The Baobab SCI Flexible Fund performed well in 2024, producing a pleasing return of 15.45% for the calender year. A key driver of this was our pivot towards extremely mispriced domestically focused equities in and around the election.

Key local contributors during 2024 include CA Sales, KAL Group, Raubex, WBHO, Aveng, Bell Equipment, Pan African Resources, JSE, Spar and ABSA. Even though we have trimmed some of this exposure into strength, we remain very constructive about the opportunity set in select local companies.

Our global results were mixed and didn’t contribute significantly to results in 2024. IDT Corporation performed strongly on the back of very strong operational results, but the bulk of our offshore holdings produced frustrating returns and remain very undervalued.

Our Canadian oil and gas basket was a detractor, but we have used weakness to add to our holdings at what we deem to be very attractive prices. We also initiated a new position in African telecoms and mobile money provider, Airtel Africa. The shares in no way reflect the long-term growth runway or potential value unlock of a spin off of the mobile money business.

As we enter 2025 markets and conversation are focused on the likely impact of the incoming US president, Donald Trump. We have no unique insights as to what the year ahead may hold, but expect that it is unlikely to be quiet.

This may lead to more bouts of market volatility, something we would welcome and look to take advantage of. Global equity valuations at an index level are very stretched, but this is skewed by heavy concentration in a small number of companies.

Outside of this there are many pockets of mispricing that create a very favourable backdrop for active stock selection. US assets have sucked in capital from everywhere, leaving significant opportunity in capital starved areas that are underowned, underappreciated and very undervalued.