm’s broad range of clients in South Africa and offshore (direct, retail and institutional).

Laurium Capital (Pty) Ltd is an authorised financial services provider (FSP 34142).

Contact information:

• Kim Zietsman
• Telephone: 011 263 7715
• Email: kim.zietsman@lauriumcapital.com
• Website: www.lauriumcapital.com

Laurium Capital generate exceptional returns for their clients

Blue Chip speaks to Kim Zietsman, Head of Business Development and Marketing at Laurium Capital.

How would you describe your investment philosophy as it pertains to managing hedge funds?

We have a strong understanding of business fundamentals and market cycles as well as proven valuation skills. Using these skills as a smaller manager within a narrow and shrinking stock universe allows us to generate alpha through active stock selection beyond our larger peers. We are further able to capitalise on shorter-term value dislocation opportunities. Strong fundamental analysis, a high-quality core of stocks selected with a valuation bias complemented by event-driven strategies should continue to drive superior performance over time.

What do you see as your competitive advantage?

We are a well-resourced team, yet we remain nimble, not weighed down by large AUM or corporate structures. This allows for quick decision-making and provides an environment where active management can thrive. Laurium is one of the only asset management companies in South Africa founded and run by ex-sell-side individuals. We believe the drive and investment banking discipline in the way we approach investments is unique. The firm employs individuals who have a rich set of connections in both South Africa and Africa, which we believe in leveraging.

What process do you follow to decide what instruments you will invest in?

Investment selection is driven by the investment objective of the fund. We strive to minimise risk through disciplined hedging practices and to maintain high levels of liquidity, low concentration risk and low correlation to the equity market.

As part of our research process, we determine fair values for all equities and investments that are under our coverage and in our portfolios. The risk related to these specific positions is then qualitatively and quantitatively assessed before their inclusion in the portfolio. Considerations would include elements such as the range of possible fair values for the instrument in question, levels of operating and financial leverage of the company, the liquidity profile of the share, etc. The aim is to include positions that generate the best risk-adjusted returns in line with the fund’s objective.

In addition, the portfolio managers will assess how the instrument’s inclusion will impact overall portfolio risk. As part of our investment risk management philosophy, we aim to spread our gross and net exposure over sectors and factors, and not to take significant directional bets on this basis. This does not mean we never have strategic tilts to certain sectors or factors but that these tilts are controlled and assessed relative to the risk they carry.

How do you manage risk in your hedge fund(s)?

Given the broad range of tools available to hedge fund managers, risk can be managed in many ways. Hedge funds use leverage, gross exposure and net exposure as key tools to manage both risk and return. By actively monitoring and adjusting both gross and net exposures, managers can dial up or dial down risk, depending on the mandate and investment objectives.

Short positions are used both as a risk-mitigation tool but also in alpha generation. Individual stock short positions are used to both mitigate factor risks emanating from the long book as well as to generate alpha, either as a pair against a long position or through the creation of a “rump” trade by shorting out a particular part of a company with listed underlying components. Outright shorts are used when we believe that a company is trading significantly higher than our assessment of its intrinsic value. Risk is also managed by appropriate sizing and diversification of long and short books and continuously managing liquidity risk.

What is your track record?

Laurium has been managing hedge funds for over 16 years, generating exceptional risk adjusted returns for our clients, net of fees.