Conduit’s portfolio: We don’t want to know what’s inside
Insurer’s return from its equity investments was pretty good, but most likely based on mercurial companies
There was a most interesting claim in insurance company Conduit Capital’s interim results to end-December about the performance of its equity portfolio.
The company – controlled by US-based investor Sean Riskowitz – reported a pre-tax return of 15.3% from its equity portfolio, or 32.8% on an annualised basis.
With the JSE all share index down markedly in 2018, this is a trend bucking performance that will send investors scurrying to view the constituents of Conduit’s portfolio.
But inquisitive investors will not get a see-through.
Conduit reckons investment ideas are valuable intellectual property – arguing there are risks that trader-type market participants can “front-run” the company’s long-term investing ideas.
So the make-up of the portfolio is not disclosed.
Officially, Conduit’s strategy is to invest in a concentrated portfolio of “compounding type” businesses: “The group invests in high conviction ideas where the risk of loss is limited and the upside potential uncapped due to the durability of the underlying company’s competitive advantage. The group invests in outstanding businesses that have the capacity to compound their value at a high rate for a long time.”
Conduit adds that it often invests in businesses that are either misunderstood by or uninteresting to the broader market.
If one presumes that Conduit applies largely the same investment criteria as other Riskowitz-aligned investment entities then one might presume the equity portfolio comprises positions in companies such as Trustco, Calgro M3, Taste Holdings and Finbond.
Quite honestly, the mercurial (to put it politely) nature of these holdings should hardly have Conduit fretting about punters front-running their investment ideas.