Coronation’s crown a trifle wonky after Steinhoff wallop
R14bn down the Swanee for the giant fund manager, which has now jacked up its levels of scepticism
Coronation Fund Managers, bloodied from a R14-billion loss on its holdings in Steinhoff, was applying a “higher level of scepticism” to its investment approach, CEO Anton Pillay said on Tuesday.
“Investors’ best defence is to understand the ways in which these bad actors can deceive governance structures,” said Pillay following the announcement of Coronation’s financial results for the six months to March.
The asset manager, one of South Africa’s largest, continued to suffer outflows from its retail and institutional funds over the period, but at a slower rate.Fund managers suffered hard knocks to their portfolios in December following the collapse of Steinhoff’s stock. The counter lost more than R200-billion in value within days of admitting to accounting irregularities and announcing the departure of long-time CEO, Markus Jooste.
Coronation held 5%-6% of Steinhoff at the beginning of December, which translated into 2.3% of its assets under management, said Pillay.
Coronation had decided to stay invested in Steinhoff and had been interacting closely with the new board to ensure “accountability is felt across the group”, said portfolio manager Neville Chester.
Following the Steinhoff collapse, Coronation had “reinvestigated” other companies that had raised red flags, such as those that were highly acquisitive or heavily indebted, Chester said.
Coronation was once again looking closely at company boards to ensure they were as strong and independent as possible. It would also support the forced rotation of companies’ audit firms. New auditors were more likely to discover flaws in a company, as they tended to ask more questions than the incumbents to get to the bottom of why companies did things in certain ways, Chester said.
Coronation was in the process of completing a “legal due dilligence”, which would inform what legal action it would take against Steinhoff and in which jurisidction, said Pillay.
This was being done to “protect the interests of our clients”.