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<\/a><\/p>\nEnergy accounts for 45% of the fund\u2019s assets, reflecting a stance maintained for four years, Gastaldi said in an interview from Cape Town. Blue Quadrant has long been positive on oil and gas, arguing that a period of lower prices had caused underinvestment.<\/p>\n
The wager paid off as the pandemic further discouraged spending on capacity, creating conditions for a supply crunch and price surge as economies reopened.<\/p>\n
Gastaldi\u2019s biggest holdings as of Sept. 30<\/p>\n
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- Cenovus Energy Inc.<\/li>\n
- Occidental Petroleum Corp<\/li>\n
- Antero Resources Corp<\/li>\n
- Suncor Energy Inc.<\/li>\n
- Thungela Resources Ltd.<\/li>\n<\/ul>\n
While foreign stocks account for much of the fund\u2019s energy allocation, Gastaldi has also added South African equities to take advantage of hammered valuations, with domestic small- and medium-sized companies now 30% of the portfolio.<\/p>\n
\u201cThe valuations in many companies were probably as depressed as we\u2019d ever seen it,\u201d he said. \u201cThat created an opportunity to increase one\u2019s exposure to South Africa.\u201d<\/p>\n
Fertilizer and explosives maker Omnia Holdings Ltd and woodfiber and paper producer Sappi Ltd are among stocks bought, along with coal miner Thungela Resources Ltd – the year\u2019s third-best performer in Johannesburg – and Harmony Gold Mining Co.<\/p>\n
Another is Royal Bafokeng Platinum Ltd, up almost 80% this year and now in talks to be acquired by bigger rival Impala Platinum Holdings Ltd.<\/p>\n
There are still opportunities in South Africa, though the local market\u2019s 80% recovery from its March 2020 pandemic-induced low places a premium on stock selection and creates a preference for companies with foreign-based earnings and resilience to the country\u2019s frequent rolling blackouts and rising power prices, Gastaldi said.<\/p>\n
\u201cIt\u2019s in companies that we think can benefit from a weaker rand, and have the ability to navigate the domestic challenges, particularly the electricity challenge.\u201d<\/p>\n
And that bet on energy stocks will remain in place.<\/p>\n
Gastaldi sees oil climbing beyond $100 a barrel. But even if it doesn\u2019t, oil companies can be an attractive proposition.<\/p>\n
\u201cWe see them generating a lot of free cash flow and we see them using this to pay dividends or do share buybacks, which ultimately, will still create upside returns, even if the oil price just stays where it is.\u201d<\/p>\n
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