Piet Viljoen’s share portfolio revealed

Counterpoint Asset Management executive director, Piet Viljoen, is one of South Africa’s top fund managers, with his Counterpoint SCI Value Fund showing 26% growth over the last three years.

Viljoen spoke at the recent Morningstar Investment Conference in Cape Town, where he shared his view on the market.

Viljoen said fundamentals for South African businesses are not great from a political and economic perspective.

However, the valuations of local shares are currently discounting a more negative outlook than what will actually realise.

“There’s massive negative sentiment built into the valuation of the stocks,” Viljoen told delegates.

“The businesses themselves are struggling to compound their earnings because of the fundamentals, but the prices are low enough to compensate for that.”

“What you are not getting in the business compounding earnings, you are getting in the valuation uplift over time as things turn out to not be as dire as everyone really expects.”

Viljoen said emerging markets as a whole are cheap, with the exception of China. A big reason is that emerging markets, unlike developed markets, have positive real interest rates, so capital is priced correctly.

Viljoen believes it will lead to emerging markets outperforming developed markets in future.

Historically, emerging markets would fall apart in environments with economic tightening and a strong dollar.

Despite these factors, emerging markets have been more stable and showed a lower decline than their developed peers this year.

Viljoen sees China as a highly risky environment to invest in from a regulatory and political perspective, especially regarding capital flows.

He still believes that certain businesses might be worth investing in but that an investor should only take a small position in these companies to compensate for the risk.

If Viljoen had the freedom to put any allocation on his asset classes, 33% should be in South Africa, with only around 11% in SA equities and the other 22% in government bonds.

Viljoen applied this weighting to Counterpoint’s SCI Worldwide Flexible Fund, which he manages and has no restrictions on asset class allocations.

The Counterpoint SCI Value Fund is a pure equity fund focused 100% on SA equities.

Piet Viljoen’s Counterpoint share portfolios

The tables below give a breakdown of the share portfolios which Viljoen handled on 30 June 2022.