African Bank Investments: Fund manager bets recovery is nigh

Sam Houlie, a fund manager at Momentum Asset Management, is betting that African Bank Investments Limited (Abil) will rebound. He has added South Africa’s worst-performing lender to the portfolios of his funds. Houlie’s Momentum Small/Mid-Cap Fund has 6 percent invested in Abil, according to a fact sheet on the website of Momentum Asset Management. Abil is also the largest holding in Houlie’s Momentum Value Fund, comprising 11 percent, the data show. While there would be a “significant” drop in Abil’s fiscal first-half profit, steps to bolster capital and improve the quality of new loans would start to produce improved results from the second half of this year, Abil said on February 5. Two days later, Houlie said: “The business is now so well capitalised that they will definitely survive the current difficult patch for unsecured lenders in South Africa. There is no need for African Bank to go out there and grow aggressively; they will survive.” Abil shares have dropped 56 percent over the past 12 months, the second-worst performer on the all share index, which has gained 12 percent. Houlie was also buying shares in Impala Platinum, Pallinghurst Resources and Anglo American, while still expecting further declines in industrial stocks, he said. Abil shares lost 6.03 percent to close at R9.35 on the JSE yesterday. – Bloomberg