Caption:  Contrarius Investment Management director Heaton van der Linde accepts the Raging Bull Award from Personal Finance editor Dieketseng Maleke. Picture: Ayanda Ndamane, Independent Newspapers.

Contrarius Investment Management is based in Jersey, with offices in Bermuda and South Africa.
Contrarius Investment Management won: • Raging Bull Award: Best (FSCA-Approved) Offshore Global Equity Fund for Straight Performance over Three Years to December 31, 2023.
Contrarius Investment Management is based in Jersey, with offices in Bermuda and South Africa. It was founded in 2008 by former Allan Gray chief investment officer Stephen Mildenhall.
The firm’s global equity fund, which is domiciled in Ireland, is denominated in US dollars. Launched in 2009, its benchmark is the MSCI World Index. At the end of last year, according to its December 2023 fund fact sheet, 80% of the fund was invested in the United States, 10% in Asia (ex-Japan), and 9% in Europe. It had no exposure to Japan.
Personal Finance asked Mildenhall how the fund operates.
PF: Please explain the fund’s investment philosophy/strategy regarding stock selection and market sector and geographical allocations.
SM: Contrarius is a contrarian, valuation-based investment manager and is happy to invest in value- and growth-oriented shares provided they are trading below an assessment of their intrinsic value. The fund’s stock selection is based on detailed fundamental research and the investment philosophy is not benchmark cognisant. As a result, the fund’s individual share holdings, sector and geographic exposures can vary materially from the benchmark index.
PF: To what do you attribute the fund’s outstanding performance over the three years to December 2023 – an annualised return in US dollars of 21.4%, compared with the MSCI World Index’s 7.3%?
SM: The fund’s performance for the three-year period benefited from being overweight in selected holdings within the energy, consumer discretionary and materials sectors. Many of these shares recovered from very attractive levels following the pandemic. While this was a very good three-year period for the fund, December 31, 2023 also marked 15 years since the inception of the fund on January 1, 2009 and it is pleasing that Contrarius’s contrarian, valuation-based approach has also delivered long-term outperformance, with the fund outperforming the MSCI World Index, the average global equity fund, the MSCI World Value Index and the MSCI World Growth Index since its inception.
PF: What stocks have stood out for you over the past three years (and what stocks have perhaps not performed as well as expected)?
SM: Three of the largest positive contributors over the three years were Teck Resources (materials), Signet Jewelers (consumer discretionary) and Valaris (energy). Signet Jewelers traded at about US$27 in February 2020, before the impact of the pandemic, then fell to less than $6 in March 2020 and ended 2020 at about $27. It ended 2023 at about $100, but still trades on less than 10 times earnings. We are, however, now finding better value elsewhere and the fund no longer holds Signet Jewelers and has also substantially reduced its exposure to the energy and materials sectors.
The fund’s media-related shares have not performed well over the last three years, in particular Warner Brother Discovery and Paramount Global. These shares have detracted from the fund’s performance. However, we continue to find them very attractive and they continue to be among the largest holdings in the fund. They have very valuable content but are undergoing a transition from linear television (cable and broadcast) to streaming. We believe that they are nearing an inflection point in this transition over the next couple of years and that patient investors with a longer term outlook will be rewarded.
PF: What is your outlook for the fund (and global equities in general) over the next year or two?
SM: Over the past year the fund has meaningfully reduced its exposure to energy. As contrarian, valuation-based investors we have been finding extremely compelling opportunities outside of energy. Many of these opportunities are in high-margin, long-term growth-oriented companies. We noted last year that after an extended period of value-oriented stocks underperforming growth-oriented stocks it may be tempting for traditional “value” investors to argue that we are in a bubble and that it is “value’s” turn to outperform. We continue to believe that this may not prove to be wise. If artificial intelligence (AI) is indeed a transformational event, price movements to date would probably not suggest a bubble for the overall market, even though certain parts may have run ahead of fundamentals. Fortunately, we are finding significant value in a broad range of stocks. These include both value-oriented stocks and growth-oriented stocks, some of which we believe are likely to be meaningful long-term beneficiaries of advances in AI.